A Chicago man took home $276,000 this spring after he won the lottery three times in three weeks. In each case, it all boiled down to being in the right place at the right time.
This man’s good fortune was pure luck. There’s no way he could have predicted that the cards he randomly chose at that moment in time would make him hundreds of thousands of dollars.
But business does not happen by chance. Getting the right merchandise in the right stores at the right time in the hopes of a big payoff used to involve lots of manual work, combined with a bit of wishful thinking. Sure, some aspects of stocking the shelves were obvious: loading up on winter coats in October and patio furniture in the spring, for example.
But how many big screen TVs could a store in Minneapolis expect to sell in the second week of January versus the third? What about that same retailer’s shop in New York City? And what hit would the brand’s reputation take if it sold out right before Super Bowl Sunday?
A decade ago, knowing how much of each product was sold and available in each location was a big thing, but not anymore. And until recently, tracking and analyzing sales information at each store level was daunting and largely impractical. But today, winning supply chain solutions take chance out of the equation and allow companies to closely monitor sales patterns, inventory and deftly respond to customer needs.
These solutions are taking brand protection to the next level: brand augmentation.
Leveraging an Integrated Supply Chain
Between ecommerce and the near-ubiquitous presence of big box stores, consumers are used to living in a buy-on-demand world. If a retailer doesn’t have what the customer is looking for, they’ll just tap a smartphone and find the product elsewhere.
Supply chain integration helps brands prepare for, and respond to, customer needs. It’s the next level of forecasting and planning that connects brick and mortar stores not just with suppliers, but with each other and their ecommerce platforms.
A retailer with hundreds of stores across the U.S., for example, might see a surplus of hammers if it only looks at the big picture. But a closer look could reveal that although stores in California stocked too many hammers, ones in Texas are running low. In a fragmented supply chain, the California stores would put hammers on sale while Texas locations would place an order to the supplier in China. To the California consumer, it looks like no one wants to buy that brand of hammers – which could result in brand questioning, when it’s actually a supply chain issue.
With an integrated supply chain, retailers maximize the efficiency of products they already have in stores. A regional manager in Texas can see there’s an excess of hammers in California and have them shipped to his store. As a result, the California stores relieve their inventory without having to mark down prices, while helping satisfy customers halfway across the country. This builds the brand’s reputation for well-stocked stores.
Sales and operations planning tools (S&OP) streamline supply chain integration by automating these processes. With the right rules in place, S&OP can track and respond without any human intervention to an event that happens in a store in France, for example, that affects inventory in the U.K., that impacts production in China. Indeed, the fully integrated supply chain can make placement decisions in real time while the product is being routed.
For example – the replenishment order for a given store on Monday includes five 60-inch TV’s. As the truck is being routed, we find that a second store has just sold two of the same TV’s resulting in a higher need – the route is recalculated, and the driver notified of the change. When the TV’s are dropped at the second store, the driver is instructed to pick up five iPhones and deliver them to store No. 3. Behind the scenes, S&OP processes are analyzing real-time data to determine: if ordering needs to occur from suppliers; in what economic order; and the quantity paced against expected demand – all updated in real time. All of this happens in real time many times a day as products move off shelves and out of warehouses (direct-to-consumers) to ensure your organization doesn’t have too much product nor too little.
Protecting your sales, and more importantly your brand from out of stocks and the need for discounted sales, is paramount.
The Power of Sales & Operations Planning Tools and Analytics
When combined with analytics, S&OP can help you track what customers bought historically and forecast future buying patterns to better align operational and financial plans. The technology gives companies the ability to efficiently handle a very large amount of transactional data from a multitude of sources. Crunching five years of data manually would be near impossible, and even if a company accomplished it, the findings would be out of date by the time they were prepared to use.
Big Data offers a wealth of information on who bought what product when. This level of visibility into consumer behavior allows retailers to understand that they need to stock more cell phones at Christmas and fewer shortly before they announce their latest releases. As a result, stores won’t be flooded with phones that won’t sell. Unless you protect your brand this way, customers will wait for the product to go on sale before they buy.
Analytics enable companies to create better planning proactively for customer needs rather than reacting with sales, or by scrambling to fill shelves, aligning predictions with strategic plans. The volume of data can appear overwhelming, but the right solutions simplify the process by mining the crucial bits that will inform the smartest business decisions.
In the end, consumers drive brand reputations—and you don’t want to leave your reputation to chance. If you invest in S&OP and analytics and understand your customers better than the competition, you’re going to enhance your brand, capture more market share and win the game.
Doug Braun is the Chief Executive Officer of IBS, a world leader in distribution resource management software, providing ERP and WMS business applications for the wholesale, distribution and manufacturer/distributor markets. For more information about IBS, or to contact Mr. Braun, email firstname.lastname@example.org.
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