Last October I was happy to meet Elena Pasquali who worked years ago for SAP being in involved in CRM-Tasks. She is now CEO of WareLite Ltd. where they showed me new ideas to leverage SAP-processes with an real time Demand Chain Management system. The system was so impressing that I tried to join them and in Februar I could do that.
- real time DCM solutions get their information from “goods receiving process = end of supply chain ) shelf replenishment and POS-Terminals.
The survey provided by Daniel T. Jones from “The Lean Enterprise Academy” http://www.leanuk.org/articles/the_invisible_opportunity.pdf points out the problems of using POS-Data for forecasts or reorders. Standard approaches are not good to obtain accurate demand data for reordering processes.
- POS data show only sold products but don’t give you any idea what customers demand really was.
Think of an supermarket where the shop manager accepts 1,5% stock out for each article. That seems to be pretty good but it is not. If you are going to buy 40 items where each has on average 1,5% stock out = 98,5% availability . That means you probably find only about 55% (= 0,985 ** 40 )of the items you wanted. So what’s about 45% of the items you wanted to buy but they where out of stock. Either you decide to buy an alternative or nothing but POS-Terminals don’t know about this. POS-Terminals record only sold products and not real demands.
What’s the impact of that. Lacking information of real demands led to processes depending on POS-Data. Forecasts and reorders based on sold items instead of real demands doesn’t allow to provide best services to customers and wastes lots of money.
To have good demand data, new approaches are needed to get them fast and reliable.
WareLites DCM based on an XTP-System (extreme transaction processing) has a solution for that.
- record goods receiving to now the stock in the back room (SAP goods received process)
- record goods sold to update stock (POS-Data sold items)
- measure sales trends on shelves and back store (POS-Data and replenishment information provided immediately to this system on occurrence)
- calculate replenishment information for the back store and the shelf based on high- low-watermarks and sales information in real time -> the system can tell you the you will be out of stock in 3 hours for milk if customers buy with the same rate like in the last minutes/hours . Transfer this information directly to the store manager or to the supply chain systems for reordering or shelve replenishment.
- reacting in real time helps to avoid stock-out on shelves so customers can buy what they wanted und you get real demand data.
Having a system like this (= demand chain management in real time) you have demand data of customers in real time instead of Pos-Data containing wrong demand data with 45% errors in the example above. Now you could feed your forecast system with real demand data instead of poor POS-data.
Lets think of other products which have real bad features like fashion items:
- fashion items ordered only once. They move through your system and disappear after being sold.
- you don’t reorder, because for the next season you will have different items
To support fashion items you don’t need reorder information because fashion items are not reordered. But it would be very helpful to have sales trendes immediately to see when the items leave the store.
Having sales data in real time is like flying a plane with instruments in a foggy sky. Not having this information gives you the feeling of defect instruments, you don’t know where you are, how much fuel you have left, which direction you are flying.
End of April, I will get a survey of an college in Austria which checks how WareLite DCM supports logistic processes. As soon as the information is available I will share it with you.