Different methods to optimize the supply chain
Wikipedia: “Demand Chain Management is the management of upstream and downstream relationships between suppliers and customers to deliver the best value to the customer at the least cost to the demand chain as a whole. The term demand chain management is used to denote the concept commonly referred to as supply chain management.”
There are 2 different approaches to get knowledge about customers demand for retailers.
1.) A very common method is to analyze data from POS-Terminals. Based on very sophisticated calculations considering events (football, tennis, …), holydays, seasonal changes specialists try to guess future demands of customers. This calculated future demands help to parameterize supply chains but it’s still a guess. These systems need best data from POS-Terminals to provide good results and that is also the problem. POS-Terminals show only what customers bought but you don’t have any information about missing articles (out of stock) or replacements somehow accepted by the customer.
2.) Another method is to do measures in real time. That means any stock change (replenishment, sold items) is recorded immediately. Having this numbers you can implement a very clever process. Measuring selling rates enables you to calculate sales trends in real time so you know when you will have an of-of-stock situation. If your supply-chain is responding fast enough to this information you get new items before the OOS-situation becomes reality. These systems are monitoring the reality and help you to be proactive responding to customers demand.
The get best results you should combine both approaches because monitoring helps to avoid OOS so systems of group one get better data for their forecasts. These forecasts can be used to set parameters for monitoring. You have a self-optimizing process when you combine both methods.
Students of the technical college in Vienna ( http://www.fh-vie.ac.at ) are running a project to evaluate the impacts for logistic processes if you use systems of group 2. We had some very interesting discussions because you can optimize the supply chain by measuring customers demand and not by guessing future demands based on historical and faulty data.
Some details you can find here: http://en.wikipedia.org/wiki/Demand_chain_management
Best regards to all of you.