Resilient supply chains with forecasting and replenishment for retailers
In an era in which many claims are about automating processes as much as possible – we do that, too, at SAP -, the first weeks of COVID-19 quickly proved strikingly that it sometimes needs a manual push-start to get things in the right direction. Especially if we talk events of an unprecedented impact and abruptness.
Looking at forecasting and replenishment the effort needed for that sort of manual intervention for a retailer is, however, very much depending on the extent supply chain planning applications are intertwined.
While a retailer with a central forecast has its one forecast to review and tweak until it can navigate the new situation autonomously, retailers with fragmented forecast applications are putting in a multiple of the effort to maintain somewhat consistency and effective results across their processes. In times where your resources are stretched this proves even worse.
We speak about reviewing multiple forecasts in different applications, about redundant corrections to be made to the different forecasts, about adjusting parameters, and input demand influencing data here and there, not to speak about synchronizing the whole effort.
Leveraging “one single version of the truth” forecast, such as the Unified Demand Forecast (UDF), allows taking advantage of the intrinsic power of a central mechanism. UDF is currently used to propel processes like promotions, replenishment, allocation management or assortment planning. So one amendment is automatically available to all of these applications – which is exactly the sort of automated consistency you want to achieve.
Same thing goes for replenishment of distribution centers. Just end of last year I had a discussion with a hypermarket retailer who has some unfortunate organizational reasons for using historical goods issues of DCs to base their predictions upon. They are not the only ones. Those unresolved matters today implicate that massive efforts have to be made to adjust DC replenishment – on top of the work needed to maintain stores afloat.
At the same time for other retailers, multi-echelon replenishment (MER) proves superior in the ease of propagating demand changes along the supply chain. While demand impact is reflected in the sales forecasts, store order forecast picks them up and uses them – in a fully automated mode for DC replenishment.
So when we speak of providing for more resilient supply chains in the future, UDF and MER are certainly a good way to start.
If you wish to learn more about multi-echelon replenishment please feel free to check out the excellent MER blog of Sylvia Ludwig
For our customers of SAP Forecasting and Replenishment and Unified Demand Forecast, some information on demand forecasting for the different phases after COVID-19 have been collected in a note that is continuously updated.