By David Johnston
Federal tax stimulus checks have already started mailing to consumers. While some companies may be looking forward to capturing some of the additional consumer spend, the anticipated increase represents a blip in a perennial continuum of demand influences— seasonal shifts, back-toschool and holiday shopping, tax time, rising fuel costs and a host of other foreseeable and elusive market influences.
The impact is only exacerbated in a challenging economy with shortening product lifecycles, rampant promotions and markdowns, instantaneous Internet access to product reviews and prices and a proliferation of alternative purchasing options. No strangers to cyclical sales and competition, manufacturers have high stakes in inventory management and optimization, with minimal margin for error or complacency.
Global View
Success in a global environment demands a global view, yet many companies still operate as a series of independent, geograph-
ically dispersed divisions, often as a result of expanding their global presence and product portfolios through acquisitions and mergers. As their supply chains grew in complexity, their demand management, distribution and production planning processes remained fragmented.
So, how do successful manufacturers synchronize demand, distribution, logistics and production to mitigate out of stocks and excess inventory and respond to consumer demand?
An integrated, adaptable supply chain is critical to achieving a competitive advantage and essential in today’s market. Companies that drive their supply chain decisions from a fragmented view of shipments and orders are at risk of losing market share and competitive advantage. Conversely, companies with an optimized and flexible supply chain driven from a global view of consumer demand can sustain performance during times of economic uncertainty.
Economic Challenges
‘Proven’ should be the watchword for selecting technology. Even in this tight economy, more companies are investing in proven solutions to improve forecasting, distribution planning, production planning and overall inventory management. Advanced technologies can offer manufacturers fully integrated, scalable and fieldproven solutions that continuously optimize the supply chain network to respond to demand, optimize inventories across the global network, improve forecasting accuracies by sensing and responding to market demand and globally manage logistics and transportation to reduce spend and carbon emissions. This enables companies to respond to demand shifts quickly and more accurately source, produce and deliver products. Progressive companies are already deploying the technology required to achieve these goals.
The largest meat processing company in the world recently leveraged inventory optimization software to manage consumer demand spikes and generate one view of demand across its supply chain, sales and marketing operations. The software solution streamlined demand, fulfillment, event management, transportation and load building across divisions. The result: effective management of huge demand spikes through demandside analysis and statistical forecasting, which enables the company to develop optimal seasonal strategies to meet actual demand.
A leading manufacturer of consumer products implemented transportation and logistics management software to procure and schedule logistics providers during times of rising fuel costs and driver shortages. The result: a reduction of transportation costs by 7% to 10%, while simultaneously achieving increased truckload optimization, improved response to freight capacity needs and carrier selection and more efficient invoicing.
Proven technology helped another consumer goods supplier reduce inventory levels, increase sales, boost inventory turns and improve forecast accuracy. The Fortune 500 company implemented a joint collaborative planning, forecasting and replenishment (CPFR) program, realizing a 23.8% increase in sales and a 31.7% decrease in inventory. The collaboration also led to a 42% boost in inventory turns and 97.8% forecast accuracy. By ensuring the right product at the right time on retail customers’ shelves, the company eliminated excess safety stock and refocused manufacturing to customer demand.
Requirements
Today’s integrated supply chain platforms offer 360-degree global visibility to the extended supply chain. Investment in a global supply chain platform can yield greater visibility into the extended network and consumer-centric market, so planning and execution decisions are based on accurate, timely data.
Global visibility allows suppliers, manufacturers and retailers to plan sales and promotion volumes more effectively, calculate inventory requirements and respond to operational issues, as well as leverage each other’s unique product, inventory and logistics insights to improve alignment across the entire network. Visibility and collaboration are ‘must-have’ enablers to realize the benefits of an Integrated Business Planning process—the next evolution of sales and operations planning.
Demand volatility has served as an impetus for manufacturers that have come to expect—and demand— proven software solutions providing one view of demand from supply chain to consumer.
David Johnston is senior vice president, manufacturing and wholesale distribution, for JDA Software Group Inc. (www.jda. com), a provider of integrated retail, supply chain, logistics and transportation management software for manufacturers, distributors and retailers around the globe.
