Project Description
Traditionally, retailers have looked at planning, allocation, and replenishment as three distinct disciplines within the business. In our opinion, this approach misses a significant opportunity to reduce inventory, improve service levels, and increase revenue. Working together and focusing on leveraging a single unified demand signal, these three groups can dramatically change the value retailers create for their shareholders.
Rethinking the Traditional Approach
When considering retail planning, allocation, and replenishment, we need to rethink the traditional approach of allocating against pre-season plans and min-max replenishment models that only reward unit sales. Retailers must instead focus on leveraging predictive demand analytics to influence planning and omnichannel fulfillment decisions.
The opportunity includes the following key elements:
- Leverage a unified demand signal to build better financial and assortment plans, using more than just last year as a driver
- Incorporate demand analytics to drive more responsive pre-season and in-season allocations
- Utilize predictive forecasts to drive replenishment processes that support an omnichannel environment
Adapting your end-to-end process to leverage a unified demand signal will create consistency throughout the planning and fulfillment processes, using the best data and analytics to support a forward-looking business process.
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From Silos to Collaboration
Making the leap from siloed organizations, measured independently and using disparate solutions, to a single process based on an intelligent demand signal is going to take some effort.
The first step is defining the end-to-end planning, allocation, and replenishment process and determining the common metrics on which to measure the process. This will depend on the current state of your systems and the visibility and information available to your planners, allocators, and replenishment analysts as they perform their work. This will also depend on the flexibility to incorporate a demand forecast into the allocation and replenishment execution.
From an organizational perspective, this change will require buy-in from both the buying/merchandising and supply chain executives in the company. With strong collaboration, both benefit in the short term. The buying executive gets better visibility to demand and maintains higher service levels, while the supply chain executive reduces overall inventory in the network and carrying costs.
Final Word
Incredibly, the retail industry has not yet solved the problem of eliminating the traditional siloed nature of planning, allocation, and replenishment. With billions of inventory dollars invested in the supply chain at any point in time and trillions in logistics costs each year in the US alone, it’s time for a transformational change.
We invite you to explore how Parker Avery has helped global clients become more collaborative, achieve greater efficiencies, and realize substantial financial improvements through our ground-breaking Enterprise Intelligence solution and services.
