November 19, 2009

Clean supply side data improves in-store customer experience

Recently I have been reading (a bit more than I want) about technologies around Demand Driven Supply Chains (DDSC). Just today, I came across an interesting article- Is your retail supply chain working at full efficiency? - on the same via a Tweet from ChainStoreAge. As you may have guessed, according to the author Kevin Stadler the solution is to invest in a demand forecasting and automated order management solution.

I agree with Kevin that a DDSC can [greatly] improve customer experience and financial performance of retailers, but I take a different approach to building a DDSC.

Building a demand forecasting solution is an onerous undertaking given the technological complexity in collecting clean demand side data. For a forecasting solution demand side data has to come from numerous sources. These sources, according to Microsoft & AMR, include POS scan data, store & DC inventories, planograms, sore clusters, retail item hierarchies, events, sales info, promotions, syndicated data etc. In other words getting clean demand side data is likely a technology nightmare!

My suggestion, based on numerous supply chain case studies, is to build a DDSC from the supply side. We all agree that retailers are all interested in providing superior in-store customer service and increasing top & bottom line. This is possible if shelves are stocked with products customers want each time they walk in the store, just as Kevin mentioned in his writeup. I posit that it is far efficient to integrate with suppliers and get clean and harmonized supply side data to make strategic and operational retail decisions to reduce lead times, stock-out frequencies, and ultimately to improve in-store experience.

More on this in future posts.