Check out this excerpt for promotion planning
“What do you want for Christmas this year, Love?”
“Oh, I dunno, just get me something special. You know what I like.”
And so it begins. The mind races. “What do they like? I don’t even know what I like? What shops are open? What shops even exist now?”
You once again enter the festive season in a state of panic, quickly perusing the empty shelves of wherever’s open. The scornful retail worker looks you up and down as you squint at a perfume and deodorant set hoping it morphs into something better.
If only you’d written down all those hints. Or paid closer attention to the interested hmmmm’s during the countless TV ads over the last 6 months.
Will you earn your place at the family lunch with a present worthy of public praise? Or is it more likely that you’ll be dining in the dog house?
If only you could see into the future, eh?
Tales of the unexpected
Supply chain teams across the country face a very similar dilemma throughout the year.
They need to offer a product assortment that excites customers. And translates into sales.
Then they need to order the right amount of stock, and produce it at the right time to keep up with demand.
And then most importantly, ensure the assortment generates a healthy profit.
Sure, everyone loves a selection box. But what does your finance team think of 36p profit per unit?
The problem with both supply chain planning and choosing a present for your increasingly picky other half, is that there are so many unknowns.
And in supply chain, this isn’t just a festive fiasco. It’s a continuous conundrum, all year round.
So, this week’s Billion-pound question…
How can your supply chain team predict the future?
How can they gain insights into future trends to make ‘good’ supply chain decisions?
The answer’s 3D. Or more specifically, a 3-dimensional approach to integrated planning.
“What’s that?!” I hear you shout at your screen opening up Amazon… let’s find out.
Dimension 1: Build a base with historic sales
“Last year I got the necklace, that went down well.”
So here we are with some historic data. And useful data too. Because as they say, to predict the future, you have to study the past.
And the risks in supply chain are far weightier than a sour-faced partner over dinner.
Order too much stock and there’s high storage costs and an increased risk of wastage. Don’t order enough, you risk disappointing customers and losing sales.
So risking it all by hitting repeat order, half-cut on mulled wine won’t cut it.
See, the problem with historic sales is they can only tell you so much. What if things have changed in the past 12 months? (They have)
Sure, knowing what worked last year is a decent start.
But you need more info.
And so we come on to…
Dimension 2: Enrich the base with insight from the business
“I wonder if his mates know what he might want?”
This is the business version of ‘asking around’.
Sadly, supply chain teams rarely get the chance to encounter customers in the wild. They watch them at a distance, gazing through a hole in the fence.
Commercial teams however, constantly engage with the customer.
They speak to them in real life, they know about their challenges and can think of creative ways to help them.
And that insight’s priceless.
It’s the equivalent of your partner’s mate knowing exactly what they want for Christmas, ’cause they’re still slagging you off on WhatsApp for the Slimming World Cookbook from last year.
And knowledge like that can’t be attained with historic data alone.
For example, you might begin to understand:
- Have your customers already got confirmed orders in place with their customers?
- Does your customer have a promotion on the way?
- Are they planning to launch a competitive product?
- Are they planning to drop our product completely?
- Did they feign happiness with the adult cat onesie last year?
But here’s another word of warning.
Because even with these two dimensions, you have to take the insights with a pinch of salt.
Why? Just ask your Sales team. Just ’cause a customer says they’re going to buy something, doesn’t mean they will.
And not all customers are created equally.
Be mindful enough to listen to everyone, but focus on the insights from the ‘important customers’ more.
Essentially… will Sharon from work best predict what the other half wants? Or the best mate who texts them daily?
And here’s where we come to…
Dimension 3: Taking advantage of market insight
“Will leather flares be in fashion in 2022? Is a flamethrower a wise choice if you live next to a forest?”
There’s lots of market ‘triggers’ that can help us to understand what future trends are on the horizon.
For supply chain decisions you can look at social trends, population shifts, even weather and climate data.
But we need to gather the data & then process it in a meaningful way.
To start with you need a vast amount of data to analyse. And it’s unlikely to be readily available waiting on a silver platter. So digging’s often required just to get a scope of the landscape.
Equally the nature & volume of data is often far too complex for any human to understand. And this is why data science, machine learning and AI are making such huge strides in the industry.
That can go a long way to helping you derive a story from your data.
Sadly, there’s a little way to go before they can read the inner workings of your other half’s mind.
But if you’re wondering whether a new hoover will please them immeasurably, I’ll tell you now.
Demand planning’s a team sport
There’s a common theme with all of my articles on supply chain excellence.
And it’s my top tip almost regardless of the topic…
Include your supply chain team in all areas of your business.
Let them mix and integrate with your sales, operations and finance teams. Let them catch up regularly. Make sure they talk, and talk candidly and openly.
Sure, good demand planning starts with the supply chain. But the best performing businesses understand that to properly predict the future, you need input from across the business & beyond.
And as for your partner’s Christmas present… if you’re hoping for guidance from me, I’d make sure there’s a duvet in the dog house this year.