Lauren Parnell Marino/Fickr

Is a shelf-connected supply chain possible with traditional ERP?

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Lauren Parnell Marino/Fickr

The great management theorist W. Edwards Deming was once quoted as saying, “Without data you’re just another person with an opinion”. Over the past few years, the amount of available Point of Sale (POS) data has grown dramatically, increasing the urgency for all companies who sell through retail channels to leverage such data to drive decisions in their upstream supply networks. Access to retail data, down to the item, store, day, and shift level is powering a new level of decision-making which will completely transform business processes in areas such as demand, replenishment, promotion, and new product planning.

Yet limitations in ERP computing platforms, both from a scale and cost perspective, have precluded many retail-driven channels from taking full advantage of the potential benefits of this huge amount of data.  This is often coupled with the inability to reengineer related processes and decision-making across their supply networks.

A new technology approach, the multi-party supply network platform, provides a highly scalable solution to the shelf-connected problem. These cloud platforms have been engineered from a detailed data representation on up to provide massively scalable performance and enable business processes that would otherwise not have been feasible.

Using my company as an example, cloud-based platform solutions have been deployed across many retail driven supply networks including CPG, Electronics, Automotive, and Pharmaceutical. Many of  our customers have been doing store and daily-level planning for some time now, managing the massive increases in data involved (a 7-fold increase going from weekly to daily, and perhaps 100-fold going from DC to store-level) by leveraging our platform.

Simply put, providing massively scalable cloud based architecture is necessary given the large number of stock-keeping units (SKUs) in play across the multiple stocking locations within the supply network. As retail products are launched and new promotions rolled out, significant volumes of downstream data are produced. To gain insight into consumer demand (i.e. popular items versus slow moving ones) CPG companies need to have the ability to quickly analyze and react to point of sale (POS) data. Knowing that a shortage of inventory is the key reason for new product launch failures, it is crucial to ensure that retailers have the right mix, volumes, and locations of inventories to meet customer demand.

Today most CPG companies lack the ability to generate either order or inventory visibility across their supply network. They also lack the ability to quickly respond to fluctuating consumer demands, frequently resulting in sales promotions that run out of stock which in turn leads to lost business and customers. They absorb increasing numbers of product launch failures, struggle with higher inventory costs, and are saddled with ROI’s on trade promotions that can often turn negative.

In future posts I”ll explore how a shelf-connected supply chain requires a new approach to forecasting, replenishment, collaboration, and S&OP. If you’re impatient, I suggest you download the new white paper: Is your supply network really shelf-connected?