New Year, New Forecasting and Planning Opportunities for Retailers

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Planning Opportunities

With the start of the new year, manufacturers and retailers should look into using supply chain technology to drive a competitive edge. Baskin-Robbins, the world’s largest ice cream chain, has done just that with the implementation of Vanguard IBP, a business forecasting and planning platform that combines advanced analytics with forecast automation and an intuitive, easy to use interface. Using Vanguard IBP, Baskin-Robbins plans to:

  • Increase forecast accuracy.
  • Minimize ingredient and finished-goods losses.
  • Improve supply-chain operations and financial performance.

The company also expects to increase customer service levels without increasing supplier inventory levels, which will provide additional financial returns during a period of rapid operations and revenue growth.

Retail Forecasting Battle

Leading retailers often miss their forecasts, stores close due to poor sales and performance (see Macy’s and Sears recent news), and stock prices fall due to missing the numbers. These issues demonstrate how complex retail forecasting can be. If we take a step back, poor forecasting affects not only the retailer, but also its suppliers. Inaccurate demand planning by a retailer leads to massive supplier frustration. Following are some quotes by suppliers who took part in a research paper completed by KANE in an effort to identify the main barriers to retailer-supplier collaboration:

  1. Inaccurate retail forecasts:
    • “Retail projections, for the most part, are not reliable, which makes it very hard to try to get ahead and build up stock. You end up getting burned. There’s not much discussion when they stop ordering and we’re stuck with the inventory.”
    • “We see poor demand forecasts and then unrealistic expectations on delivery once orders are placed.”
    • “By giving suppliers access to actual demand and consumption data down to the store level, we could eliminate or reduce the inventory stockpiles across the supply chain.”
  2.  Inadequate lead time in retail forecasting:
    • “We need to know their inventory levels and demand with enough lead time for our production.”
    • “Retailers should plan and make decisions as far in advance as possible.”
    • “Better planning, especially looking ahead in daily/weekly orders, can enable cost-saving shipment consolidation, which is not happening today.”
  3. Poor communication:
    • “We need to communicate more and be honest with each other – more transparency.”
    • “Let’s work it out together. Educate both sides of the table with no finger pointing or defensiveness.

Vanguard IBP

Vanguard Integrated Business Planning (IBP) assists in addressing these issues by maximizing efficiency and improving forecasting accuracy. Retailers provide their budgets and end targets, allowing insight and collaboration on how to prepare the sales forecast. The impact of the implementation of the sales forecast on downstream demand and supply plans are observed and recorded, providing direction toward further collaboration and future process.

Vanguard IBP assists retailers in ensuring that products are available to meet customer demand throughout the year. This enables (and requires) improved collaboration with suppliers of the retailer, which improves communication issues mentioned earlier. Vanguard IBP supports an iterative process and approach to forecasting. Based on best practices, having a highly collaborative and iterative process yields improved performance. Vanguard IBP helps to ensure an efficient supply chain, and provide an understanding of how sales forecasts contribute to the company’s financial projections.

While no technology is a silver bullet, Vanguard IBP combines the market’s most accurate forecasting analytics with best-of-breed S&OP processes. It also enables dynamic collaboration both internally among stakeholders, as well as externally among suppliers and partners. At Vanguard, we take great pride in a customer renewal rate near 100%, as we are dedicated to our customers’ success and to maximizing the value of their investment in Vanguard.