Strong supplier-retailer relationships have always been part of the foundation of supply chain management. However, consumer preferences are rapidly changing, product life cycles keep getting shorter, and pandemic-related supply chain challenges continue. As all of retail works to ensure that products reach shopping carts despite these issues, the importance of solid relationships between retailers and suppliers has only grown.
As Andreas Persson, head of replenishment at ICA Sweden, noted, “Retailers and suppliers have one supply chain, and we succeed or fail together.” Through proactive, collaborative sharing of forecasts and other data, retailers and suppliers can align their business objectives, provide visibility into future needs, and streamline end-to-end processes.
While manual data sharing can work as a starting point, it is also time consuming, can’t be managed in real time, and can introduce human error. Instead, retailers need a way to automatically share critical data on a regular cadence at a level of granularity that meets their suppliers’ needs. Suppliers need the tools to use that data in their own planning as well as a way to actively respond frequently and to make suggestions or adjustments that retailers can address in near real-time.
How a Planning Portal Can Improve Forecast Sharing
A collaborative planning portal can automate data sharing, improve visibility, and facilitates discussion between both parties. When granted access to such a portal, stakeholders can import, review, and comment on forecasts, stock balances, order projections, availability, and other critical information. The result? Both parties gain insight into what they can expect in terms of supply and demand in the near (and far) future, allowing them to make appropriate adjustments when exceptions arise.
By establishing a consistent and reliable exchange of information in a mutually compatible format:
- Retailers can make more accurate decisions about merchandising, promotion, and procurement. This can lead to better availability (especially during promotions, range changes, and high seasons), lower inventory levels, and the ability to proactively adjust to supplier challenges as they arise.
- Suppliers can gain insight into retailer expectations and make more accurate decisions about inventory, production plans, and shipping, with particular insight into promotions and new products. They can also improve their ability to quickly react to changing demand situations (such as promotions or new product introductions), and they can reduce the manual work involved with customer-specific planning.
Additionally, a portal gives suppliers and retailers the opportunity to initiate conversations about capacity and availability with enough lead time to pivot or change plans, avoiding last-minute surprises that cause increased costs (overtime, expedited shipping, and so on), wasted time (and those associated costs), and general frustration for all.
Suppliers and Retailers Both Benefit from a Shared System
In a previous blog post, RELEX experts noted that suppliers “can’t afford the luxury of responding to consumer demand; they must anticipate it.” Because forecast sharing gives all parties access to the same data in advance, suppliers gain this essential early visibility into predicted demand upticks or downturns. This gives suppliers the ability to alter production to anticipate shifts in demand and/or suggest alternate options to best meet both retailer and customer requirements.
Forecast sharing can also uncover discrepancies in expectations. For example, a supplier’s data may indicate that a retailer is predicted to place an upcoming order for a fixed amount of inventory. However, the retailer’s forecasts may indicate an upcoming event that will call for ten times that inventory, such as during a promotion. When the parties actively share information in advance of the demand shift, there is time for all involved to compromise, if necessary, and to work together on a solution.
Trust and Communication Matter as Much as Technology
It’s no secret that relationships between suppliers and retailers have traditionally come with a fair amount of frustration on both sides. To smooth the way forward, suppliers and retailers need not only the technology to share data but also a regular cadence of discussions to agree to the best format and use of that data. Even when technology is working properly, the success of forecast sharing will always rely heavily on the human part of the equation through shared goals and open communication needs.
A planning portal can support this collaborative process. Ultimately, the success of forecast sharing depends on the trust built when both parties have a clear understanding of how their plans will impact one another. When retailers and suppliers combine advanced technology with open communication, they can work together to achieve the best outcome for the end customer.