Omnichannel Demand Management

The omnichannel retail marketplace is driven by discontinuous consumer demand across all channels and with this brings difficulties in managing the demand in an individual channel.  This affects the inventory demand management and as a result the inventory placement across channels because of the changes in demand across channels.  These demands require the retailer to modify their forecasts and inventory management to support this discontinuous change model across channels. The old adage in this model is true, ‘the only thing constant is change’  and retailers must implement methods to support this change model.  Just as with forecast planning, demand management must change in order to adjust to the changing demand of the omnichannel market.

The omnichannel market is only going to expand from consumer cross channel shopping and purchasing and this will only increase the pressure on demand management and forecasting.  Demand management procedures must change just as the forecasting side of the equation must change to review and replan in shorter cycles in order to adjust as necessary as a result of the discontinuous consumer demand by channels.  Omnichannel retailers must be prepared and plan to adjust and move inventory across locations based on consumer demand cycles across locations and channels.  The forecasting and demand changes are resulting in the need to reevaluate the inventory management practices in order to support the changes driven by the omnichannel marketplace.

These changes in consumer demand radiate throughout the marketplace to disrupt retail practices.  This cycle of discontinuous change will only continue and in fact speed up as consumers continue to mash new capabilities to meet their changing lifestyles.  These changing demands require that retailers implement procedures to increase collaboration and flexibility in order to be able to support the level and velocity of change.  This means dramatic changes to the retailers procedures and methods of demand management and sales tracking.  This requires that retailers flatten their demand management, forecast planning and sales delivery in order to meet these demands.  These requirements will drive cultural changes for retailers as well because it requires elimination of silos in their forecasting, demand and inventory management.

Consumers are flattening their shopping and purchasing to eliminate the silos between retail channels and retailers must follow suit in order to meet the consumer demands.  This means that omnichannel retailers must support purchasing practices that demand omnichannel delivery to the consumer from every channel.  This means that omnichannel retailers must support stringent delivery service levels to a consumer selected address across all channels.  Large omnichannel retailers must improve their delivery service level to meet the same service levels as Amazon in order to survive.  Wal Mart has recognized this and has been changing practices, procedures and even their culture to meet these changing demands.  Other large omnichannel retailers must follow in order to survive.

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

Collaborative Supply Chain

There are new and expanded demands in today’s retail supply chain to increase and improve the collaboration across all partners both internal and external.  Consumers are included in this increased and improved collaborative supply chain in a manner and depth that is creating new norm in the retail supply chain.  Most retailers have been interacting with consumers via a handful of tools, including product reviews and surveys covering shopping and purchasing experiences.  The more advanced retailers are engaging consumers directly in automated focus groups to collect opinions regarding product and lifestyle advertising.  While these are all productive and healthy steps in the right direction they must continue to expand collaboration with the consumers to engage in relationship shopping and sales to maintain their position in the marketplace.

As the collaborative relationship with customers grows and expands, the retailers will also need to expand their collaborative relationship with their other supply chain partners in order to react to the demands of the consumer.  As an example, expanding the relationship with customers will improve the demand forecasts and I expect this will then change the manner and cycle in which retailers purchase from their suppliers.  Then changes in the supply purchasing cycle will flow into changing requirements in transportation and shipping of products.  Shorter demand purchasing cycles that result from the refinement of demand planning will ripple across the extended supply chain and change the relationships and methods to support the demands.  

These changes can be a very positive thing and result in improved inventory management and placement along with a reduction in overstock inventory.  Improvements and the expansion of the consumer relationship and collaboration will allow retailers to gain insight into their customer demands at an earlier time in the cycle.  This will be especially supported by the increase in data available from the improved relationship along with the increase in eCommerce sales.  In the past retailers were basing their plans on the fashion developers’ tastes and new product development along with the actual sales of the products and similar products.  This was inaccurate and allowed for fluctuations in demand along with missed sales that were not realized.

eCommerce and online sites allow the retailer to capture all of this lost data for action because the provide the ability to capture the consumer shopping patterns when they are shopping on the site.  Retailers can determine the sequence of shopping and selection and these sequence patterns can then be turned into more accurate demand forecasts. So you can see how important it is for retailers to utilize every communication channel available across the supply chain to improve communications and collaboration.  All retailers now need to focus on relationship selling that is supported by the collaboration across all channels and partners.

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?

Multi-Channel Inventory Management

Inventory management in the multi-channel retail marketplace can be difficult due to the changing demand from different channels and different geographic locations.  It requires dramatic changes from retailers to their purchasing procedures to support the consumer demands for purchasing.  The consumer shopping demands are blending channels and the consumer lifestyle is fueling these changes that are also driving changes to the consumer purchasing patterns and methods.  All of these changes are then fueled by mobile technologies and improvements in wireless networks to support the consumer shopping and purchasing demands.  All of these changes in consumer practices then drive changes in retail requirements to support these consumer practices.

These changes in consumer practices require that retailers blend their capabilities across channels to support direct to consumer shipments from all channels.  This simplifies the inventory planning to some degree because it blends the total inventory demand forecasting into a combination of inventory demands from all retail channels. It makes it more difficult in the manner in which the inventory is then consumed and the forecast to determine the channel.  From a simplistic approach though, the inventory planning and resulting consumption in this new retail multi-channel marketplace should result in lower overstock inventories and increased sales.  

There seems to be a disconnect though between the current reaity what I describe as an expected inventory forecasting and changes to the inventory management that would result in improvements to inventory management outcomes.  We are seeing instead what appears to be no change in the levels of overstock inventory, especially in the large legacy retailers and in fact the overstock inventory seems to be increasing in the case of one retailer.  This is where big data analysis comes into the picture to help retailers understand the changes to the flow of inventory by channel and by region to allow them to improve the inventory management to meet the consumer demands.  

A considerable challenge for retailers to enacting these changes is presented from both the business process, including culture, revisions requirements and the cost of technology upgrades required to implement forecasting and inventory management improvements along with the business process changes.  Blending the support of purchasing across all channels requires that all channels efficiently execute the particular processes across channels.  Bottom line the retail store must have the ability to ship customer orders using similar processes as a distribution center configured to ship orders to the consumer.  These changes to forecasting and inventory management require significant change to business process in addition to technology.  This means that the retailer must increase efficiencies and capabilities to fill customer orders shipped from the local store, along with improvements in inventory movements between stores and regions to support these demands.

And now for the audience participation portion of the show…

ECommerce will have wide ranging impacts on both the retail and manufacturing sectors.  How can you focus these abilities to improve the consumer's experience?  Improving the consumer’s experience will require a re-evaluation of the sales channels, the manufacturing channels and practices and the supply chain channels and practices from the raw materials to the consumers’ homes.  In order to ensure and maintain success in this new reality you must harness the tools and capabilities in many new areas.  How can you support these continuously changing requirements?