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December 1, 2023

Demand Volatility and Channel Complexity

Brady Coady, Vice President of Merchandise Planning at FGL Sports Ltd, shares how retail organizations can address the challenges of demand volatility and channel complexity.

Emphasize Forecast Accuracy

Forecasting is at the heart of everything merchandise planning and inventory management related. Supply chain leaders need to be able to forecast their inventory accurately, including how much inventory they will have to house and ship. This makes investments in big data and predictive modeling algorithms essential for retailers. By leveraging non-traditional data like web data and consumer demographic data, retailers can create more complex algorithms to predict consumer demand and shipment demand.

Brady Coady emphasizes the importance of forecast accuracy and the ability to create a forecast and implement it across the business. That accuracy cascades into labor planning, supply chain, labor handling, planning, bin location planning, and warehouse operations. Supply chain leaders must leverage technology to create accurate forecasts and then implement them across the business.

"All this big data allows the leveraging of more complex algorithms, AI, machine learning-based ones that help us pinpoint and get more accurate in our forecasting. So first and foremost, forecast accuracy and the ability to create that forecast and implemented across the business."

Brady Coady -
Vice President of Merchandise Planning at FGL Sports Ltd

Agility Through Automation

Alongside forecast accuracy, supply chain leaders must leverage automation to react and be agile when demand volatility strikes. While forecasting accuracy is the preferred path, volatility and unpredictability will always be present in the forecasting world. Supply chain leaders must leverage automation and technological solutions to move quickly and shift strategies when the forecast is wrong, or there's a heavy amount of volatility.

Brady Coady explains that automation and technological solutions must be able to shift strategies quickly and efficiently when demand volatility strikes. Supply chain leaders must implement these technologies to overcome any volatility and create the best possible outcome at the lowest possible cost.

"If you can leverage automation and technological solutions to move quickly to shift strategies, that's going to help you overcome any of that volatility and create the best possible outcome at the lowest possible cost."

Planning for an Omni-Channel World

The rise of omni-channel retail has created new challenges for supply chain leaders. Retailers must create a seamless experience across all channels, including brick and mortar, ecommerce, curbside pickup, and buy online pick up in-store. Supply chain leaders must have a clear understanding of how to manage this complexity to reduce split shipments and associated costs.

Brady Coady highlights the importance of visibility when operating in a large geographic space. Supply chain leaders must decide what products they will show their customers online versus what they will make only available in-store. This decision can drive up split shipments, which can be costly. Supply chain leaders must use technology to optimize orders and routing for a seamless customer experience.

"The order optimization order routing could not be more critical. All those things really, really matter, and being able to actually use technology to compete contrast and create the ultimate cost to fulfil that gets you the quickest shipment to a customer because customers expect it very quickly."

The Importance of Digital Transformation

Digital transformation is no longer a luxury for supply chain leaders; it is a necessity. Investments in ERP systems, forecasting, and automation are essential for supply chain leaders to remain competitive in the market. If supply chain leaders do not transform digitally, they cannot leverage the amazing capabilities created in other areas of the business.

Brady Coady emphasizes that digital transformation must start with the customer. Supply chain leaders must place the customer at the top of their minds and understand that everything they do is in service of making the customer experience better. Supply chain leaders must also create a roadmap and work towards it incrementally. Implementing digital transformation in smaller pieces can be less disruptive than a wholesale, rip-the-band-aid-off approach. Finally, supply chain leaders must remember that people are at the heart of everything. Digital transformation is meant to leverage human capital better, creating more automation and tasking more efficiently and smarter ways of working.

"If you don't transform digitally as a supply chain network or as a leader, how can you consume all of this amazing capability that's created in other areas of the business?"

The Takeaways

  • 1.

    Forecast accuracy is at the heart of everything merchandise planning and inventory management related. Supply chain leaders must leverage big data and predictive modeling algorithms to create accurate forecasts that can be implemented across the business.

  • 2.

    Agility through automation is essential for supply chain leaders to react and be agile when demand volatility strikes. Supply chain leaders must leverage automation and technological solutions to move quickly and shift strategies when the forecast is wrong, or there's a heavy amount of volatility.

  • 3.

    Planning for an omni-channel world requires visibility and order optimization. Supply chain leaders must use technology to optimize orders and routing for a seamless customer experience.

  • 4.

    Digital transformation is no longer a luxury for supply chain leaders; it is a necessity. Supply chain leaders must place the customer at the top of their minds and understand that everything they do is in service of making the customer experience better.

  • 5.

    Supply chain leaders must create a roadmap and work towards it incrementally. Implementing digital transformation in smaller pieces can be less disruptive than a wholesale, rip-the-band-aid-off approach.

  • 6.

    Supply chain leaders must also remember that people are at the heart of everything. Digital transformation is meant to leverage human capital better, creating more automation and tasking more efficiently and smarter ways of working.

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Why retailers need to digitally transform their inventory management

Ensuring the right inventory arrives at the right stores at the right time is a constant struggle. Our white paper shows how to make the process seamless. A collaboration between o9 and IBM.

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