Inventory has seen off many retailers, which is hardly surprising given that “we are not good at inventory control,” claims Zen Yaworksky, director of the Upminster-based Supply Chain Academy. It seems that 20% of businesses have no sales and operational planning recognisable processes in place and only 10% of them have excellent S&OP. Perhaps one reason for that is that estimated demand for supply chain professionals exceeds supply by six to one. Hopefully that chasm may be narrowed by the Supply Chain Academy’s launching this year, with Plymouth University, of a unique degree for the supply chain profession.

chazThe supply chain is all about inventory, claim the pundits, in which case the advice coming out of a morning’s seminar on February 5 at the Supply Chain Academy, hosted by the Logistics Leaders Network, is “forecast more often, forecast quicker.” This makes sense because a good demand/stock forecasting programme, especially one that reacts in real time to changes in daily weather forecasts, can typically shave one third off inventories without harming customer service levels. That can make a huge difference to stock holding costs when millions of pounds are tied up in stock, and can repay the cost of forecasting software within two weeks.

Forecasting, however, can be a tricky business and when it fails, the results can be disastrous. One way to mitigate that risk is to use the power of WMS and other IT to hasten the flow of information and it need not involve much forecasting. The best ‘forecast’ of all, for example, is based on reality, not assumption, that lets the customers do the work. ‘Forecasts’ are at their best when they are based on actual sales information which is then relayed daily to a national distribution centre for replacing the sold items within 24 hours. Just such a model was used by the no-frills, deep food discounter, Netto, in Denmark over 20 years ago. Just one NDC was epos-connected to 120 shops throughout the country and at the end of each day the sales information from each store was relayed to the NDC to trigger the order processing and delivery before shop opening time the next day. The result was that 90% of all stock held at the NDC passed through it every 24 hours. Any slow movers would soon be dropped. Of course, while this approach would ensure shops never ran out it would not protect the NDC from stock-outs and that is why good forecasting that reacts quickly to factors that can change demand, like weather changes, is so important for food and even clothing retailers. A heat wave can send demand for soft drinks and beers soaring four-fold in a few days, and if not anticipated adequately would leave pubs with no beer, surely a most sorrowful site.

To return to the Netto example, having information flowing fast into a warehouse may not be of much use if IT is not harnessed to materials handling equipment of the most appropriate kind. In Netto’s case, high speed sortation conveyors handling thousands of items an hour were critical at ensuring all loads were ready for despatch early next morning. Also becoming more essential by the day, especially for e-fulfilment centres, are fast, accurate order picking methods, be it goods-to-picker hardware or voice-activated picking.

This speed to market importance cannot be over emphasised. As the world’s largest clothing retailer, Zara believes it is not the price of the goods that is key but the time to market. Part of that approach should not overlook the importance of having a decent WMS that supports sophisticated load assembly tasks for optimum vehicle loading and slick route planning and scheduling applications.

Information technology in the supply chain proves that even relative minnows in any industry can be empowered to take on the giants at an affordable price. Over 20 years ago when this writer saw the Netto business model in action it was clear that if the model transferred to Britain it would give the retail giants nightmares. Today, Netto has been joined by Aldi and Liddle in Britain and collectively are seizing market share from the leaders.

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