For our inaugural blog post, we thought we’d kick things off with by sharing some thoughts about Flowcasting by Tom Friedman, president of the Retail Systems Alert Group. Tom has been a huge supporter of ours and for that we are deeply and sincerely thankful.

Here we go!

André, Mike & Jeff

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Foreword to Flowcasting the Retail Supply Chain

I like to call it the paradox of 'who knows best.'

It is the paradox that has plagued supply chain professionals forever. In the Extended Retail Industry, this has meant every member of the eco-system from retailer to manufacturer has created its own forecast with its own metrics for success. This has resulted in disjointed, incomplete and inaccurate planning, scheduling and execution across the Extended Retail Industry. It manifests in out-of-stocks particularly at store level, overstocking, higher expenses and disgruntled consumers.

For many years, Andre Martin, the Montreal-based consultant who wrote the seminal text Distribution Resource Planning, and two of his longtime colleagues – Mike Doherty and Jeff Harrop – believed they had a solution to this age-old paradox. They have created a new supply chain movement called Flowcasting that seeks to improve product flow, forecasting and resource utilization.

In reading Flowcasting the Retail Supply Chain, I learned how a single product forecast in each store should replace all forecasts throughout the rest of the ecosystem. I saw how a hyper-focus on the original forecasts at the SKU level will engender trust among members of the ecosystem. I gained an understanding how to improve inventory levels by cascading time-sensitive adjustments from systems in store to regional distribution centers to manufacturing plants. I discovered how Flowcasting improves promotional planning, product introductions, seasonal planning and operational/capacity planning. Last and certainly not least, I began to consider how this practice could reduce or eliminate cumbersome purchase order practices that constrain and often damage business relationships.

But these changes will not happen until the Extended Retail Industry reduces its dependencies on what Martin and his colleagues refer to as “a whole underworld of forecasts below the radar screen”. Somewhat cynical in their view of the today’s forecasting practices, they claim there is an elaborate underworld of independent forecasts that overlooks consumer demand in favor of internal organizational metrics, goals and objectives.

Unlike some other forecasting initiatives, Martin and his colleagues are offering a forecasting concept that seeks to offer equally weighted benefits to manufacturers.

"Over time, as more retailers adopt Flowcasting, the manufacturer will gradually convert from a manufacture to stock (MTS) strategy to a manufacture-to-order (MTO) strategy for most of its business, and reap all the economic and productivity benefits that derive from MTO approach. Gone will be the uncertainty of demand, associated safety stocks, and associated warehousing and operating costs as well as last minute and very costly production schedule changes …"

I strongly recommend reading this new book to improve your understanding of the paradox of current forecasting practices and eventually how Flowcasting will help you and your trading partners reap all the economic and productivity benefits in your extended supply chain.

Thomas H. Friedman
Founder and President
Retail Systems Alert Group
Newton, Massachusetts