Over the last 15 years or so, the rapidly declining cost of storing information has been a real godsend. This trend, coupled with the use of barcode checkout scanners have allowed retailers to build a treasure trove of daily consumer demand information for each and every product, right down to store level.

Some sophisticated retailers even keep a date stamped accounting of store level receipts and perpetual inventory balances for each stocking location as well. With this kind of data, it’s actually possible to reconstruct the history of every movement of product from the manufacturing plant to the customer’s hands.

However, the sheer volume of information makes it difficult to glean anything useful from it on an ongoing basis. Sure, you may occasionally run some regional analysis on a promotion or look at end-of-season stock levels for a group of stores, but you’re really only using a small fraction of the information that’s available.

When it comes to storing electronic information, the prevailing wisdom seems to be that “it’s better to have it and not need it than to need it and not have it”.

At the risk of stating the obvious, what would really be useful is the exact same level of information, updated every day, except with date stamps that are in the future, not the past. Having a rich history is wonderful, but you can't really use it to run your business - any more than you could drive your car by looking in the rear view mirror.

While it’s nice to know how many units of each item you’ve sold daily in each store over the last several months, wouldn’t you much rather know how much you will sell each day several months into the future? That sure would make it easy to figure out when you’ll need to replenish the shelves!

An historical record of inventory balances for every item at every stocking location is great information to have. But wouldn’t it be much more useful to know what your inventory will be three days from now? Or three weeks? Or three months? If you had this information far enough in advance, you could virtually eliminate seasonal carryover and overstocks!

Keeping all inventory movements for the last year can help you to figure out “what went where”. But what if you had a data warehouse that could tell you what’s going to move between any pair of nodes every day for a year into the future? You could do detailed capacity, transportation, manpower and cash flow planning by just converting to the appropriate unit of measure and adding up the numbers!

Imagine it - a data warehouse that tells the future at the same level of granularity as a traditional data warehouse – by product by day in units at any location.

But can such a thing even exist?

Believe it or not, by using the Flowcasting business process to make full use of what’s in your traditional data warehouse, it is possible to generate a daily simulation of POS sales, shipments, receipts and inventory balances at every location (stores, DCs and factories) in the supply chain – a full year into the future.

The results clearly show that retailers who use time-phased planning to unlock the full value of their data warehouses will have a significant competitive advantage over those who choose to wait.

Posted by Jeff Harrop at 03:55 PM | Permalink | Comments (0) | TrackBacks (0)

“Never look down to test the ground before taking your next step; only he who keeps his eye fixed on the far horizon will find the right road.”
- Dag Hammarskjold (1905-1961)

Much has been written in recent times about “visibility” in the supply chain, usually with the words “real time” in close proximity. While the phrase “real time visibility” has never been defined in a formal way, it seems to boil down to a very simple philosophy: “Whenever something has happened in the supply chain, tell everyone about it – FAST!”

So, on Tuesday, a retailer sells some quantity of Product X in each of its stores. That night, all of these POS transactions are collected, summarized and given to the manufacturer of Product X. On Wednesday morning, the manufacturer knows how many units of Product X was sold in each store the day before, and so on.

There’s just one small problem:

All of the units of Product X that were scanned at the cash register yesterday were placed on the store shelf 3 or 4 days ago...

...before they made it to the store shelf, they were received in the store’s back room...

...before they made it to the back room, they had to travel to the store on a truck...

...before they hit the road to the store, they were picked and loaded onto the truck at a distribution centre...

...before being picked at the DC, they had to be received and put into storage...

...before being received at the DC, they were in a truck or railcar from the manufacturer...

...before they left the manufacturer, they needed to be manufactured or assembled and staged for shipment...

...before being manufactured, raw materials and/or components needed to be sourced, perhaps from overseas.

When you add up the time required for all of the activities that are necessary to get the product to the shelf, the “real time” information starts to look quite dated. In essence, what the retailer is actually doing is providing a status update on products that the supplier already planned, produced and shipped several weeks or months ago.

Shaving an hour or two off the time it takes to share transactional data will certainly not do much to alleviate constraints imposed by the laws of time and distance.

So are we saying that sharing real time information in the supply chain is a waste of time? Of course not. Sharing information about the very recent past is a good and necessary thing, but it’s not good enough. Trading partners need to be sharing information about the future.

Knowing how much money you currently have in your bank and investment accounts is a necessary input for any kind of retirement planning – but in and of itself it’s not a retirement plan. You still need to project future deposits and withdrawals and make assumptions about rates of return. Then continually update and revise as time passes and conditions change.

Flowing product in the retail supply chain is no different. Real time transaction information is the base on which a supply chain plan can be built, but you still need to continually project and model the forces of demand and supply in a time-phased way to make this real time data worthwhile.

Planning problems cannot be solved with faster execution. Only by keeping our eyes ”fixed on the far horizon” will we finally be able to make a major impact on retail out-of-stocks and supply chain inventory investment.

The Flowcasting movement is about turning supply chain visibility into supply chain clairvoyance.

Posted by Jeff Harrop at 12:12 PM | Permalink | Comments (0) | TrackBacks (0)

Look at this time chart. Any idea what it is?

Source: http://en.wikipedia.org/wiki/High_jump

Periods of steady growth, separated by periods of very rapid incline in the 1960s, then again in the late 1970s. Give up?

The chart depicts the men's world record for high jump from the early 1900s to present day (in meters). So what explains the steep slope changes? Steroids? Nope.

Before 1956 or so, virtually every high jumper used the Western Roll or Scissor Kick techniques for getting over the bar. Then a new technique called the Straddle was invented that proved far superior (the graph doesn't lie).

Fast forward to 1968 and an obscure American high jumper named Dick Fosbury - inventor of the Fosbury Back Flop. Another steep rise in the graph.

The point is, you can opt for marginal improvements by "doing the same thing only better" or you can reach for the brass ring by finding a whole new way.

Know this: Not a single world-class high jumper uses the Western Roll, Scissor Kick or Straddle techniques anymore.

Posted by Mike Doherty at 01:28 PM | Permalink | Comments (0) | TrackBacks (0)