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I wanted to summarize French consultant Bill Belt's unique perspective on Flowcasting, but he did it best in the November 2006 issue of his Bill Belt Excellence newsletter. Thanks Bill!
One of our blog readers sent us a question recently we thought might interest you:
Q. “Have you guys done this stuff in any actual company with proven results?”
A. Yes, we have implemented components of this process in a few retail organizations and the results have been excellent. In an on-going implementation for a hard goods retailer in the U.S., retail out of stocks have been reduced by 50% across all the stores that are live. For a Canadian retailer who provided Flowcasting plans to their suppliers, service levels improved from 85% to 93%, while distribution centre inventory turns doubled from 5 to 10.
A recent Business Week article outlines that Amazon.com is offering a service to retailers and etailers that we proposed in our Flowcasting book. Here’s a snippet:
“Not least, Amazon is now opening its vast network of more than 20 distribution centers worldwide to all comers. For years it has handled distribution and even Web site operations for the likes of Target Stores Corp. (TGT ) and Borders Group (BGP ). Recently it has started providing customized handling, packing, and customer service people for upscale retailers and manufacturers such as fashion boutique Bebe. And with Fulfillment By Amazon, it's opening all that up to small and midsize businesses.”
This is similar to what we suggested in Flowcasting, chapter 10, pg 212…
“Suppose that a number of etailers decided to combine forces and adopt the collaborative model depicted above. Say they decide to open a fulfillment center that stocks the combined offerings from all the etailers in the collaborative group. The distribution costs for all the etailers would be immediately reduced, since the group would share fixed facility costs such as utilities, rent and depreciation. The etailers would use the Flowcasting process to provide demand projections for their manufacturing partners, thereby lowering inventory costs. And by using the methods outlined earlier in this chapter, the etailers would lower transportation costs to the fulfillment center as well.
The combined leverage on product volumes would also help in reducing outbound transportation costs. And given the increased volumes, the etailers would also have greater leverage in negotiating freight rates and agreements with the carriers that fit their model. The benefits of a collaborative distribution model could make etailing more profitable in the future.”
Maybe Amazon will go one step further, adopt the Flowcasting approach for planning, and offer this service as well. We hope so.