Retailers now provide a wealth of sales and inventory data via web-based portals to let suppliers see exactly how and where their products are selling. But come Christmas, a new product launch or even an unexpected bout of sunshine, the best laid plans can still go down the plughole. Recriminations, and in some cases financial penalties imposed by retailers for failure to meet orders, are flowing as thick and fast as ever. As one short shelf life supplier laments, "you can have a good two or three months and then have to write off £50,000 worth of stock."
Fines for shorting the multiples can run into thousands of pounds, according to one supplier, and "they charge by the case, at the retail, not the cost price".
Little room for manoeuvre
If you get Christmas wrong, and it seems to be coming later every year, "service levels can go to hell in a handbag" admits another.
As Northern Foods boss Jo Stewart found to his cost last Christmas, maintaining exemplary service levels in the face of an unexpectedly late surge in demand, coupled with internal restructuring problems, cost the company a "bucket of money". Although the festive trading period is planned with almost military precision, he says, "sometimes you disappoint against a forecast, sometimes you murder it".
For suppliers working on an order today, despatch today basis, there is very little room for manoeuvre if an order comes in far higher than forecast, says one supplier. "Extranet systems like TIE and SID are very useful, but they are not really suited to very short shelf life, with the exception of Retail Link [Asda's private exchange, which now features a new perishable goods replenishment system for short shelf life products]. They are just not responsive enough."
Attitudes and practices vary, but some buyers still take the "all I want you to do is supply what I order," approach, says one commercial director. "That's all very well. But it would be nice if their forecasts  which they never confirm  bore some resemblance to their orders. It's not unknown for a retailer to put in a forecast based on a promotion it wants to run on your product and we've come back and said, The capacity of our factory doesn't meet your forecast.' And the attitude has been, Well that's your problem'."
Despite the reams of data available to suppliers on SID Â Sainsbury Information Direct, SSIS Â Safeway Supplier Information Systems, TIE Â Tesco Information Exchange, and Asda's Retail Link, these sites are only just beginning to warrant the title, exchange', as opposed to repositories of data presented to suppliers with a good luck note attached.
Asda deputy trading director Dave Cheesewright says the traditional way of managing store and depot replenishment separately creates a curious phenomenon, whereby depot orders to suppliers go up and down like a yo yo, while EPoS sales, which generate store orders, are relatively smooth. By plugging depots into Wal-Mart's store replenishment platform, a major IT project due for completion this year, replenishment should become more demand-led and suppliers will not have to cope with such volatility.
A second major project has been building in collaborative planning, forecasting and replenishment  a fancy name for sharing data to produce joint forecasts  into Retail Link, Wal-Mart's private exchange. This has been on trial with eight suppliers for about six months, and basically means Asda and its suppliers are singing from the same hymnsheet. "All replenishment is based on an algorithm of assumptions," observes Cheesewright. The problem has been that suppliers' and retailers' forecasts are based on two different sets of assumptions. Most other retailers will give suppliers information to write a forecast for them, he says. "My point is, you lose ownership when you do that, and you outsource expertise."
A single, agreed forecast also eliminates the inevitable mudslinging that follows a cock up. "Previously, you had endless discussions along the lines of, you said 10,000 cases, no, you said 12,000 cases. It's an inefficient way of doing business."
Sainsbury's collaborative promotional planning tool, cps, which requires both sides to agree to a forecast, specifically addresses clause 18 of the code of practice, that "a supermarket shall ensure the basis on which it prepares any forecast is transparent", says supplier relations manager David Hatch.
Cynics observe that clause 12, in which supermarkets agreed to compensate suppliers for any product overordered at the promotional price and subsequently sold at a standard price, is less rigidly adhered to.
As both parties are obliged under the cps system to state the purposes of any promotion  and you'd be surprised how often they differ, says Hatch  it also brings greater transparency to the whole process.
Safeway is also embarking on a big upgrade of its extranet SSIS to make it a true exchange, says supply chain operations director Mark Aylwin. "We could see SSIS as a platform for collaboratively managed inventory in a controlled environment."
Suppliers neglect the front end
While he is all too aware of how costly waste is to both sides, Aylwin claims there are "still too many manufacturers focusing solely on the logistics of manufacturing and delivery to depots, rather than what's happening at the front end".
Somerfield is only just starting to develop a private exchange on the net, but does now share EPoS data, depot stock levels and forecasts with key suppliers.
However, what doesn't help matters, is that TIE, SID, SSIS and co all cut their data in a slightly different way, with some offering store specific data, others focusing on depot stock and national sales, and some working by unit, others by case, and so on. If you want to aggregate all this data to plan your production schedules more effectively, you need whizzy tools that can compare the data in a meaningful way.
Despite some discussion on this in the late 1990s, there is little impetus for standardising data on private exchanges now, especially as more collaborative functions are built in and they are clearly seen as tools conferring a competitive advantage.
If we are still some way off the ECR vision of a joined up supply chain with seamless data flow and an end to the adversarial relationships of the past, there is no doubt that people still believe in that vision.
There is no room for complacency when it comes for forecasting customer orders, says Britvic business unit controller Murray Harris, "but we're less and less likely to be caught out".
{{ANALYSIS }}
Fines for shorting the multiples can run into thousands of pounds, according to one supplier, and "they charge by the case, at the retail, not the cost price".
Little room for manoeuvre
If you get Christmas wrong, and it seems to be coming later every year, "service levels can go to hell in a handbag" admits another.
As Northern Foods boss Jo Stewart found to his cost last Christmas, maintaining exemplary service levels in the face of an unexpectedly late surge in demand, coupled with internal restructuring problems, cost the company a "bucket of money". Although the festive trading period is planned with almost military precision, he says, "sometimes you disappoint against a forecast, sometimes you murder it".
For suppliers working on an order today, despatch today basis, there is very little room for manoeuvre if an order comes in far higher than forecast, says one supplier. "Extranet systems like TIE and SID are very useful, but they are not really suited to very short shelf life, with the exception of Retail Link [Asda's private exchange, which now features a new perishable goods replenishment system for short shelf life products]. They are just not responsive enough."
Attitudes and practices vary, but some buyers still take the "all I want you to do is supply what I order," approach, says one commercial director. "That's all very well. But it would be nice if their forecasts  which they never confirm  bore some resemblance to their orders. It's not unknown for a retailer to put in a forecast based on a promotion it wants to run on your product and we've come back and said, The capacity of our factory doesn't meet your forecast.' And the attitude has been, Well that's your problem'."
Despite the reams of data available to suppliers on SID Â Sainsbury Information Direct, SSIS Â Safeway Supplier Information Systems, TIE Â Tesco Information Exchange, and Asda's Retail Link, these sites are only just beginning to warrant the title, exchange', as opposed to repositories of data presented to suppliers with a good luck note attached.
Asda deputy trading director Dave Cheesewright says the traditional way of managing store and depot replenishment separately creates a curious phenomenon, whereby depot orders to suppliers go up and down like a yo yo, while EPoS sales, which generate store orders, are relatively smooth. By plugging depots into Wal-Mart's store replenishment platform, a major IT project due for completion this year, replenishment should become more demand-led and suppliers will not have to cope with such volatility.
A second major project has been building in collaborative planning, forecasting and replenishment  a fancy name for sharing data to produce joint forecasts  into Retail Link, Wal-Mart's private exchange. This has been on trial with eight suppliers for about six months, and basically means Asda and its suppliers are singing from the same hymnsheet. "All replenishment is based on an algorithm of assumptions," observes Cheesewright. The problem has been that suppliers' and retailers' forecasts are based on two different sets of assumptions. Most other retailers will give suppliers information to write a forecast for them, he says. "My point is, you lose ownership when you do that, and you outsource expertise."
A single, agreed forecast also eliminates the inevitable mudslinging that follows a cock up. "Previously, you had endless discussions along the lines of, you said 10,000 cases, no, you said 12,000 cases. It's an inefficient way of doing business."
Sainsbury's collaborative promotional planning tool, cps, which requires both sides to agree to a forecast, specifically addresses clause 18 of the code of practice, that "a supermarket shall ensure the basis on which it prepares any forecast is transparent", says supplier relations manager David Hatch.
Cynics observe that clause 12, in which supermarkets agreed to compensate suppliers for any product overordered at the promotional price and subsequently sold at a standard price, is less rigidly adhered to.
As both parties are obliged under the cps system to state the purposes of any promotion  and you'd be surprised how often they differ, says Hatch  it also brings greater transparency to the whole process.
Safeway is also embarking on a big upgrade of its extranet SSIS to make it a true exchange, says supply chain operations director Mark Aylwin. "We could see SSIS as a platform for collaboratively managed inventory in a controlled environment."
Suppliers neglect the front end
While he is all too aware of how costly waste is to both sides, Aylwin claims there are "still too many manufacturers focusing solely on the logistics of manufacturing and delivery to depots, rather than what's happening at the front end".
Somerfield is only just starting to develop a private exchange on the net, but does now share EPoS data, depot stock levels and forecasts with key suppliers.
However, what doesn't help matters, is that TIE, SID, SSIS and co all cut their data in a slightly different way, with some offering store specific data, others focusing on depot stock and national sales, and some working by unit, others by case, and so on. If you want to aggregate all this data to plan your production schedules more effectively, you need whizzy tools that can compare the data in a meaningful way.
Despite some discussion on this in the late 1990s, there is little impetus for standardising data on private exchanges now, especially as more collaborative functions are built in and they are clearly seen as tools conferring a competitive advantage.
If we are still some way off the ECR vision of a joined up supply chain with seamless data flow and an end to the adversarial relationships of the past, there is no doubt that people still believe in that vision.
There is no room for complacency when it comes for forecasting customer orders, says Britvic business unit controller Murray Harris, "but we're less and less likely to be caught out".
{{ANALYSIS }}
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