Why combine supply chain and category planning?
Why Combine Supply Chain and Category Planning?
Providing the consumer with the right products is an ever-important success factor for the retailer, but the ways and means to succeed in this are constantly being transformed. If earlier it was enough to establish regular deliveries of products to stores, now this is catastrophically insufficient.
To improve the efficiency of retail and planning processes, consider market trends, consumer behaviors, collect data sets, perform calculations and research based on this data in order to make the right strategic business decisions. And with all this, do not forget about the mutual influence of different business processes. Interested in learning how supply chain and category planning combined can boost retail sales growth? Read about it in our article!
Comprehensive supply chain and category planning wins!
Many retailers continue to strictly separate the processes of sales forecasting and supply chain management and operate in separate management systems and programs. This approach leads to inefficiency and fuzzy communication. It is necessary to break stereotypes and integrate retail processes, and it should start with category planning and supply chain management.
Leading retail chains use internal company information, as well as knowledge of consumer trends and needs, to increase sales and improve the quality of service in each individual store and the entire retail chain as a whole.
Legacy forecasting models are not up-to-date because they are not designed to explore and understand contextual datasets. However, it is critical that the entire supply chain ecosystem be built around understanding true demand. In order to properly build retail business processes and accurately predict demand, it is necessary to integrate flexible merchandising, category planning and supply chain planning.
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3 Reasons to Combine Supply Chain and Product Category Planning
It is becoming more and more difficult to localize processes in conditions when the world economy, due to globalization, is becoming more and more like a single organism. What can we say about the business processes of the trading network. To grow successfully, a retailer must be able to respond quickly to changes in demand, respond to customer needs for specific products, and ensure in-store availability without overstocking.
How can a retailer strike a balance between sufficient shelf availability and in-store restocking? Only by integrating processes and taking into account their mutual influence.
Here are the benefits a retailer gains from a comprehensive approach to supply chain and product category planning:
- Real-time data reconciliation: If a new item is introduced during assortment optimization, it will immediately become available as part of the master data set in the supply chain. This approach reduces errors and eliminates out-of-stock situations.
- Optimal shelf replenishment: The system monitors inventory changes and takes into account physical shelf space constraints, ensuring that the order is highly accurate to match the store's actual product needs.
- "True" range, as a result of understanding the true demand: how to understand which products will be needed by customers, and which will remain unclaimed on the shelf? When planning categories, the analysis of lower-level data obtained using store scanners will become indispensable. Retailers do not have time to manually edit the assortment, and the automation system in a matter of seconds will make a sales forecast and block the addition to the assortment of the store of those goods that are not available for ordering in this store at the moment. In addition, if a product has low predicted demand and low loyalty rates, then a few repetitions in the assortment will not add value to it.
Combining planning by product category, planning and a warehouse automation as a link in the supply chain and all logistics, retailers receive: growth of at least 1% for each category, optimization of business processes and a reduction in the turnover period by a third.
To meet changing consumer demand, a retailer needs to be flexible in its assortment and align it with the supply chain.
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