Restructuring Supply Chains to Respond to Demand: IBF Webinar SummaryJune 30, 2020
Recently, we were pleased to join the Institute of Business Forecasting & Planning (IBF) for its panel on how leading companies are evolving their supply chains in response to COVID-19. Our president Mark Burstein joined our customer Carter’s, Citizen Watch America and Cardinal Health for the discussion, which can be found on demand here.
Managing Supply Chains in Response to COVID-19
Burstein kicked off the conversation by sharing what retailers are up against in the present environment as stores begin to reopen. For companies that are essential, demand is greater than supply. Their goal is to distribute material equitably to prevent hoarding.
However, for most retailers, supply is greater than demand. Their goal is to turn inventory into cash in the most profitable manner possible. How can you identify where there is demand and transfer or deploy from one store to another?
The panelists each shared first-hand accounts to how they have worked to answer that question.
Handling Excess Inventory
Glenn Pascrell, SVP, merchandise planning and market analytics, Citizen Watch America said they are expecting a two-year recovery from the pandemic. With inventory backed up in warehouses, the priority is to sell what the company already owns. For them, this is the most promotional season they’ve seen before because of the excess inventory they need to get rid of.
Steve Tribou, VP of sales forecasting and planning, Carter's agreed that there is a “sell what you have” mentality for most retailers. He discussed how Carter’s is working hard to stay close to customers to understand how they’re viewing the world and why that impacts the business.
Restructuring Supply Chains to Respond to Demand
Burstein posed the question, how can we help retailers restructure? At NGC, we believe that demand sensing and continuous planning can help retailers better manage evolving situations.
Burstein described how a digital supply chain that incorporates factory capacity and production lead time can quickly and precisely reallocate orders to alternate vendors as infection rate spikes at primary suppliers and factories, forcing limited production or shutdowns. Demand sensing, using multiple sources including a retailers’ POS (point-of-sale) data and COVID-19 infection rate data, can identify the optimal channels and stores to deploy inventory (regardless of current location) in order to maximize sell through and profit.
Responding to Popular Behavior
The good news is, Burstein said, conversion rates right now are through the roof. When customers are venturing out, they are doing so with a purpose; 30% of customers who come into a retail store make a purchase.
Lori Anter, MBA, director, demand planning, Cardinal Health said that for items that have been increasing in demand, they have developed a seasonality index in response. Burstein agreed that addressing supply chains based on demand was the right approach. In the future, sourcing decisions are going to take hours, not weeks.
Manual Doesn’t Work Anymore
The fact of the matter is, Tribou said, every day is different: we’re challenged in different ways and getting new information every day.
With the retail industry evolving at an increasingly rapid rate, Burstein remarked that it doesn’t matter how many people you have, manual systems don’t work anymore. To learn how you can respond to the constantly evolving situation, reach out. We’d be happy to talk about how we’re helping retailers better manage their supply chains.