![]() ![]() Not all firms are wild about sharing every piece of information they can with their supply chains partners. Because different companies often use different information technology systems and software, Web-based tools like Retail Link are becoming a popular way for supply chain partners to interface with one another. Retailers can log into Retail Link to see how well their products are selling at various Walmart stores, how soon more products need to be shipped to the company and where, how any promotions being run are affecting the profitability of their products, and so forth. Walmart has developed a Web-based CPFR system called Retail Link. Collaborative planning, forecasting, and replenishment (CPFR) is a practice whereby supply chain partners share information and coordinate their operations. Sales and marketing personnel know what promotions are being planned because they work more closely with customers and know what customers’ needs are and if those needs are changing.įirms also look to their supply chain partners to help with their demand planning. ![]() In addition to looking at the sales histories of their firms, supply chain managers also consult with marketing managers and sales executives when they are generating demand forecasts. JR P – Chickens at Chatsworth, Kerbyshire – CC BY-NC 2.0. Others were given “rain checks” (certificates) they could use to get free grilled chicken later (Weisenthal, 2009). Just twenty-four hours after the coupons were uploaded to the Web site, KFC risked running out of chicken. As part of the promotion, KFC gave away coupons for free grilled chicken via. Consider what happened to KFC when it first came out with its new grilled chicken product. The promotions you run will also affect demand for your products. Do you remember when peanut butter was recalled in 2009 because of contamination? If your firm were part of the supply chain for peanut butter products, you would have needed to quickly change your forecasts. So if you had based your production, sales, and marketing forecasts on 2007 data alone, chances are your forecasts would have been wildly wrong. Why? Because changes in many factors-the availability of materials to produce a product and their prices, global competition, oil prices (which affect shipping costs), the economy, and even the weather-can change the picture.įor example, when the economy hit the skids in 2008, the demand for many products fell. One way for you to predict the demand for your product is to look at your company’s past sales. Forecasting decisions must be made more frequently-sometimes daily. ![]() Sourcing decisions-deciding which suppliers to use-are generally made periodically. Lead times also have to be taken into account when a company is forecasting demand. A product’s lead time is the amount of time it takes for a customer to receive a good or service once it’s been ordered. Closely related to demand forecasting are lead times. ![]() For example, if demand is heavy, you might need your staff members to work overtime. It will also affect your production scheduling, or the management of the resources, events, and processes need to create an offering. If you’re a producer of a product, this will affect not only the amount of goods and services you have to produce but also the materials you must purchase to make them. Demand planning is the process of estimating how much of a good or service customers will buy from you. Esteban Maringolo – IBM Thinkpad Logo close up – CC BY 2.0.Īs you can probably tell, the best marketing decisions and supplier selections aren’t enough if your company’s demand forecasts are wrong. ![]()
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