SCM Technology

The snow is finally gone from my backyard and the squirrel chasing season has begun for my dog. Throughout the spring and summer my dog will hunt down squirrels every time he is let out the back door. Squirrels consistently scurry up the nearest tree and leave him standing below barking.

This was the visual I had when I realized that food and beverage manufacturers and retailers may be barking up the wrong tree when it comes to getting real demand information.

I have engaged in discussions with many consumer products and food and beverage companies who view retailer point of sale data as the holy grail of demand planning. The argument seems to be that if retailers could provide accurate timely point of sale information, demand planning would be easy. In the same breath these manufacturers go on to explain the data cleansing challenges associated with making point of sale data meaningful.

I propose an alternative solution that can be used by many food and beverage companies who utilize direct store delivery. Most direct to store distribution processes have field sales people, merchandisers, and delivery drivers visit retailers on a daily basis. For sales people, the process often involves taking a physical inventory at the store shelf and back room to calculate an order size (often called “build up” quantity) using mobile computers connected wirelessly to route accounting systems (RAS). In most cases this inventory level will be a more accurate indicator of actual sell-through at a retail location than the point of sale data. At a minimum this inventory level provdes another data point that can be used along with point of sale data and sell-to data to provide an accurate view of sell-through by product.

I suggest that manufacturers with direct store delivery capabilities leverage their existing business process and systems infrastructure to gain visibility to true demand patterns at the retail location.