Forecasting Key Customer Demand with CCIO
- 16 March 2020
- By Manhattan Staff
Twenty years ago, if a trailblasing consumer went on her favorite retail website and ordered a sweater, she paid using a credit card (with much trepidation), and three weeks later the item arrived at her door. It was truly a miracle of technology, and it was simple. That was online shopping in its infancy.
Today, it’s a customer-centric world, and retailers have embraced omni-optimisation technology to capitalise on new opportunities. They have websites that offer easy online shopping and a range of fulfilment options for shoppers to choose from. For wholesalers, however, connected commerce coupled with the proliferation of promotional events has had different effects. To satisfy wide variances in demand and next day – or even same day – fulfilment for your customer’s customer, it’s essential to have sophisticated technology and a modern inventory management strategy. It’s the only way to manage the demand variability and profitably optimise assets around customer replenishment.
Chaos on the Wholesale Side
The growth of omnichannel has wreaked havoc on demand and replenishment in wholesale. The unpredictable ebbs and flows have made it challenging to deliver high service levels and high order fill rates and maintain optimal inventory levels. An inventory analyst will notice a sudden change in demand and be faced with unanswerable questions. Was it because of a one-off demand from a customer? Has the customer consistently been ordering more? Was a new customer added? Is an existing customer running a promotion? Will the trend continue?
Without easy access to key customer and SKU information, it’s difficult to plan accurately going forward. That’s why Manhattan Associates developed Customer-Centric Inventory Optimisation (CCIO) – a new demand forecasting and replenishment capability for a new reality in wholesale.
So what is CCIO? It’s a solution that gives a wholesaler the ability to analyze individual customers – especially its largest customers – and understand their specific business behaviors and demand patterns. In layman’s terms, CCIO is about being more precise in planning your inventory by understanding what your customers are doing. It allows you to identify key customers, isolate critical information and then analyse the data to make optimal demand planning and replenishment decisions. Let’s bring CCIO to life with three real-world use cases.
The Unexpected Spike
A food service distribution wholesaler has a sudden spike in demand. Traditional technology shows the total amount sold, but not how that total is broken down or where the change occurred. Troubleshooting the source of the spike, and predicting if it’s likely to continue, requires going into a separate enterprise resource planning or order management system and digging for answers. With CCIO, the wholesaler gets full visibility – within the inventory management solution – into every one of its customers, revealing information like who bought what and what varied from the norm. By identifying its biggest customers, the wholesaler can then analyse the data and better plan for the future. In this case, the spike was a result of a promotion run by a national grocer. Armed with this insight, the wholesaler works individually with the grocer and its promotional schedule to plan for demand and meet service levels while keeping inventory balanced.
The Downward Demand Trend
A wholesaler provides product to a clothing retailer, which is one of its largest customers. Because of financial pressures, the retailer decides to close 20% of its stores and as a result begins ordering less from the wholesaler. Even as a major customer, the retailer is just a small part of the wholesaler’s aggregate inventory. With traditional solutions, the effects of the reduction may take weeks to register, resulting in shelves full of excess inventory at the wholesaler’s DC. Conversely with CCIO, the wholesaler already knows the retailer is a tier-one customer. The sudden drop in demand would have been seen immediately and action could be taken without delay. The same nimble reaction can be applied to store openings as well. Insight and data lead to greater agility. It’s inevitable that promotional events will occur outside a wholesaler’s purview. But CCIO creates opportunities to improve forecasting and planning for those events by managing inventory proactively.
The Emptying Shelves
This last example may be a familiar one. An inventory analyst is about to leave on a Tuesday night. He checks his top eight items one last time and sees their levels are good. He comes in the next morning, gets a cup of coffee and discovers two of the items are out of stock and two others are down to safety stock levels. Suddenly, the analyst must become Sherlock Holmes to find out why. He must switch systems, run reports and search for clues to solve the mystery and figure out if it’s going to happen again. If the analyst had CCIO, all of that critical information would be right on his dashboard. Intuitive, easy-to-read screens would show who ordered what and how abnormal those orders were, based on each major customer’s buying history. Instead of spending hours researching, the analyst can find answers in minutes.
Advanced Technology for Advanced Planning
CCIO offers wholesalers a modern inventory management strategy that delivers unprecedented visibility and analysis so they can better keep up with the ever-changing needs of their best customers. It gives you the ability to plan your inventory based on how your customers are consuming your inventory. Ultimately, wholesalers can even raise service levels enough to offer “replenishment as a service,” where they handle the ordering and demand planning and their customers can focus on core competencies. (That’s a concept we’ll explore in our next blog.) No matter how it’s used, CCIO is a major step forward, empowering wholesalers to identify, isolate and analyse inventory data and enabling them to stay ahead in a changing world.