Flowcasting / Inventory Planning

A completely integrated retail supply chain is now possible – with the potential to provide substantial bottom-line benefits for both manufacturers and retailers. Changes at the stores can be instantly visible to the manufacturer's plants, and everyone in the extended supply chain can be working from a single set of demand forecast numbers.

True Innovation
Flowcasting has been developed by one of SCDigest's Top 10 Supply Chain Innovators of All Time - RedPrairie's Andre Martin. Known as "The Father of DRP," Andre has been credited with, "in many ways, the start of today's supply chain planning software industry.
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Traditional forecasting and demand planning systems have tackled the retail supply chain by trying to forecast store demand based on shipments out of the DCs. But that doesn’t tell you anything about which items are actually selling in each store. In short, it doesn’t account for actual consumer demand, which is at the heart of the “demand driven” or “sense and respond” inventory strategies required in today’s consumer driven economy. What’s more, these forecasts are not linked to store and supply chain execution systems, such as perpetual inventory control, to react efficiently and effectively to changes in demand. Clearly, a new approach is needed.

Fortunately, there is a new approach that makes perfect sense: start your forecast at the item level within each store – where true consumer demand begins – and flow this up through the supply chain to drive all other activities, from the store shelf to manufacturing plants and raw material suppliers. This is how RedPrairie’s Collaborative Flowcasting inventory planning solution works.

Why Collaborative Flowcasting is different

Collaborative Flowcasting is based on the inventory planning principles of distributed resource planning (DRP) systems which have been widely used over the past 30 years. Where Collaborative Flowcasting is different is:

• It is based on actual store level item demand
• It is scalable to handle the huge volume of data at the store level
• It is refreshed daily based on actual store results
• It is integrated to RedPrairie’s industry leading store and supply chain execution systems

The system forecasts inventory needs at each store by analyzing each store’s POS and inventory data. This item within store forecast is then used to calculate inventory needs up through the supply chain – so everyone is working from a consistent set of numbers. This eliminates the forecast error and “bullwhip effect” induced by the typical practice of having separate forecasts at each level of the supply chain. What’s more, the forecasts are updated daily based on actual store results so they are always in step with true demand.

Customers who have deployed RedPrairie’s store operations and/or supply chain execution solutions receive the added benefits of an integrated approach to planning and execution. This integrated approach can efficiently direct the flow of goods and work throughout the replenishment process, and can also calculate the costs at each level so intelligent distribution decisions can be made.

The Collaborative Flowcasting model of inventory demand planning offers benefits beyond what is typical with traditional planning approaches. These include:

• Manufacturers have extraordinary, up-to-the-minute visibility into the needs of their retail customers, and as a result, can provide outstanding customer service
• Retailers get the products they need to satisfy their customers, reducing out-of-stocks and overstocks
• Both manufacturers and retailers can significantly improve promotion effectiveness & profitability through continuously updated store-by-store recalculations
• Both manufacturers and retailers can reduce safety stock at all levels because they have a more accurate picture of demand
• Stronger, more effective collaborative relationships are built between manufacturers and retailers, allowing both groups to grow and improve the business rather than fighting fires
• Inventory planning and replenishment execution become an integrated process, enabling manufacturers and retailers to model the costs of inventory decisions and react to changes in demand more quickly and intelligently