JDA Software Highlights The Rewards Of Retailer/Manufacturer Collaboration

Even as the economy improves, increasing revenue still remains a challenge for both retailers and manufacturers. Adjusting to the consumer's "new normal" – e.g. cautious spending habits, difficulty securing credit, concern with higher-than-normal unemployment rates – is critical. Retailer/manufacturer collaboration provides an opportunity to increase revenue margins by quickly adjusting product and inventory strategies based on the ever-changing consumer buying patterns.

Gartner's recent "Top Supply Chain Planning Processes" research report noted that collaborative business processes with other partners in the supply chain can only improve a company's internal planning processes and execution by improving visibility and helping to align goals and objectives. Gartner also noted that, when done well, collaboration ensures a win/win situation for the participants, and improves the overall performance of the end-to-end supply chain1.

David Johnston, senior vice president, supply chain, JDA Software, outlines the rewards and quantifiable cost savings that may be achieved from enhanced communication and collaboration between retailers and manufacturers.

• Gain valuable insight. While large retailers are tasked with managing up to 100,000 products, manufacturers have a much more intimate level of knowledge and understanding about their products that can be shared with their retail channel partners. Likewise, retailers can provide their manufacturing counterparts with invaluable insights into consumer behavior by sharing real-time sales at the shelf and store-level inventories. By sharing this visibility, retailers and manufacturers can leverage their relationship and both benefit from more timely consumer insights, better planning, more effective promotions and greater success when introducing new items. A leading U.S. drug store chain implemented a strategic collaboration program that enabled one of its key partners, a leading global health and hygiene consumer goods manufacturer, to access data at the point of sale and SKU level. With this depth of detail, the retailer's order frequencies are now based on true customer demand, while the manufacturer can anticipate demand and recognize trends before they occur, leading to significant outbound and inbound cost savings.
• Utilize one synchronized forecast. Consumer product goods (CPG) manufacturers often operate from multiple forecasts such as account team forecasts, demand planning forecasts and marketing forecasts. Retailers utilize a different set of forecasts, based on intricate sales data all the way down to the store shelf. CPG manufacturers and retailers have the opportunity to leverage and link this data to create one, synchronized view of demand for joint forecasting and replenishment efforts. CPG manufacturer, Pharmavite, established a Collaborative Planning, Forecasting and Replenishment (CPFR) program with many of its retail partners – including warehouse retailer, BJ's Wholesale Club – to improve in-stocks, increase sales and enhance supply chain visibility. Through this close-knit collaboration effort, Pharmavite ensured that the right product is on its retail partner's shelves at the right time; eliminating excess safety stock, allowing planning at a more targeted level and keeping the focus on the end consumer. Quantifiable results of the CPFR program are also impressive, Pharmavite has improved inventory turns by 30 to 50 percent, decreased weeks of supply by 30 to 50 percent and reached a 97.8-percent forecast accuracy with retail partner BJ's Wholesale Club.
• Collaborate on strategic planning initiatives. As retailers increase their ability to create time-phased views of demand, there is an opportunity to collaborate more strategically with manufacturers so that product flow is optimized and tied to the overall sales plan. With this strategic collaboration in place, manufacturers can also address scenario planning such as how packaging changes or delivery frequency might impact order flow from raw materials planning all the way to the store shelf. For example, a product with a high seasonal peak requires manufacturers and retailers to determine how to get the product on the store shelf as close to the sale as possible, while taking into account constraints such as distribution center and logistics capacity. By collaborating on how to get the right amount of inventory on the shelf closest to the sale, manufacturers and retailers can achieve more efficient supply chain planning, market share and margin increases, as well as reduced inventory and storage costs that can be passed down to the consumer.

For more information, visit www.jda.com.

About JDA Software Group, Inc.
JDA Software Group, Inc., The Supply Chain Company, is the leading global provider of innovative supply chain management, merchandising and pricing excellence solutions worldwide. JDA empowers more than 6,000 companies of all sizes to make optimal decisions that improve profitability and achieve real results in the discrete and process manufacturing, wholesale distribution, transportation, retail and services industries. With an integrated solutions offering that spans the entire supply chain from materials to the consumer, JDA leverages the powerful heritage and knowledge capital of acquired market leaders including i2 Technologies, Manugistics, E3, Intactix and Arthur. JDA's multiple service options provide customers with flexible configurations, rapid time-to-value, lower total cost of ownership and 24/7 functional and technical support and expertise. For more information, visit www.jda.com.

SOURCE: JDA Software Group, Inc.