May the Force of Demand Planning be With You

25476523_sWe have all made that promise. The promise we make to ourselves that we will start our holiday shopping in July. Meticulously picking out items that our loved ones covet – and doing so with time to spare. Expectations would lead you to believe that all presents are bought, wrapped, and stored in the closet by November 27th.  The reality is that the closet is empty, no items are checked off your list and that you inevitably will have to face the crowds.

If holiday shopping at the local mall doesn’t instill fear on its own, perhaps knowing that 7% of holiday shoppers seeking a new Star Wars toy are willing to trip the elderly, and 11% of those shoppers would be willing to shove other customers if that meant success in obtaining one of these toys. This data was just released by a FusionOps research study. Luckily for procrastinators, retailers now use demand planning to help know when and where to send merchandise, which hopefully can at least reduce the tripping and shoving.

The FusionOps research study, which focused on Star Wars fans’ excitement about the new “Episode VII: The Force Awakens” movie, suggests that 69% of these fans think retailers won’t be able to keep up with the expected high demand for Star Wars toys this holiday season. With merchandise being on the shelf since September 9th, dubbed “Force Friday,” and demand exponentially increasing as we near the release date of the movie, how are retailers preparing? Despite our being light years ahead of the technology that existed when the first Star Wars movie came out, fans still believe that there will be disruptions to the supply chain of the Star Wars merchandise this holiday season.

Problems on the Horizon?

I find this research disturbing. Significant advances have been made by manufacturers and retailers with regards to demand planning, which allows companies to better forecast consumer demand, despite the variables involved in managing merchandising, inventory, and operations executions (MIOE), sales and operations planning (S&OP), and supply chain segmentation. If a manufacturer knows ahead of time of strong demand for a new product introduction, it seems as if they should be able to predict and execute a build plan to stay one step ahead of the expected future sales.

According to a recent Gartner report, “Learning From Leaders — Three Best Practices in Retail Demand Planning” authored by Mike Griswold, retailers face significant challenges in demand planning, including:

  • Demand-planning processes are too focused on channel-specific plans
  • Demand-planning processes are disconnected with various owners
  • Confusion exists on the roles merchandising and the supply chain play

A review by Gartner of the maturity of retailers in their ability to demand plan suggests a large number are either in late Stage 1 (reacting) or early Stage 2 (anticipating). The end goal is to achieve Stage 5, where a company is orchestrating their demand plan as a shared, collaborative exercise between retailers and suppliers. Of course, the use of technology plays an important role to enable network relationship management. And, achieving visibility into your supplier’s operations is another key objective to accomplish. When a company is able to do each of these steps, they have then reached the goal of a network-based, orchestrated demand plan.

If, as Gartner suggest, most retailers are operating at either Stage 1 or 2, then Star Wars fans’ may indeed be right in their concerns over stock outs and lack of availability of toys this holiday season.

Desperate Measures for Desperate Times

For those of you who hoping to purchase a new Star Wars toy this holiday season, the FusionOps research study did had some final insights, which of course I can’t necessarily condone:

  • 19 percent of the respondents said they would be willing to dress up as a Star Wars character, even though it is unclear how this would advantage them
  • 12 percent would willingly lie to other customers, and
  • 12 percent would cut in line

 

Of course, the best course of action would be for retailers to establish a more collaborative demand-planning process that incorporates information from each of their sales channels and supply chain partners. In the absence of this demand planning transformation, my only closing thought is “May the force be with you!”

 

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