Retail business owners today face the dual challenge of having an optimum replenishment methodology for the depleting stock while maintaining a seamless purchase process on the supply chain management front.
The questions they frequently come across are…
- How much to purchase and hold in stock value?
- What kind of product quality and grade to go for?
- How to arrive at the right vendor?
- Can all this be tied into a predictable, seamless and automated process that ensures timely and quality delivery?
Departmentalization of Processes
A lot of retail organizations in the interest of addressing challenges specific to a certain business process through focused human resource skills have ended up in departmentalization or in other words the compartmentalization of processes and relegating them to silos. The software solution vendors have contributed to the issue with module based constrained solutions without an open architecture and lack of integration capabilities.
The lopsided ‘One size Fits all’ Approach
The fact that purchase predominantly is a standard function has been over emphasized by software solutions providers leading to a rigid and ‘one size fits all’ approach. It is true that the overall structure of the purchase process is quite standard across industry sectors, at the same time there are some very critical domain specific requirements that one needs to address. The variations can range from approval workflows, Reorder Policy, output print formats, vendor evaluation processes, goods acceptance mechanisms and many more.
When we look at the purchase process in the retail ecosystem, we have a variety or stakeholders, some of them are internal to the organization like the Finance and Stores, while others are external like the vendors and contractors. Not all the stakeholders would be ready or can match the system needs of the retail organization, and would require certain tailoring/customizations to be able to adapt to the defined IT processes.
Accurate and Timely Documentation
Demand Forecasting and Automated Replenishment Requests
By definition demand forecasting is the process of estimating and predicting customer demand of products or services by using informal methods such as educated guesses, and quantitative methods, such as the use of historical sales data and takes into account external factors like market trends, seasonal demands, yearly growth rate, economic conditions, upcoming promotions among others.
For a system-based demand forecasting also called as perpetual inventory system, you need to have clean, well classified master data along with sizable historical sales transaction data.
Based on the Safe Stock principle, setting Reorder Level and Order Quantity that gets reflected in the automated replenishment requests which are fed to the purchase process.