Forecasts are getting worse not better and will continue to get worse, Gavin Chappell, supply chain director of Asda, warned delegates at a retail supply chain conference today.
He was highlighting the importance of agility in retail supply chains in the face of growing complexity and the increasing number of factors that affected forecasting.
“We have to find different ways to construct supply chains to take that into account.”
And he gave examples of the unpredictability that could arise in retailing. In one example, he said that Easter soft drinks sales at one store had been twice the level of those at another store ten miles away.
Speaking at the Retail Week Supply Chain Summit in London, Chappell quoted a YouGov survey which showed that 28 per cent of supermarket customers could not get everything they needs during a visit to a store.
In a ten item basket, at 98 per cent availability, this meant that a customer had an 81.78 per cent chance of getting everything she needed.
Lack of agility could stop a retailer supplying the freshest produce or frustrate customers in accessing the newest product lines.
Chappell quoted the statement on ‘known known’, ‘known unknowns’ and ‘unknown unknown’ made famous by former US secretary of defense Donald Rumsfeld.
He highlighted some of the areas of ‘unknown unknowns’ – true vendor production capacities; supply chain stability (labour, trucks, manufacturing plant and equipment).
‘Known unknowns’ include what is going to happen to the weather, and the actual performance of promotions.
Overall, he said: “There are more ‘unknowns’ than ‘knowns’.”
Despite the problems involved in forecasting, Chappell was clear that agility could not be used as a replacement. “We have to continue to do proper planning,” he said.
And he went on to talk about some of ways that agility could be improved including:
* Asking vendors to work on a “day one for day two” basis to reduce the time from order to delivery.
* Seven day a week inbound. Stores work seven days a week so why should distribution centres be closed at weekends.
* Manufacturing for agility. Manufacturers focused on capacity utilisation but increasingly they needed to move towards more lean and agile manufacturing runs.
* Greater flexibility in the use of transport.
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