How Flowcasting Could Dramatically Improve On-Shelf Availability
It’s no secret that the process manufacturers and retailers have used to maintain on-shelf availability through the supply chain has never been optimal. The manufacturer moves items to the distribution center, the distribution center moves items to the retailer’s distribution center, and finally, the items get to the retailer to be put on the shelf. Each stage has its own operations process and decision-making paradigm, generally based on historical information and sometimes competing objectives. The potential for mistakes and out-of-stocks is pretty high and when they happen it causes friction. That used to be the only way to do it. But it isn’t now.
Now we have the capacity to create a seamless system of collaboration that ensures more products get sold and more customers are satisfied, with lower costs and fewer conflicts. We have the technology and the processes for everyone from the manufacturing plant to the store to work together to ensure that the right product inventory is on the shelf when needed and to give customers a great experience. It’s flowcasting. The only issue is getting everyone on board to use it.
What is Flowcasting?
Flowcasting is the method for transforming the process from a series of stops and starts to a continuous flow based on all parties collaborating and planning using current data about what’s on the shelf, what’s on the way and what’s being planned for. It has the potential to solve a myriad of problems: over or underproduction based on outdated information, over or underutilization of distribution center space (either for the manufacturer or the retailer), sharply reduced the incidence of leakage, out-of-stocks and other issues that hurt both the manufacturer and the retailer. In some cases, according to the Grocery Manufacturer’s Association, flowcasting has reduced out-of-stocks by more than 80%.
Hurdles to Flowcasting
But flowcasting has some challenges, too. It requires an unprecedented level of trust and cooperation among all the parties. It also requires an investment in data and communication solutions that keep all parties connected.
In some cases, the CPG and retail industries have both been slow to adopt new technologies. Tech is fast and ever-changing, and these industries have to deal with some very concrete, brick-and-mortar type products. They’ve been concerned that if they invest this year, something better will come out next year and they’ll have to fork out money all over again.
The Data is Available, But Siloed
Additionally, getting everyone from manufacturing to retail to focus on collaborating over mutual goals is difficult. They have different business objectives and constituencies. They don’t have, in many cases, a relationship that focuses on raising the boats for everyone. Manufacturers are interested in selling their own products; sharing so much precise data about their own operations with a retail chain that also sells their competitors’ products is a challenge. As for retailers, many of them can see how flowcasting would help manufacturers, but they may not be so clear about how it helps them.
The bottom line is technology and society are changing each other in a profound way for CPG and retail organizations, and that’s not going to slow down anytime soon. The cutting edge companies aren’t waiting for the next wave, they’re creating the waves. So while not all players may want to jump into data collection, analysis, and sharing—or flowcasting—with both feet and their whole budget, they can’t really sit this out, either. The best solution might be to begin to analyze how flowcasting can help your operation and what changes are needed for it to be a profitable and sustainable solution.
Is Flowcasting Worth the Investment?
Historically, organizations that focus on the customer experience win. Those that can do so while reducing redundancies and unnecessary costs lead the market. Increasing on shelf availability through flowcasting and data tracking is one way to get there.
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