A guide to delivering supply chain transformation and retail planning from factory to consumer with Plantensive – part 1

Part 1 – A roadmap for suppliers, retailers, and CPG firms for building collaborative solutions covering demand, supply chain, and retail planning

When the global pandemic hit with virtually no warning, the retail and consumer packaged goods (CPG) industry was turned upside down. Supply chains were quickly disrupted—and then overwhelmed. Everyday items, like paper and cleaning supplies, were suddenly out of stock, and retailers were doing the unthinkable—limiting customer purchases. The effects rippled across the industry, changing everything from demand forecasting and category management to order fulfillment and everything in between.

What does this new landscape look like for retailers and CPG companies? From a 20,000-foot perspective, familiar mileposts and guardrails have vanished, and what is left is a wide-open industry that is scrambling to adapt, survive, and thrive.

Beyond silos

If nothing else, the COVID-19 pandemic highlighted the need for more responsive communications and near-real-time visibility and collaboration between supply chain partners. Before the COVID-19 pandemic, retail and CPG companies struggled with fragmented, siloed operations. Merchandising, supply, and operational teams often pursued their own goals and objectives and rarely considered the needs of other business groups. The task of tearing down those silos, though generally perceived as a good idea, was continuously pushed off to a later date.

Then, the COVID-19 pandemic arrived, exposing critical weaknesses up and down the supply chain. Teams had to face the reality that their planning systems were seriously flawed, if not completely broken. Traditional communications processes were disrupted as more people started working from home and attending meetings online. Meanwhile, merchandising became even more dependent on the supply chain. Today, the need for a simple, scalable, and flexible complete planning process for retailers and CPG brands has never been more critical.

Plantensive’s complete process

Plantensive—an Amazon Web Services (AWS) Partner and a global leader in supply chain and retail-planning solutions—saw this shift in the industry early on. Reacting to client demand, the company set out to create a modern process that would bridge the gap from supply chain to merchandising to operations, closing gaps that had existed for decades and widened even further by the pandemic.

Plantensive brought together internal retail and CPG experts to study the effects of the COVID-19 pandemic on operational processes and to draw up a post-COVID-19 road map for suppliers, retailers, and CPG firms alike. The task force started by formulating high-level (“Level 1”) planning strategies that incorporated the impact of changing consumer shopping habits on retailers and brands. Among other insights, the need to break down long-standing silos in the retail and CPG industry became abundantly clear. The group produced a fully interactive framework of the pandemic’s impact on the complete process, as summarized below:

Aligning collaboration and strategy

To create a cohesive and complete process, businesses need to align every part of the supply chain and retail/CPG processes at a high level. Below are some examples of Level 1 processes—covering demand, supply chain, and retail planning—that should all be in sync. Integration points between the processes need to be simple with easily recognizable checkpoints and data exchanges that minimize downtime and roadblocks.

• Integrating demand planning: To maximize profitability, your choice of product assortments should be driven by customer demand, and your forecasts should factor in item substitutions, alternative suppliers, and market insights. As demand changes in real time, you can adjust your forecasts continuously and alert other teams (both upstream and downstream) about these changes.

• Integrating supply planning: Whenever you adjust your demand forecast, it will directly affect your supply chain process. That means you must clearly communicate changes from your demand team to your supply team—and then from your supply to your retail team. Ideally, your supply team will also provide feedback to your demand team, and similarly, your retail teams will communicate back to your supply group. All of these integration points need to be simple with easily recognizable checkpoints and data interfaces.

• Integrating retail: Feedback and communication from your retail and category planning team are critical to the efficient functioning of your overall supply and demand operations. After all, that’s where the proverbial rubber meets the road—when supply literally meets demand. If you don’t establish a clear two-way communication process across your teams, you can fail to notice emerging consumer habits and trends that are vital to maintaining your competitive edge.

Ripple effect: How the COVID-19 pandemic impacted retail stores

When the COVID-19 pandemic hit in 2020, the retail and CPG industry faced a myriad of disruptions that spread across the supply and demand landscape. Take the case of a convenience store chain that received a shipment containing only a single flavor of a popular sports drink instead of the usual two flavors.

This meant that many customers who came in to buy a drink and a snack would find out that their favorite flavor was missing. Of course, they could buy a different product, but many would decide not to. In fact, many would choose not to buy any drink at all at this store because it no longer carried their drink of choice.

This is a familiar story in the retail and CPG industry. In fact, US food retailers lose billions of dollars each year due to out-of-stock items. Communication and collaboration between retailers and suppliers can greatly reduce these disruptions by providing early visibility into supply challenges and faster work-arounds.

Digging deeper

As Plantensive revisited these Level 1 strategies in the wake of the COVID-19 pandemic, we zeroed in on the details of each strategy, flushing out step-by-step processes that make up each Level 1 milestone. In our next blog—“Modern merchandise planning in the post-COVID world”—we will dive deeper into these “Level 2” processes and look at how they roll up to new Level 1 processes. We will provide guidance on navigating today’s rapidly changing retail and CPG landscape using tools that your organization might already possess.

For a complimentary supply chain consultation, contact Plantensive.

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Plantensive, a MorganFranklin company, is a supply chain, retail-planning, and category management solutions provider to many of the world’s leading companies across the CPG, distribution, manufacturing, and retail industries. Plantensive designs, develops, and delivers effective, efficient, and sustainable planning solutions for supply chain customers. Plantensive’s global supply chain services meet you wherever you are in your journey—from your suppliers to your customers. For more information, contact us at https://plantensive.com/contact/.