This is not a straightforward or linear problem for suppliers. They realize that they must cut inventory-carrying costs and yet they're still required to maintain customer fill-rates, lest they be fined or penalized for short-shipping, late shipping, wrong shipping, and the list goes on. Ultimately, they are still held accountable for on-time delivery and in-stock positions.
There is one clear opportunity to mitigate this risk: exploitation of retailers' point-of-sale (POS) data that provides essential real-world facts and insight into actual consumer demand. If leveraged correctly, this type of supply chain intelligence can improve a supplier's ability to cut inventory costs while strengthening inventory positions at the consumer purchase point. And, there are perhaps even more significant benefits to sales, including cross-sell, up-sell, and promotional activities to mitigate returns of slow-selling, surplus inventory - important information to have in any economic climate.
Complicating the inventory problem is that the supply network is far more global, outsourced and challenging to manage than ever before. There is no shortage of papers and studies written about the subject of inventory optimization and there's certainly no magic fairy dust to throw at the challenge; however, the growing popularity for CPG companies in the use of customer POS data to impact inventory management techniques, demand planning models, purchasing decisions, and ultimately inventory is proving to be cost-effective and impactful.
Traditionally, these companies have used historical sales reporting, pending orders, and customer forecasts to try and make the inventory management problem a little bit easier, but there's a vast increase in the use of on-location customer POS data and trading partner intelligence to support decisions about inventory.
What is Supply Chain Intelligence?
When is POS intelligence most effective?
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