The document discusses how sales growth can cause problems for businesses if not properly managed through effective supply chain planning. It notes that without accurate forecasting and demand planning, businesses experience issues like fluctuating inventory levels and costs, lost sales from stockouts, and excess inventory requiring costly corrective actions. The document advocates adopting a new approach leveraging data and analytics to precisely forecast demand based on influencing factors and optimize inventory ordering to meet demand while controlling costs. Case studies show how other businesses significantly improved key metrics like inventory levels, sales, profits, and service through advanced supply chain planning.

1. Sales Are
Booming!
Now I’ve Really
Got Problems
When you are in demand, you
need to deliver the goods - without
inflating costs and inventory.

2. blueridgeglobal.com Sales Are Booming! Now I’ve Really Got Problems | 2
So many retailers and distributors see a sales increase as a panacea, and yet
when sales do grow, problems arise faster than ever. You can pump up
inventories to get every sale, but then you’ll have to cut off the inventory spigot
when Finance protests about cash or cost issues. Without a clear resolution,
sales and costs sway back and forth like a pendulum.
For many, the pendulum effect is too familiar. Sales go up, inventory becomes
excessive; and then cash gets tight, inventory drops and customers are
disappointed.
The pendulum effect stems from the misalignment of inventory with potential
sales. More importantly, that misalignment, which is costing you revenue and
profit, has everything to do with your supply chain planning.
Without
a clear
resolution,
sales and
costs sway
back and
forth like a
pendulum
REDUCED MARGINS
OVERSTOCK
EXCESS COSTS
LOW INVENTORY
LOST SALES
DISAPPOINTED CUSTOMERS

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The New
World
• Customers have more information and
purchasing options than ever before, they
make decisions faster than ever, and when
they decide they want something, they
want it immediately.
• Businesses have access to tremendous
amounts of data about their customers,
and they have a greater ability to leverage
that data to influence demand, precisely
plan for demand, and respond to changes
in demand.
• To avoid disappointing customers and missing
sales, retailers and distributors need to ensure
product availability, and they need to do so with-
out creating pockets of excess and misaligned
inventory and incurring excessive costs.
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What Will You Do?
To some it’s a revelation that difficulty managing growth is caused by their
supply chain. For others, inconsistent results are often obscured, or it is an
accepted casualty of business. Whether you can’t see it or you’ve come to accept
it, you must deal with it.
We’ll spare you a speech about a new world and big data, but understand many,
maybe even your competitors, are already adapting and thriving. Take one auto-
motive distributor for example. CRP Industries, a supplier of both automotive and
industrial goods, has increased sales double digits without increasing their overall
inventory investment by a single penny.
This paper has two goals:
To brief you on how your supply chain planning approach is
fundamentally tied to financial and inventory performance issues.
Show you a new approach that will ensure an end to the
swinging pendulum, help you capture every sale, and keep
inventory and costs in check.
If you’re curious about how exactly the supply chain status quo is killing your
business, go ahead and read the next section: How Your Supply Chain Stunts
Growth. If you’ve already experienced the revelation that your supply chain
planning is flawed and are looking for a way out, by all means jump to the
Saving Commerce from the Status Quo section.

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How Your
Supply Chain
Stunts Growth
You might not realize exactly how your supply
chain causes growth to be more pain than
panacea, but one imperfection in your
supply chain actually creates a ripple of
issues across the organization. Take a look
below at how these supply chain flaws are
manifested into recurring business problems.
If any of these situations are familiar to
your business, you may need to rethink the
way you approach your supply chain.
Lack of, or Inaccurate
Forecasting
Means you can’t effectively predict what
your customers will purchase from you.
This leads to excess inventory, stockouts,
slow turns, and relentless pendulum
swings in customer fulfillment and
inventory levels. With inadequate or
inaccurate forecasting, companies
are constantly stuck in a reactionary
mode, searching in vain for ways to
recover.
‘Siloed’ Information
Means that access to planning data
is inaccessible by the necessary depart-
ments within the company. This leads
to limited visibility, the inability to predict
future sales, and the inability to align
operations to maximize cash and profit
positions. Organizations may have difficulty
balancing merchandise, operational and
financial plans. A lack of communication
makes it difficult to track and improve
supplier performance, receive or stock
inventory effectively and efficiently, and
synchronize the goals of Merchandise,
Finance, Planning and Operations.
Imprecise Demand
Planning
Means you don’t effectively stock
inventories to fulfill demand at the proper
time. This produces both stockouts
and excess inventory that requires the
frequent need to take costly corrective
actions to get inventory in the right loca-
tion at the right time. Imprecision in the
demand plan contributes to reduced
margins, poor cash flow, warehouse
capacity issues, and more.
State of Distrust and
Acceptance of Status Quo
Means that you don’t trust the recom-
mendations of your solutions or your
staff, and ultimately you acquiesce
to the notion that you can do nothing
about it. This leads to loss of hope in
the possibility of effectively predicting
and planning, forcing the team to fall
into reactive habits, constantly fighting
fires, and simply accepting this is the
way things are.
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The Smoking
Gun? Check
Your Supply
Chain Solution
The truth is that the problem is likely the way
your supply chain solution was designed. Too
many traditional supply chain solutions aren’t
focused enough on the intricacies of retail
and distribution supply chain conditions, and
they were designed in an era where today’s
rich data and relatively inexpensive computing
power weren’t available.
This means they use ambiguous data and too
many assumptions, estimations and averages.
With many of the variables that impact the
supply chain effectively ignored, you are left to
rely on imprecise recommendations that are
often inaccurate.
Here are some common problems with many status quo solutions:
The data that feeds the forecast is too vague. It doesn’t
provide for analysis, like – analyzing every single customer
transaction individually to understand what causes demand.
The forecasting method is incomplete. Doesn’t take
advantage of what influences demand, like – discounts,
events, advertisements, etc.
The planning method is imprecise. It doesn’t consider
current and future inventory levels across all locations, or
other practical realities of the supply chain, like - supplier
lines, ordering schedules, logistics constraints, capacity
limitations, holidays, etc.
The foundational approach may not be focused on
retail and distribution. The solution may be too generalized,
like - ERP, or solutions adapted from manufacturing, or credit
analysis, etc.
The recommendations for action are not precise or
transparent enough to gain the trust of the users and
management. Which causes manual intervention, like – costly
corrective actions to get inventory to the right location at the
right time.

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Saving
Commerce
from the
Status Quo
Fortunately, death by statistical averages, estimates and assumptions is no
longer necessary. Now you can unravel the factors influencing customers to
buy, enabling companies to approach supply chain planning in a way that
affords tremendous precision and huge financial benefits.
With today’s advanced technology and analytics, we can analyze much more
than vague historical sales data. We can begin to understand the context and
influences behind customer buying decisions, including causal factors like
promotions, events, advertising, display impacts, price, SKU relationships and
more. This information is the vital to accurately forecasting what customers
will buy in the future and when they will buy it.
Accurately predicting which products your customers will buy and when they
will buy it is the first step to leveraging your supply chain for a better top and
bottom line. The second step is planning your inventory orders to suppliers in
the most economically optimized way possible, while still considering logistics
constraints such as supplier minimums, ordering schedules, etc. Due to the
computing power of the Cloud, you can now automatically calculate, with
economic optimization unique to your business, an entire year’s worth of
future inventory orders. And that order plan can be automatically updated
and adjusted as conditions change in your supply chain or in the market.
Your demand planners and inventory analysts will transform into strategic demand
planners that meet customer needs at the lowest possible risk and cost, making
them direct contributors to your bottom line.
Precision inventory planning and rapid
response to changing conditions (internal
and external) are the keys to eliminating
lost sales, increasing turns and improving
margins at the same time.

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What’s at
Stake?
Having a hard time believing that changing your
supply chain approach could really have that
big of an impact? Leaders in various industries
have already started to capitalize on this newly
enabled understanding of the customer and
precision planning capabilities. By improving
supply chain planning, they have dramatically
improved key performance indicators (KPIs)
that directly contribute to increased profit and
margin.
Top 25 Foodservice Distributor
• Consistently attaining 99.65% service levels
• Reduced overstock by 25%
• Reduced lost sales by 40%
• Increased labor efficiency by 40%
Major North American Hardware Retail Chain
• Increased service levels by 2.5%
• Reduced excess inventory by 10%
Global Distributor of Industrial and Automotive Goods
• Grew sales by double digits
• Improved fill rate to greater than 95% without increasing inventory
• Brought backorders down to their lowest level in company history
Leading European Retailer of Safety Products and Cleaning Supplies
• Increased product availability by 8 percentage points
• Increased turns by 3.6
• Reduced inventory by 25%
Major HVAC Distributor
Accomplished the following in just 5 months
• Increased service levels by 4%
• Reduced inventory 25%
• Decreased orders by 31%
• Reduced overstock by 47%
• Achieved double digit growth
Regional Food Wholesale Distributor
• Increased revenue 12%
• Reduced inventory 14%
• Increased profits by 181%
181%
+40%efficiency
profit
increase
25%inventory
reduction

8. Like yours, these companies’ markets
are always in flux, with customer
behavior constantly shifting and new
competitors popping up every day;
yet, these market leaders are thriving.
Eliminating excess inventory and
increasing turns and service levels
is crucial to keeping cash in your
pocket and competitors at bay.
You can learn more about how these companies revolutionized their supply chain planning approach and are staying
ahead of the pack by contacting us directly at: www.blueridgeglobal.com/contact-us.
Or you can visit us on the web at www.blueridgeglobal.com.