How to Meet Fluctuating Consumer Demand through Dynamic Allocation and In-transit Visibility

1. © GT Nexus, Inc.
How to Meet Fluctuating Consumer Demand through Dynamic
Allocation and In-transit Visibility
Deliver Supply Chain Agility
A STRATEGIC IMPERATIVE FOR RETAILERS

2. Retail consumer behavior is not easy to predict, especially in
new or emerging markets. Global companies that source from
regions around the world and sell to just as many must find a
way to balance a longer, more complex supply chain with the
volatile consumer demand for their products.While there is a
way to ensure product availability with legacy software systems,
it usually includes large amounts of buffer stock and expensive
air freight to move shipments to the customer in time.
In today’s competitive retail environment, this strategy is no
longer acceptable.Too many costs due to inventory obsoles-
cence and high freight rates deplete the bottom line, allowing
more agile retailers to step in and take the sale.
Retailers can only compete when they have the agility to look
at current demand and make allocation decisions on the fly as
trends change.
Impact of Low Supply Chain Agility
When retailers don’t have the systems in place to bring all of
their supply chain data to a single platform, they miss crucial
information on inventory location and availability across
regions and channels. When an unexpected demand change
occurs, they fail to get the desired product to the customer
and experience:
Lost sales due to stockouts or wrong product entirely
High inventory costs from holding buffer stock
Inaccurate buys based on forecasts from past sales but not
real-time demand from stores and customers
Increased admin costs due to manual inventory tracking
The Root of the Problem
Many retailers are not equipped to quickly adjust to new
consumer demand.Traditional ERP systems track inventory to
shipment, but fail to shine light on in-transit products as they
pass through the supply chain.This leaves retailers to make
allocation decisions solely on forecasts from past sales.
1. Sourcing and inventory allocation decisions are made
90 to 180 days ahead of consumption
Sales forecasting leaves much room for error when there’s a
high level of supply chain volatility.When demand requires
an updated selling strategy and retailers aren’t agile
enough to react, it leads to:
Lost sales and too many markdowns
Inventory obsolescence
2. Supply chain flows are rigid and inflexible
Often demand swings occur that are not in line with the
original inventory positions.When systems aren’t equipped
to track in-transit inventory, it’s difficult to reallocate to
meet this new demand.This leads to:
Expedited air freight and inter-DC transfers that increase
transportation costs
Excess inventory at each DC as a buffer, increasing
inventory costs
© GT Nexus, Inc.
2
While global sourcing can reduce the first cost of products, it also increases costs along
the supply chain as retailers try to meet volatile demand.
The Challenge
Holding excess inventory at DCs gets the product to the customer, but at
a cost.
Origin
Vendor
Origin Customer 1Customer 1
Customer 2Customer 2
DC Allocation
Decision
2. DC Transfer:
Increased Cost, Reduced Inventory Velocity
1. Volatile Demand
Origin
Vendor
Origin
Destination
DC/XD
Destination
Destination
DC/XD
Increased Cost, Reduced Inventory Velocity
Destination

3. Plant
Plant
Network
Connectivity
Agility
Customers
Customer
DC / Warehouse
Plan
Actual At-Risk Delay
Dynamic ETA
B
A
Sense more accurately
Operate more efficiently
Respond faster
Make better decisions
3
The Solution
A supply chain network in the cloud allows for what traditional
software does not: tracking demand changes and dynamically
allocating product to meet them. Inventory can be sent to stores
or regions where customers are unexpectedly buying heavily.
Seasonal buys in apparel can be made in larger quantities with
the option to dye fabric and cut patterns later in the supply
chain.When changes like these can be made after the initial
buy, retailers are able to serve more customers, more quickly.
This has a huge impact on both revenue and costs — more
products are bought, and fewer go to waste in warehouses and
clearances in low-demand regions.
Adopt a flexible, multi-leg visibility solution to meet
demand swings.
Combine order, shipment, and event data to provide
accurate view of inbound flows and dynamic ETAs
Access complex, multi-leg intercontinental flows (origin
consols, destination transloads, domestic moves)
Enable DSD and DC bypass programs with factory carton
labeling
How to use an agility solution:
1. Adapt to demand and seasonal trend changes on the fly by
dynamically allocating in-transit inventory
2. Analyze data from transportation providers, inventory plan-
ners, merchandisers, and supply chain partners
3. Make better buying decisions by postponing allocation to a
later date
4. Listen to system’s early-warning signals and alert appropri-
ate parties of potential delays
Value Propositions
By adopting a supply chain agility
solution, retailers can increase
revenues and lower supply chain
costs by quickly meeting chang-
ing demand.With a cloud-based
platform, they are able to:
1. Create a supply chain that
can easily adapt to its environment
Start managing by exception, with everything else
automated
Capitalize on opportunities for selling across the globe
Perfect advanced delivery techniques — cross-docking,
direct-to-store or customer, and in-transit allocation
2. Increase profits through greater revenue from sales
Avoid lost sales by stocking product where customers
want to buy it
Lock down repeat customers who depend on accurate
delivery dates and availability
3. Increase scalability of the business
Use dynamic allocation to reach customers in wider
regions and volatile emerging markets
Take advantage of new selling channels (mobile, online)
through established inventory routes
Supply Chain Agility and the Networked
Company
To make supply chains agile, companies must transform them-
selves from silo-based, inward-facing corporate operators to
interconnected, highly agile business network orchestrators.
In retail, trends and demand
changes can make or break a
brand.Those that can identify
selling opportunities and physi-
cally get their product to the
customer in time will come out
the winners.
1. Volatile Demand
2. No DC Transfer;
Increased Agility
Origin
Vendor
Origin Customer 1Customer 1
Customer 2Customer 2Origin
Vendor
Origin
Destination
DC/XD
Destination
DC Allocation
Decision
Product is allocated dynamically as demand changes.