Bridging the Retailer-Manufacturer Divide: A Conversation with Flowcasting Founder André Martin

Retailers and manufacturers have long faced a disconnected supply chain, operating with different data sets, mismatched expectations and fundamental business differences. The result? Frustration, mistrust and a breakdown in the information supply chain.

In this blog series, Supply Chain Nation sat down with a number of industry experts to discuss the retailer-manufacturer divide. First up is our conversation with André Martin, considered the father of both Distribution Resource Planning (DRP) and Flowcasting, a new paradigm in supply chain collaboration. In the following excerpt, Martin explains why Flowcasting finally fulfills the promise of collaboration that retailers and manufacturers have been striving for over many years.

SCN: Better means for collaboration is something we hear retailers and manufacturers asking for nearly universally. Flowcasting, at its heart, is about both sides collaborating to better understand their business and set joint parameters for calculating demand. Why has Flowcasting been more successful in this regard than previous efforts such as CPFR?

Martin: The best way to answer that is to step back and ask ourselves why is it that over the years people have tried various ways—CPFR, ECR (efficient consumer response), VMI and others—to collaborate? What it really boils down to is that people have tried hard to improve collaboration up and down the physical supply chain, but the problem has been, and continues to be, that the information supply chain is broken. We often say it is disconnected, but in reality it’s broken because while retailers are trying to manage their part of the supply chain the best they can, manufacturers are trying to manage their end of the supply chain, and they’re not working collaboratively. Essentially, there is a wall between the information systems that the retailers and manufacturers are using to manage their pieces of the business. Those systems do not speak to each other and this is where the disconnect lies. The good news about Flowcasting is that it was specifically developed to fix that problem—to mend the information supply chain. The basic premise of Flowcasting is that you need to connect every node in the supply chain, and that the trading partners, in this case the retailer and the manufacturer, need to sit down and agree on the sales forecast that is going to drive the entire supply chain.

Thus, Flowcasting says “never forecast what you can calculate.” Let me repeat that because this is really the crux of the whole thing—never forecast what you can calculate. If trading partners can agree on what the consumer will buy at store level, that becomes an input into the Flowcasting process.  Then, Flowcasting calculates what the entire supply chain needs to do—from the brick-and-mortar or virtual store shelf all the way back to the factory. At the end of the day, the trading partners have a single, shared model of the business within the system. They are able to manage the end-to-end supply chain from a single set of numbers.

Once trading partners have this model of the way they are going to be flowing product, the first time they see it, it gets interesting. I’ve been there with Kraft and two of its major customers for several years now. The first day we saw their model, nobody liked it because it was the first time we saw there were flaws in the model. But the good news about that is once you have that model, if you don’t like what you see, you can do something about it because it is a true reflection of the way trading partners have decided to do business with one-another. It’s just that now it has been put all together and you can finally see a picture of how product is actually flowing up and down the supply chain. Trading partners can then begin to take corrective action to improve the flow from the factory all the way to the store.

In comparison, CPFR is really a good collaborative effort. I have always argued that CPFR has contributed to the collaboration aspect that trading partners need to have. The reason it hasn’t worked is because the trading partners were developing individual forecasts and then trying to reconcile their forecasts, as opposed to what we are talking about here which is to agree on the input. Let’s agree on what the forecast is going to be, because we only need one. We don’t need the manufacturer to come up with their forecast and the retailer to come up with their forecast and see how we can collaborate and reconcile. That is not the way to do it. The way to do it is to drive the entire supply chain from a single store-level forecast.

SCN: Thanks, André. In the second part of this series, launching August 19, Martin will discuss how Flowcasting helps manage demand volatility, and how to address the two biggest factors that rob manufacturing of efficiency. Readers, if you’ve experienced a breakdown in the information supply chain, we encourage you to share your thoughts in the comments section below.

Join the discussion on Twitter! Follow along using the hashtag #DemandAmazing.

  83 Comments   Comment

  1. Stephen Phillips

    What types of calculations are required for the Flowcasting process to work?

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  2. Samrat Banerjee

    By eliminating the need for outbound forecasting for the Retail DC, we eliminate an entire layer of uncertainty. Long term plan flows directly into short term execution (planned orders become firm orders). Provides visibility to see and translate demand into meaningful
    information for all nodes and trading partners. Visibility is the key to productivity.

    Reply
  3. Single input mutually agreed forecast is indeed helpful but difficult to achieve in large companies who have stores that are dispersed and numerous. 1000+

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  4. Flowcasting is what retailers and manufacturers have been waiting for and will help to build an even stronger collaborative relationship to success.

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  5. This revolutionary business process will make sure the entire supply chain in synch with the consumer demand. I am sure both retailer and manufacturer will realize the benefits of improved profit and productivity, reduced cost.

    Reply
  6. Paul Longshaw

    I hope that Flowcasting is a major part of Focus Connect and how it will help the community

    Reply
  7. I’m new in Supply Chain field and I started to learn about Flowcasting very recently. It was hard for me to understand how revolutionnary it was because it felt so right that I thought Supply Chain was working like that already! I’m so glad this idea comes from a JDA employee’s mind!

    Reply
  8. Brajesh Kumar

    It helps us in understanding all aspects of flow casting while designing related Model/Software. Thanks for bringing this insight.

    Reply
  9. Debasish Mishra

    Information supply chain’s new avatar has revolutionized the entire supply chain and hence given way to a business model where manufactures and retailers see eye to eye.

    Reply
  10. Gregory Petit

    I particularly enjoyed the collaborative aspect of flowcasting. Collaborative seems to be the next big thing in Supply Chain

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  11. Great paradigm and it’s we’re the future of supply chain is. From my experience it’s best to promote this collaboration on a B2B portal platform, it can really boost the engagement of both retailers and suppliers.

    Reply
  12. Gregory Petit

    I found the whole collaborative aspect of flowcasting very relevant.
    Collaborative seems to be the future of retail and supply chain.

    Reply
  13. Great article and thought provoking on retail – manufacturing gaps. FLowcasting is the answer !!

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  14. Keerthisekhar Durbaka

    The new phase of Information supply chain has revolutionized the entire supply chain and hence given way to a business model where manufactures and retailers will have a close look to each other.

    Reply
  15. Ed Heinzelman

    Thanks for the information…communication is almost always a stumbling block in any workflow.

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  16. Interest in see further post on this around 3pl’s and transport integrations around lead times.

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  17. As Manufacturers embrace this concept – what is the anticipated impacted on their costs? Higher demand planning accuracy helps reduce inventories but does it require smaller batch sizes and thus higher production costs? Would be interested to understand the relationship between improved planning and manufacturing costs.

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  18. I am hoping many corporations embrace flowcasting and intelligent fulfillment to see the benefits.

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  19. That’s right! As long as we have just one forecasting number, it becomes much easier and seamless for both retailers and manufacturers! Good one. thank you.

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  20. Interesting- though building the trust betwen the 2 entities is stil lthe greatest challenge

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  21. Dushyant Barodia

    Flowcasting has been creating a buzz, this puts things into perspective.

    Reply
  22. Nandan Shety

    Good Read. Basically Flowcasting enables to aligns business plans for all supply chain partners through a single model of the business and one sell-through based forecast and demand plan and…

    Reply
  23. Brian Armstrong

    Who should be driving the decision to collaborate – the Retailer or the Manufacturer? Based on your article, it seems like it would be the Retailer, but how then do we get the Manufacturer(s) on board?

    Reply
  24. Should Retailers be their customer buyers or should be a manufacturers seller?
    Having the retailers driving the collaboration will lead to manufacturers on the consumer demand road.

    Reply
  25. Chris Caraballo

    Takes a special vendor partner who is willing to invest in the tools to support flowcasting. True S&OP partnerships would thrive with this type of integration.

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  26. Well written article. Never forecast when you can calculate is imperative.

    Reply
  27. Luis Martinez

    Breaking barriers all along the Supply Chain should be the real objective. Excellent article!

    Reply

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