Supply Chain Nation recently talked with Joe Skorupa, the editor of RIS News and a long-time retail industry expert, about the paradigm-shifting collaboration afforded by JDA Flowcasting. Here are his comments.
SCN: You have stated that one of the reasons collaborative efforts such as CPFR and ECR have not achieved the results envisioned is the battle between retailers and manufacturers over sharing data. Do you think that is changing?
Skorupa: I think companies are viewing data in a different way than they have previously and there are greater opportunities for success. Data is viewed today as a resource of high value. One study I read referred to “big data” as “the most valuable resource on earth.” As a result of this new view of data, there is a greater tendency for retailers to want to monetize this valuable resource and one good way to make this happen is through CPFR and ECR. What companies are looking for is to drive better business outcomes. Often this is a strictly internal viewpoint, but increasingly companies are realizing that better business outcomes can be driven by programs that leverage external partners and collaborators as well.
Retailers, and companies in general, are recognizing there is untapped potential in their data sources. That is causing them to shift away from thinking of data as a something to simply accumulate in databases and instead think of it as something to fully leverage for the benefit of their business operations and supply chains.
SCN: Unlike traditional collaboration models where retailers and suppliers each have their own forecast that they then try to compare and coordinate, Flowcasting enables all supply chain partners to work from a single, shared forecast. Why is that an advantage?
Skorupa: Flowcasting takes it beyond simple collaboration between two partners in the supply chain because it is a shared forecast across all supply chain partners. This more comprehensive visibility enables more synergies and efficiencies in the way products are delivered through the supply chain and greater accuracy in getting products to the right place at the right time.
The real advancement of Flowcasting comes from the fact that it brings together a wide array of partners in the supply chain execution plan as opposed to managing each one separately. Not only are manufacturers and retailers connected in the Flowcasting methodology and solution, but others like distributers, suppliers, and transportation and logistics companies are also included in a coordinated network. They are all connected and working from a single plan. That is where collaboration really creates a huge benefit because each member along the chain can view the plan and view the opportunities there are for creating new efficiencies.
SCN: The Flowcasting mantra is “Don’t forecast what you can calculate.” How will that benefit both retailers and suppliers?
Skorupa: The benefit of working through the Flowcasting method is that the efficiencies come from the single view of the business. Yes, there is a forecast, and yes, there are calculations that are required, but the single view allows every partner along the supply chain execution path to examine their role in relation to everyone else’s role, and that is a critical component. When you examine the goals you are trying to achieve in the supply chain execution system, and you can also examine what the goals are that the other partners are trying to achieve, then that creates a holistic way of doing business. That is the big difference because when you see how everyone is interconnected, you can see the impacts that one partner has on all the others and on the end result.
SCN: The Flowcasting approach allows frequent recalculation of demand up and down the supply chain as conditions change. How is that different from forecasting practices and systems in use today?
Skorupa: Recalculation and the ability to adjust and modify based on conditions as they change in real time is actually the key advancement of Flowcasting. It is one thing to be able to get reports and react to those reports. Reports are often pulled on a time schedule, but not in real time. When you are able to adjust to real-time events, the efficiencies multiply.
I think what you are seeing in retail today is that ideal state that we have been looking at for well over a decade now, certainly since I have been working in technology for over 20 years, which is to become a real-time organization. We are seeing Flowcasting bring together the data from all suppliers in the supply chain execution flow in real time so everyone can adjust and make immediate corrections and modifications, as necessary. That and one-version of the truth shared by all partners in the supply chain are the key advancements of Flowcasting.
SCN: Thank you for your insights, Joe.