Getting the supply chain in sync

8/18/2015 - by Keith Nunes

The relationship between manufacturers and retailers is changing as data becomes more important to the supply chain.

COLORADO SPRINGS, COLO. — The changes taking place in the marketplace are having dramatic effects on both food manufacturers and retailers. For example, in order to improve efficiencies food manufacturers are requesting greater lead times from retailers while retailers are in need of agility.

Mark Batenic, chairman, president and c.e.o. of IGA.

“Working with C.P.G., they are getting farther out in planning,” said Mark Batenic, chairman, president and chief executive officer of IGA, Inc., Chicago, during the G.M.A. Leadership Forum, held Aug. 14-16 in Colorado Springs. “They tell us they need our plans a year in advance. Things are happening so quickly, how do you react?

“I think there has to be more flexibility, more use of the data of what is going through to the shopper. I know logistics are involved, but a year in advance? With fresh and groceries, we have to be closer to the source of data for promotion. We have to be able to react to these trends that are coming at us at warp speed.”

Dennis Donelon, senior director of customer supply chain integration for PepsiCo, Inc., Chicago, said the industry has to start changing its best practices as they relate to vendor collaboration.

Dennis Donelon, senior director of customer supply chain integration for PepsiCo.

“I think we are where Xerox and Kodak were several years ago,” he said. “At what point are we as an industry going to adapt?

“With the technology we have today we have the ability to focus on the shelf. Imagine how many s.k.u.s (stock-keeping units) there are in the typical grocery store. There is not a company or team that can manage that amount of data. Computers can. We have to ask how are we using data? More data does not make you smarter. The opportunity in the room is to focus on our partners to bring information together and work together.

“We all want to sell more. What if your customer wants to sell more but hold less of your product? Do you know that? We need to think about our partners and the supply chain and I think we can take huge leaps as an industry.”

Girish Dhaneshwar, director of supply chain for the consulting firm Cognizant, Toronto, said warehousing is one area where changes need to be made in the process.

Girish Dhaneshwar, director of supply chain for the consulting firm Cognizant.

“What we are seeing is whole focus is on taking cost out of the system,” he said. “In warehousing, so many technologies have come along to create savings. ... You need to start thinking about your warehouses differently. Warehouses in the omni-channel will be changing and we need to start re-thinking how we manage warehouses.”

Focusing on the omni-channel drove the conversation to e-commerce and how such on-line vendors as Amazon and others are starting to promote greater change in the system.

“We are seeing a lot less full pallet orders,” Mr. Donelon said. “We are seeing more demand for special items and we are trying to understand who is supplying our products when we are not. You have to put aside the pride factor and recognize what your core competency is.”

He added that PepsiCo is looking at the e-commerce space and trying to identify where its strengths are in the emerging retail category.

“You have to step back and say what is right for me?” he said. “Will this drive ultimate value for the consumer? For our business it is not a core competency to be a warehouse for Amazon. But it requires us to understand what products will play in that space and it is limited. What is the opportunity? Just doing it to do it is not the best way to build success.”