embraced the concept of “collaborative channel management.” It
involves “working with our channel partners to create the best
experience for our end consumer.” To make it work, Sony is involving all key partners in the “end-to-end” supply chain, including
headquarters in Japan and regional sales and marketing organizations.
One key to the new approach is obtaining solid support from
Sony’s global headquarters team. “It has really helped to drive the
change,” says Kairis. The next piece is identifying the roles and
responsibilities of all individuals in the chain. That’s followed by
focusing on data, to examine store-level information on a weekly
basis. With that intelligence in hand, and working closely with
retailers, Sony can formulate an action plan and determine which
areas need attention.
Sony works from a series of key performance indicators, meas-
uring such critical factors as in-stock levels and customer weeks of
supply. Kairis notes improvements of 40 percent and 50 percent,
respectively, in those areas since implementation of the new collab-
orative effort. “We want to see an increase in available inventory at
the right locations,” she says,”at the same time not driving up inven-
tory levels.”
The company has created both an internal scorecard and one
that can be used with its top two retail channel partners. It has done
a lot of work on “fine-tuning” the metrics, Kairis says, to ensure best
use of the data. She says the retailers have responded favorably to
the effort. “They really appreciated the visibility to what’s happen-
ing in their location, and the guidance we’ve been able to provide,”
she adds. “We’ve suggested order forecasts on a weekly basis. They
work through what they can and can’t utilize.”
Future enhancements, involving deeper analysis of product cat-
egories and customer demand, will involve close cooperation with
retail partners. Says Kairis: “We can’t do it without their support.”
Planning for Demand in
Consumer Electronics
Guy Yehiav, vice president of value chain planning with
Oracle Corp., describes some innovative techniques that
suppliers of consumer electronics can use to improve the
matching of supply with demand—drawing on the
resources of everyone in the chain.
Without visibility into actual demand, producers of consumer packaged goods and electronics will have a hard time meeting the needs
of the marketplace. Yehiav says suppliers should be getting point-of-sale (POS) data from retailers. An “information-rich” environment is the key to understanding customer behavior, he adds.
That’s not the entire solution, however. Some retailers are reluctant to share POS information, says Yehiav, and many manufacturers don’t know what to do with that intelligence even if they receive
it. Ultimately, they will need to combine that data with information
at the marketing level, then figure in the needs of new-product
introductions. Companies must align their short-, medium- and
long-term planning processes for each item, especially in the area
of electronics, where product lifecycles can be alarmingly brief.
The role of replenisher is a vital one, but it’s often filled by an
entry-level staffer, Yehiav says. “The probability is that a good
replenisher will not be there for the long haul.” Even the best
forecasting technology can be undermined by poor processes.
He urges the use of “open order correction,” a technique
whereby replenishers take into account current orders, expected
consumption and the historical behavior of the retailer. In the
process, “they can anticipate the order with much better accuracy
in the short term.”
Open order correction is especially available with new-product
introductions, where suppliers must cope with short lifecycles and
a wide array of SKUs. The technique helps them correctly to assess
demand for items that don’t have a history. Even so, it has yet to see
wide-scale adoption by CPG and electronics producers. “Not a lot
of manufacturers know there’s a technology that can help to automatically anticipate the next order,” says Yehiav.
