Book Review: Flowcasting the Retail Supply Chain 

It must have been a long winter in Canada for Mike Doherty and Jeff Harrop. How else would two of the most respected minds in retail supply chain planning find the time to document their experience in their first book – Flowcasting the Retail Supply Chain.

When they first called to tell us about their book, I asked if it was a collection of the topics covered in their provocative newsletter, The Right Flow including my favorite title “Is Your Supply Chain Boiling Like a Frog?”. The answer was surprisingly, “No”.

What I found in Flowcasting is a practical description of proven techniques from our days together at Canadian Tire that have now been field-tested across a variety of retail formats through the down-and-dirty work of these two consultants, turned authors.

Don’t misinterpret the grabbing subtitle, “Slash Inventories, Out-of-Stocks, and Costs with Far Less Forecasting”. These practitioners of retail planning still advocate forecasting, analytics and time-phased planning; they just tend to strongly recommend an approach that starts with consumer demand. And we agree.

DT: Great book.

Harrop: Thanks.

DT: Why such a strong message on the cover?

Harrop: I knew you would ask me about the cover. As you know, we struggled for so many years trying to balance a consumer demand forecast with our order forecast in our work at a great retailer here in Canada. We found the same practice at so many other retailers. So we needed to express ourselves… and tell the world there is a better, more integrated approach that starts with the consumer in mind.

DT: So now that POS data is available, manufacturers can stop forecasting?

Harrop: You are not going to let it go.

DT: No.

Harrop: Should manufacturers stop forecasting? Of course not. Our book outlines a how-to approach for using POS data in time-phased planning processes within the retail enterprise. We also describe an approach for consumer demand based collaboration with manufacturers.

DT: It seemed to me that you were really talking about operational forecasting. Is that correct?

Harrop: Exactly. Manufacturers and retailers still have to create forecasts and develop comprehensive business plans. Then they should bring them together in a collaborative process in support of a consumer-driven, operational plan.

DT: Thank you. So a manufacturer should still expect a retailer buyer to ask their opinion of the potential for their products… for their category. Harrop: No doubt. Merchants want to compare opinions before they finalize the category plans. But once a plan is complete, then it’s time to operate. The operational plan needs to start in the store, with the consumer in mind, and should work back through the shelf and eventually to the order plan.

DT: Are you suggesting that the order plan may be different than the consumer demand plan?

Harrop: Absolutely. As you well know, the disconnect between the consumer demand plan and the order plan is causing a lot of financial grief for retailers and manufacturers. Our research showed that working back from the point-of-sale data creates better alignment and performance results.

DT: So what should a manufacturer do in this brave new world?

Harrop: If I were a manufacturer, I would engage my key retailer customers and jointly figure out how to forecast consumer demand and schedule the rest of the supply chain around it. Retailers will expect suppliers to present their insights. Oh and focus on retailers that “get it”... I mean get the idea of working back from consumer demand plans. Some retailers are still focused on age-old processes, such as forward buying, etc. So a manufacturer will most likely have to deal with forecasting consumer demand and ordering patterns, the imbalance of consumer demand and order plans, until more retailers get it.

DT: Thank you.

Harrop: Always a pleasure.

To read more of Jeff’s thoughts on retail planning processes, read his exclusive article in the Digital Tempus Business Intelligence Network. Register or login today.