Four steps to achieving successful demand forecasting

The Grocery Code Adjudicator states that suppliers to UK grocery retailers deserve to receive timely and accurate forecasts. Its Grocery Store Supply Code of Practice (GSCOP) defines what is expected, and its latest annual report states that all regulated retailers achieved compliance.

Despite this, forecasting remains one of the top three issues suppliers face. The report highlights suppliers reporting poor forecasts from retailers, significant variations between forecasts and orders, and penalties for failing to meet service levels.

Furthermore, the GCA June 2018 publication states that: “It was found that retailers adopted a range of approaches, and used the word “forecast” in a variety of ways. Some made a clear distinction between a forecast and an order; others did not see forecasting as a discrete activity but rather, as an integral part of supply chain management, often proceeding close to real time.”

So, how can retailers and suppliers move forward? The GCA’s Best Practice Guide [2] makes 17 recommendations to improve the current process. These include:

  • Closer collaboration between retailers and their suppliers
  • Regularly reviewing forecasting performance
  • Ensuring that suppliers are able to get access to supply chain or buying teams to share intelligence and discuss forecasts or orders
  • Ensuring that retailers have adequate systems and processes which learn from and take account of known or past issues
  • Ensuring that suppliers are able to access adequate sales data

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