Operations profitability and agility, through data and AI

Bulk Orders and the Bulkier Genie

Jan 28, 2015 4:25:38 PM / by Ratheesh Raveendran

Few weeks back, Sanjiv & I were at a meeting with a major apparel brand manufacturer to present OpsVeda solutions to their team. The operations team suggested we pick an issue that couldn’t be resolved earlier, and explain how OpsVeda will make a difference in the process. One of the experienced operations’ team member suggested "let us go with Bulk orders, they impact many things downstream…”. Then, Sanjiv explained how OpsVeda helps AFS customers manage exceptions in demand and supply planning efficiently.

Bulk Orders, sometimes referred to as contracts (Promises to buy), are a common practice in the apparel or retail industry.  At the beginning of a season, the retailers forecast the demand and place orders for the next 2-6 months. It can be based on the demand observed at stores, promotions, and the feedback received from customers. The retailers communicate the demand forecasted to the manufacturers/ distributors as bulks or contracts, and eventually place ‘pull’ orders for specific quantities and locations as the season progresses.

Few common issues with bulk orders and contracts are:

  • Duplicates – Manually entered Bulks and the followed up by EDI transmissions
  • Duplicates – Same  bulk order placed by multiple sales representatives
  • Bulks pointing to parent entity, while pull orders relate to specific entities/locations/ stores
  • Referencing of orders to bulks is needed to ensure the supply plan is not over or under the demand; further, to ensure we first prioritize allocation to those that sent in the forecast.

Imagine thousands of products, each with multiple styles, and each style with multiple grid sizes (for instance, Jeans, style 508, grids 30x28, 30x30, 30x32, 32x30, 32x32, 32x34, and so on). Millions of demand lines are fairly common, and the SKU permutations become challenging, fairly quickly.

Business implications:

  • If the brand manufacturer underestimates the demand, it will result in shortage that ultimately impacts customer relationships, loss of sales and fails to meet their SLAs. Most importantly, lost opportunity and lost competitive advantage.
  • If you estimated right, you have the perpetual duty to ensure allocations are within customer start dates, before cancel dates, and prioritized appropriately.
  • If they overestimated the demand, it results in excess inventory, markdowns and losses.

A balance between organization’s risk tolerance and desire to optimize operational resiliency is essential. Bulk orders and contracts are necessary for the makers & the distributors to plan their procurement & production. Unfortunately, these bulk orders fail with the current system leading to negative impact on supply chain. Therefore, companies are constantly looking for a solution that can automate, mitigate the risks around bulk orders and contract referencing, so as to optimize execution.

OpsVeda for AFS/ Retail delivers a preconfigured sales/supply/inventory/allocation solution that streams internal and external transactional data in real-time, and reports exceptions on an interactive workbench for the end users and managers in sales, logistics, and supply operations. In this meeting, there were two major requirements that came from the sales and operations team, specifically with respect to bulks:

  • To identify & flag a duplicate bulk order ahead of time, as they stream in
  • To track sales orders against the committed bulk orders instantly.

The team had concerns about system performance - “hey, it takes over 6 hours in our system today…”! We said, “how about 60 seconds”! We illustrated the significance of OpsVeda being powered by the SAP HANA and how OpsVeda is designed for high-volume, high-speed analysis and handles such comparisons with ease. And yes, the solution enables a real time streaming storyboard for the operations team.

In a nut shell, OpsVeda empowers supply chain professionals to stay ahead of the rapidly changing environment. The use cases of OpsVeda don’t stop with the above mentioned scenarios. There are endless possibilities to streamline operations and to achieve transparency using OpsVeda solutions.

With OpsVeda for AFS/ Retail, complexity with bulk orders turned simple for the operations team!

Tags: Enterprise Software, Operational Intelligence, Real Time Analytics, channel management, Business Agility, Supply Chain Visibility, Innovation

Ratheesh Raveendran

Written by Ratheesh Raveendran

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