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Why do CPG companies struggle with fill rate improvements?
Most CPG companies run their supply chains with heavy dependence on monthly demand forecasts. When the actual demand at the granular level turns out to be widely different from the forecast, as is often the case, their teams get into a reactive mode. They expedite freight. They put pressure on factory to produce urgently. They pressurize vendors to deliver fast. They get into firefighting.
By the time a fire is put out, another one starts. It’s a never ending sequence of fires to be put off by a team under stress.
Firefighting is like treating the symptom. Firefighting is not a sustainable solution. We need to prevent fires. We need to attack the root cause.
Major root cause of all stockouts is a delayed response to demand shifts. We should detect demand shifts fast. We should anticipate demand shifts by deciphering the evolving demand patterns.
Demand Sensing is precisely the science to do it. It deciphers evolving demand patterns and predicts demand shifts in the near future, so that your supply team gets enough time to prevent the fire.