The Hindu Business Line : Getting the forecast right

“The merchandise has to be in place to wow the consumers. The idea is to get the forecast right so that the bulk of the merchandise can be sold at full price.”

_ K. Ananthan

Get it right: Keeping the wheels of the supply chain well oiled and running is critical to retail. (Above) A Reliance Fresh store employee uses a radio frequency identification device to manage stocks.

Swetha Kannan

Listen to your customers, learn from them,” says Dhaval Buch, Executive Director, Supply Chain, Hindustan Unilever. A simple statement but a profound reality – a basic lesson retailers often forget. But if this one lesson is practised wel l, most retail and supply chain hassles can be overcome easily.

Retailers get paid only when the cash register rings. And that can happen only when the customer is happy. However, no one can really satisfy the customer fully. That will remain a dream always, says Buch, who was part of a panel discussion on supply chain management in the retail sector, at the India Sourcing Summit held recently in Bangalore.

Crowning the customer

Stressing that the customer is an integral cog in the retail chain, Rakesh Biyani, Wholetime Director, Pantaloon Retail, says getting the customer forecast right is half the job done. Of course, in a business like fashion, prediction of trends is not like a stylish ramp-walk. Fashion is a challenging, dynamic business and therefore placing orders is tough. But the job still needs to be done.

“The merchandise has to be in place to wow the consumers. The idea is to get the forecast right so that bulk of the merchandise can be sold at full price. Focus on the larger consumer cycle and continuously monitor the run rate. Look at what competition is doing,” says Biyani. Also, keep in mind regional differences and local preferences, he adds. An effective loyalty programme also contributes to customer satisfaction. Of course, make sure you get the ‘benefits v/s costs’ equation right, warns Bijou Kurien, President – Lifestyle, Reliance Retail. “Take a wise business call on which category lends itself well to a loyalty programme. If your consumers are anyway going to visit your store, a loyalty programme doesn’t make sense. It makes sense only when you need to woo the consumer to come back to your store. At Reliance Fresh, 37 per cent of sales come from our loyalty programme. About 2.5 million consumers are in this programme.” Also, use customer data efficiently. Translate the buying history into consumer intelligence for offers, customer benefits and such, recommends Kurien.

And for heaven’s sake, don’t run out of stock. As shoppers, don’t we know how irritating it is when we hear the words, “Sorry, we are out of stock.” Presence on the shelf when the customer demands it is very critical today, says Sinchan Banerjee, Head - SCM, ITC Foods.

Quality, consistency

Another crucial aspect of supply chain management is the quality and consistency issues. How does one ensure that? Kurien explains what goes on at Reliance Fresh. “Our target is the farmer who sells his produce at our various collection centres. The produce then goes to the central processing centre where the products are washed, cleaned, sorted and graded before they go for packaging and to the stores finally,” says Kurien. So, the bulk of the dumping (of bad produce) is done at the central processing centre – there is one in every large city or catchment area, he adds.

More challenges

Some time ago, malls showed promise of becoming the drivers of retail growth. But how far are they from achieving that? Today there are as many malls struggling to come up on time as there are existing ones. The bulk of these malls are built by first-time developers who have no clue about the retail sector, laughs Biyani. The rest are all caught under regulatory issues. Add to this problem archaic labour laws and a complex tax structure, laments ITC Foods’ Banerjee.

Supply chain in the future

The short supply of talent and skills is a grave concern. “The best of the people are not seeing supply chain as a career of choice,” rues HUL’s Buch. Unfortunate indeed, considering that supply chain will have a huge role in the future of retail. “With retail getting organised and India becoming a one market place, supply chain is going to get more and more important,” says Biyani. What is required is continuous reinvention. “As more and more sophisticated chains come up, the retailer has to constantly learn and reinvent his methods in the changing landscape,” says Buch.

Greening technologies will come under greater focus in the supply chain process. While today it is about energy efficiency and using alternative fuels, the next greening wave will focus on sustainable packaging and waste handling, says Buch. Are retailers ready for this and more?

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