5 Retail Strategies for Supermarkets for AI-Driven Demand Forecasting and Replenishment Planning

December 5, 2022 · 4 minutes
Meet demands for your supermarket supply chain with AI-driven demand forecasting.
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In the past two years, there has been a shift in how supermarket & retail grocery supply chains function. A report by Acosta, a US-based sales and marketing agency, on grocery store trends for 2021 indicates that 46% of people now use online delivery more than they did before the pandemic. 

A shift from physical grocery stores to digital grocery stores is indicative of a shift from traditional shopping practices to demand-driven buying practices. When demand can be anticipated with accuracy, it can be delivered efficiently with demand forecasting techniques.

What’s the Importance of Demand-driven Replenishment?

Store replenishment is one a core operational process for retail planners and one of the biggest challenges faced by them is the trade-off between stock availability and excess stock.

It is therefore important to accurately estimate how much is demanded by customers and how much is needed for accurate replenishment on time, based on customer demand. 

This can go a long way in avoiding lost sales, stock-outs, and customer disappointments. Demand-driven replenishment and fulfillment can help retail planners manage large SKUs, determining each sales location and its optimal inventory targets.

Using an AI-driven retail replenishment software and planning solution that tracks inventory can help planners easily forecast and balance store demand to provide accurate SKU level replenishment. This ensures enhanced stock availability and reduction of lost sales. 

Challenges Faced by Supermarkets Without Effective Replenishment Planning

Wastage Caused Due to Perishable Goods

Supermarkets inventory consists of fresh fruits, vegetables, dairy, and meat products, which come with short shelf lives. This presents the challenge of selling them before their expiry periods to avoid unnecessary wastage.

Striving for Inventory Control & Optimization 

Inventory control and optimization has always been a top priority for fast moving retail goods. Optimizing inventory always involves attaining the perfect balance between demand and supply to avoid high storage costs as well as stockouts.

In the absence of effective replenishment planning and overall order replenishment, lower display space and physical inventory management limitations may create further problems for retailers.

Inaccurate Customer Segmentation Across Categories

With categories such as baby care, alcohol, groceries, and make-up all under one umbrella, it becomes difficult for grocery stores to push targeted advertising due to multiple target audiences.

Therefore accurately segmenting customers by collecting smarter data which syncs that information across all retail locations and connected devices should be a priority.

Sustainability Initiatives and Environmental Concerns

Concerns around environmental degradation and achieving long term sustainability have brought forth the added expectation of dealing with sourcing and management of products in a manner that does not harm the environment. 

Bottlenecks Hampering Assortment Optimization

Production bottlenecks have stemmed in all fragments of the retail and supermarket supply chain, in particular for those that deal with imported perishable goods. Therefore, finding and maintaining the optimal assortment of products to sell in stores has always been at the core challenge for retailers across segments.

What are the Benefits of Efficient Order Replenishment?

Data-driven forecasting builds accurate information pipelines based on patterns of purchase and forecasts of global trends.

When applied to order replenishment, these insights can be valuable to build the pipelines feed data to every level of the supply chain, thus enabling supply to be specially curated for the demand.

Some of the benefits of this include:

  1. Lesser operational costs 
  2. Optimum stock levels with greater ROI on inventory turnover 
  3. Improved customer service levels 
  4. Better management of SKUs for long-term profitability 
  5. Alignment to  predictability of demand, delivery lead time, and delivery accuracy of each item.
Build resilient demand plans & forecasts for your supermarket supply chain with ThroughPut. Watch on-demand webinar now.

Data-driven Demand Forecasting and Replenishment Planning Strategies for End-to-end Supply Chain Efficiencies

Demand forecasting elevates supply management to a level of tremendous viability and profitability. These replenishment planning strategies can help in the long term-

1. Leveraging On-time Replenishment for Alignment with Future Demand

Accurate demand forecasting guarantees replenishment of inventory based on real-time data. With automated information tracking and data management using effective replenishment planning, anticipating future demand comes naturally.

Accurate data ensures that stock replenishment is at par with future demand.

2. Implementing Optimized Resource Management to Eliminate Bottlenecks

It becomes easy to identify bottlenecks and points of wastage in the retail and supermarket supply chain with a demand-driven system in place. Where resources are scarce, demand-driven forecasting along with effective order replenishment, can identify critical junctions and points of intervention for resources to be deployed for optimized deployment.

3. Increased Supply chain Visibility for Optimum Output 

Demand forecasting in supermarket supply chains permeates down to every link in the supply chain. All channels, from transportation and distribution, benefit from precise, demand-driven information.

When demand is accurately predicted, procurement of goods and services becomes a precise activity, eliminating the need for re-evaluation and repetitive re-ordering.

The backflow of information ensures efficient material flow through the supply chain.

4. Reduced Run-hours Powered with Replenishment and Fulfillment

When the demand-driven data informing supply becomes readily available and undisputable, the time required for managing operations also reduces along with replenishment and fulfillment. Cutting down operation time also cuts down operational costs within supermarket supply chains.

AI-powered Replenishment Planning to Align for the Future

In order to meet customer demand on time , it is important to integrate demand-driven forecasting along with accurate replenishment fulfillment and planning for retail grocers.  Demand-driven forecasting is a key performance optic that enhances both the user experience as well as profitability for the owner. 

Throughput’s Demand Sensing Solution uses sales, production & logistics data sets to forecast demand and plan order replenishment and acts on it to create an undisrupted material flow through the supply chain pipeline. 

It also presents vast data sets in the form of accessible interfaces and dashboards in order to automate sales, purchasing, distribution, and manufacturing for enhanced profitability.

To see your supply chain systems optimized for higher efficiency, smarter replenishment planning and visibility with supermarket supply chain software, book a demo with us now.

Cut down possibilities of overstocking or stock-outs with ThroughPut demand sensing software. Book a free demo now.
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Anita Raj
Product Marketing Specialist