Supply chain collaboration for improved forecast accuracy of promotional sales

Usha Ramanathan

93 citations0/0 files storedInternational Journal of Operations & Production Management

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Supply Chain and Inventory Management Quality and Supply Management Forecasting Techniques and Applications

Abstract

Purpose In general, demand for functional products is dependent on a range of promotions offered in various retail outlets. To improve promotional sales many retailers collaborate with manufacturers for planning, forecasting and replenishment. The purpose of this paper is to hypothesize that collaborative forecasting will improve the forecast accuracy if all the partners can relate their demand forecast with underlying demand factors. Design/methodology/approach In this paper, the author uses a case study approach to study various demand factors of soft drink products of the UK based company which offers frequent promotions in retail outlets. The paper represents the case study findings in a conceptual framework called Reference Demand Model (RDM). Further, the case study findings are validated empirically by means of multiple linear regression analysis using actual sales data of the case company. Findings Surprisingly, some of the demand factors specified as very important by the case company are not found to be highly significant for actual sales. The paper uses the identified demand factors to suggest levels of collaboration. Practical implications Understanding the importance of product specific demand factors through regression models and incorporating the same in managerial decision making will aid managers to identify the necessary information to make accurate demand forecasts. Originality/value This approach unveils the presence of three levels of collaboration namely preparatory, progressive and futuristic levels among supply chain partners based on the information exchange. The proposed method will aid decision making on information sharing and collaborative planning among manufacturer and retailers for future promotional sales.

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References

1991Firm Resources and Sustained Competitive Advantage 2004Firm resources and sustained competitive advantage 2002Case research in operations management 1997What is the Right Supply Chain for Your Product 2000The Value of Information Sharing in a Two-Level Supply Chain 1997The Bullwhip Effect In Supply Chains 1 2000Supply Chain Inventory Management and the Value of Shared Information 2000Quantifying the Bullwhip Effect in a Simple Supply Chain: The Impact of Forecasting, Lead Times, and Information

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