In 1992, Wal-Mart deployed Retail Link® to provide its vendors with information on the sales trends and inventory levels of their products sold at the retailer’s stores. In 1996, Retail Link became available via the Internet and made the Web its application platform.
The deployment of Retail Link marked another watershed event in the Efficient Consumer Response (ECR) movement that was beginning around that time. At the 1994 conference of the Council of Logistics Management (now the Council of Supply Chain Management Professionals) I spoke about forecasting in the consumer products industry and showed an early version of the demand signals graphic shown in Exhibit 1. I said that companies were contemplating relationships with downstream partners to get demand signals to better understand supply chain dynamics, to do multi-tier forecasting for improved forecast accuracy, and to improve planning to better integrate supply chains. I had just completed a consulting engagement in which we had installed a forecasting system for a consumer-products manufacturer that used the knowledge of a distributor’s inventory to better forecast product sales to that manufacturer.
Since that time, I’ve been enthusiastic about demand signals. I’ve researched, written, and spoken about opportunities that exist to leverage POS (point-of-sale) data and other downstream signals to improve forecasting and integrate supply chains. While industry has generally been receptive to this concept, companies have actually done little with POS data to integrate upstream supply chains. Instead, POS data has mostly been used by customer facing service and account teams to work with retailers on replenishing inventories, especially to support promotions and new product launches. As I observed what has been happening, I concluded that supply chain managers felt that POS data was too inconsistent, cumbersome, and hard to use. Had I been “beating a dead horse” for over 15 years?