Only the very best manufacturers have become expert on the retail supply chain and have learned to speak and understand the retailer's language, says Gary Maxwell, senior vice president of merchandise replenishment at Wal-Mart Stores. The result is a lot of missed opportunities, Maxwell told attendees at the AMR Executive Conference, held last month in Boston.
One example he gave is a lack of understanding among manufacturers of what a forecast means. "We forecast sales at the cash register and we provide that number to suppliers for them to translate into production orders," he says. However, many suppliers treat this number as an order forecast.
Another problem is that the forecast too often is rolled up into an aggregate number and not responded to individually.
The gap is not one-sided, he adds, noting that retailers often fail to understand manufacturers' lead times, creating additional miscommunications and missed opportunities.
The underlying problem is a lack of training and certification for people working in the retail supply chain, he says. Manufacturing has done a much better job of training than retail through such organizations as APICS, he says. "Historically, manufacturing has been viewed as a science while retailing has been viewed as an art. But there is a huge opportunity for training in the retail area on common principles and supply chain fundamentals."
To bridge this gap, Wal-Mart is working with the Retail Industry Leaders Association to create a 50-hour online training program on inventory management and replenishment in the retail industry. Currently, he says, the program is in the pilot stage.