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Toilet paper stockpile9/14/2023 ![]() The math is simple, a 13% reduction in service over the course of a year translates to a 13% drop in sales. Sales could have been even higher if service had been better. However, there were unrealized revenue opportunities for the manufacturers. The result was the largest sales growth in the ten-year history of this study. Because many consumers began working at home and greatly curtailed dining out and traveling, demand for grocery goods soared. Despite Service Disruptions, Revenues Grewįor the most part, the companies participating in this study manufacture goods that end up in grocery stores. Not surprisingly, safety stock - inventory buffers used to protect against demand variability and supply disruptions - increased by 4% to deal with the volatility caused by the pandemic. While that was an improvement, it was still much worse than the historic baseline 99% service levels. For the rest of 2020, service levels stayed at 86%. In other words, if manufacturers cannot deliver everything that retailers are ordering, then there is a service failure.īy June, service levels had bounced back to 86%. Service is calculated as the difference between orders and shipments, divided by shipments. For multinational consumer goods and food & beverage companies, service is typically 99%. Service Plummets to Historic Lowsĭuring the onset of the pandemic – the months after March when nations were locking down their borders - service dropped to 83%. ![]() Demand sensing solutions, as defined in this report, produce daily forecasts that reflect current market realities, so it should not be surprising these forecasting solutions perform better when uncertainty increases. But if there was any silver lining it was that companies that made use of planning systems that combined demand sensing – the use of multiple, real-time signals (like sales in a particular store or shipments from a retailer’s warehouses to their stores) – and machine learning, had significantly less error. No matter what kind of demand planning solution was used, forecasting accuracy dropped. ![]()
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