Forecasting: Bridging the Gap Between Brands and Fulfillment Providers

June 13, 2024
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A topic that keeps popping up in my mid-year conversations with brands and fulfillment providers is forecasting. It’s a consistent pain point that, if not addressed, can lead to significant operational challenges. Let’s break down the issue and explore some practical solutions to improve forecasting accuracy and communication between brands and their fulfillment partners.

The Problem: Inconsistent and Ineffective Forecasting

For Fulfillment Providers:

  • Inconsistent Forecasts: Fulfillment providers often receive forecasts that are either too sporadic or not detailed enough.
  • Lack of Advance Notice: Planned sales events are not communicated in a timely manner, making it difficult to plan ahead.
  • Labor Planning Challenges: Without accurate forecasts, providers struggle to plan labor effectively, leading to:
    • Excess Labor: To ensure service levels, providers may carry too much labor, driving up costs and eroding margins.
    • Insufficient Labor: Alternatively, they may run lean to save on labor, resulting in missed service targets and strained relationships with brands.

For Brands:

  • Difficulty in Developing Accurate Forecasts: Brands often struggle to predict demand accurately, impacting their ability to provide reliable forecasts to their partners.
  • Communication Gaps: Even when accurate forecasts are developed, there’s often a disconnect in effectively relaying this information to the fulfillment provider.
  • Operational Impacts:
    • Sourcing Issues: Poor forecasting affects sourcing decisions, leading to stockouts or overstock situations.
    • Increased Costs: Inaccurate forecasts drive up costs as fulfillment providers may need to carry more labor.
    • Lost Sales: Missed service levels due to poor forecasting can result in lost sales and customer dissatisfaction.

The Impact of Poor Forecasting

The ripple effects of poor forecasting can be severe for both brands and fulfillment providers. Here’s a closer look at the consequences:

  • For Fulfillment Providers:
    • Increased labor costs due to carrying excess labor.
    • Missed service targets due to insufficient labor, impacting their reliability and reputation.
    • Strained relationships with brands, potentially leading to lost business.
  • For Brands:
    • Stockouts or excess inventory, leading to lost sales and higher holding costs.
    • Higher fulfillment costs as providers adjust labor to meet fluctuating demands.
    • Strained relationships with fulfillment providers, affecting long-term partnerships.

The Solution: Improving Forecast Accuracy and Communication

The good news is that both brands and fulfillment providers are taking steps to address these challenges. Here are some effective strategies being implemented:

For Brands:

  1. Invest in Technology:
    • Forecasting Tools: Implement advanced forecasting tools that utilize AI and machine learning to improve accuracy.
    • Control Towers: Develop internal control towers to enhance end-to-end visibility and provide centralized data solutions.
  2. Enhance Collaboration:
    • Regular Communication: Establish regular communication channels with fulfillment providers to share forecasts and updates.
    • Collaborative Planning: Involve fulfillment providers in the planning process to ensure they have the information they need to manage labor and resources effectively.

For Fulfillment Providers:

  1. Leverage Historical Data:
    • Use historical data to generate baseline demand and create more accurate labor plans.
    • Implement systems that can analyze past trends and adjust forecasts accordingly.
  2. Improve Communication:
    • Account Managers (AMs): Utilize account managers to improve communication with brands, ensuring that all relevant information is shared in a timely manner.
    • Feedback Loops: Establish feedback loops where fulfillment providers can share their insights and adjustments based on real-time data and trends.

Practical Steps to Bridge the Gap

To successfully bridge the gap between brands and fulfillment providers, both sides need to focus on simplifying operations and enhancing communication. Here’s how:

  1. Centralize Data:
    • Implement a centralized data platform where both brands and fulfillment providers can access and share forecasting data.
    • Ensure that this platform is user-friendly and provides real-time updates.
  2. Regular Meetings:
    • Schedule regular meetings to review forecasts, discuss upcoming sales events, and address any potential issues.
    • Use these meetings to align on expectations and ensure both sides are on the same page.
  3. Training and Education:
    • Provide training for both brand and fulfillment provider teams on the importance of accurate forecasting and effective communication.
    • Educate teams on how to use forecasting tools and interpret data.
  4. Performance Metrics:
    • Develop key performance indicators (KPIs) to measure the accuracy of forecasts and the effectiveness of communication.
    • Use these metrics to identify areas for improvement and track progress over time.
  5. Scenario Planning:
    • Engage in scenario planning to prepare for various demand situations, from peak sales periods to unexpected downturns.
    • Use these scenarios to develop flexible labor plans that can be adjusted as needed.

The Role of Technology

Technology plays a crucial role in improving forecasting and communication. Here are some tools and technologies that can make a difference:

  • AI and Machine Learning: These technologies can analyze vast amounts of data and identify patterns that humans might miss, leading to more accurate forecasts.
  • Cloud-Based Platforms: Cloud-based platforms enable real-time data sharing and collaboration between brands and fulfillment providers.
  • Advanced Analytics: Tools that provide advanced analytics can help both sides understand demand trends and make informed decisions.

Conclusion: Simplifying Operations for Better Results

In the world of fulfillment and logistics, accurate forecasting and effective communication are key to success. By investing in technology, enhancing collaboration, and focusing on simplifying operations, brands and fulfillment providers can overcome the challenges associated with forecasting. The goal is to get valuable data into the hands of those who rely on it to make decisions and run operations efficiently.

Key Takeaways:

  • Inconsistent forecasts and communication gaps are major pain points for both brands and fulfillment providers.
  • The impacts of poor forecasting include increased costs, missed service targets, and strained relationships.
  • Investing in technology and enhancing collaboration are essential to improving forecast accuracy and communication.
  • Practical steps include centralizing data, regular meetings, training, performance metrics, and scenario planning.
  • Leveraging AI, cloud-based platforms, and advanced analytics can significantly improve forecasting processes.

By focusing on these strategies, both brands and fulfillment providers can create a more streamlined, efficient, and collaborative environment, ultimately leading to better outcomes for everyone involved. Remember, there’s little value in data if it’s not effectively communicated. Focus on getting it into the hands of those who rely on it, and watch the magic happen.

Are you ready to revolutionize your forecasting practices and strengthen your partnerships with fulfillment providers? Start implementing these practical strategies today to bridge the gap and unlock operational efficiency. Don’t let inconsistent forecasts hold you back—take charge of your future success now!

Book a Discovery Call with The TAC Group Today!

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