Forecast Daily, Replenish Smarter: How to Improve Service Levels, Reduce Spoilage, and Increase Profitability
The webinar titled "Forecast Daily, Replenish Smarter" demonstrates how food distributors can enhance service levels, reduce spoilage, and boost profitability by using BFC Replenishment Optimizer to improve daily forecast accuracy and streamline replenishment processes, overcoming challenges like short shelf life and volatile demand that traditional ERP and spreadsheet methods struggle with.
Replenishment is a major driver of service levels, spoilage, and margin in food distribution. When forecasts are inaccurate, the result is waste, stockouts, and negative impacts on margin.
This webinar explores how distributors use BFC Replenishment Optimizer (RO) to improve forecast accuracy and ordering for food-specific challenges such as short shelf life, volatile demand, and complex buying patterns. The session covers how RO works in practice, the results teams are seeing, and what it takes to implement and sustain a smarter replenishment process.
Key Learning Points
- Next-Gen Replenishment in Practice: A walkthrough of how daily forecasting and replenishment benefit modern food distributors.
- Limitations of Traditional Forecasting: Where ERP and spreadsheet-driven forecasting struggle with demand volatility, short shelf life, and buyer workload.
- Improving Service Levels Without More Inventory: How smarter replenishment decisions help reduce stockouts and excess inventory.
- Making Daily Replenishment Manageable: Simplifying day-to-day replenishment so buyers can focus instead of constantly reworking forecasts.
- Where Replenishment Optimizer Drives Value: How BFC Replenishment Optimizer impacts buyers through forecast accuracy, spoilage reduction, and buyer efficiency.
Webinar Transcript Highlights
Introduction
The session is led by Paul Van Stedum, a senior solutions engineer with decades of experience in supply chain and buying, particularly in grocery and foodservice wholesale. The goal is to help buyers improve service levels, reduce spoilage, and increase profitability using better tools.
Overview of Replenishment Optimizer
Replenishment Optimizer is designed to:
- Enable daily forecasting
- Address perishable inventory challenges
- Drive revenue and profit
- Make buyers more effective by reducing reliance on manual processes
Current Practices in Inventory Management
- Many organizations still use spreadsheets or legacy ERP systems for buying.
- ERPs are strong at core functions but often weak in forecasting and replenishment.
- Teams must manage vendor deals, promotions, seasonality, and unusual demand across thousands of SKUs.
- Replenishment Optimizer provides tools to drive sales and profitability more effectively.
Challenges of Weekly Forecasting
- Most solutions forecast weekly or in periods, updating forecasts and exceptions only once a week.
- This delay can cause missed opportunities to address issues like stockouts or late shipments.
- Daily forecasting and exception alerts allow for more timely and accurate responses.
- The system forecasts based on order-entry demand, not just shipped quantities, capturing true customer demand.
Understanding Perishable Inventory
- Perishables are not just produce; they include dairy, eggs, meat, seafood, beverages, frozen, and some dry goods.
- The goal is to balance fill rates, profitability, inventory levels, buying cadence, and spoilage reduction.
- Spoilage can significantly impact profitability, and better tools are needed to manage it.
Age-Based Replenishment Strategies
- Age-based replenishment considers lot and expiration dates for inventory on hand.
- Substitution rules and shorter reorder cycles for perishables are supported.
- The system forecasts different lead times by order day and helps manage exposure periods.
- Customers have recaptured 25% to 40% of spoilage leakage using the system.
Impact of Spoilage on Profitability
- The system can project spoilage ahead of time and alert users before it happens.
- Real-world examples show significant cost savings by preventing spoilage through timely alerts and promotional adjustments.
Balancing Service Levels and Inventory Costs
- Replenishment Optimizer is an end-to-end solution, integrating demand capture, forecasting, and replenishment execution.
- Includes a profit simulator to help set service-level goals based on item priority and profitability.
- Considers lead times, promotions, seasonality, and buying cadence to optimize inventory.
Daily Demand Forecasting Techniques
- True daily demand forecasting updates every day, allowing for rapid response to demand changes.
- SALSA (Service and Lost Sales Analysis) filters out artificially inflated demand from repeated orders due to stockouts.
- Data scrubbing highlights exceptions and filters out anomalies.
- Customer demand visibility allows buyers to see order entry history and investigate unusual demand.
- Promotional filters separate promotional lift from normal demand.
- Lot spoilage analysis uses WMS data to make accurate replenishment decisions.
Customer Success Stories
- Customers in grocery and foodservice have reduced safety stock, inventory, and increased fill rates.
- The daily buyer’s workbench provides alerts and exception-based workflows, reducing time spent on routine tasks.
- Customizable dashboards allow managers and buyers to focus on relevant metrics and challenges.
Daily Forecasting
- Daily updates allow for quick adaptation to demand changes, both increases and decreases.
- Pattern recognition and seasonal adjustments improve forecast accuracy.
- Exception alerts enable proactive management.
Demand Cleansing and Customer Visibility
- The system provides immediate visibility into who caused unexpected demand spikes.
- Buyers can drill down by customer, location, or group to assess whether demand is legitimate or anomalous.
Order Entry Data vs. Invoice Data
- Forecasting based on order entry data provides a more accurate view of service levels and lost sales.
- Real customer examples show improved service levels and increased sales after implementation.
Lot Spoilage Analysis
- The system considers both manufacturer expiration and customer guarantee dates.
- Identifies discountable product and calculates orders based on usable inventory.
- Daily WMS feeds ensure data accuracy.
Perishable Buying Capabilities
- Supports daily history, day-of-week profiling, random weight, multiple suppliers, and promotional spread.
- Handles different lead times by day and supports midday updates if available.
Additional Customer Success Story
- The system enables less experienced buyers to achieve higher and more stable service levels.
Setting Service-Level Goals
- SKUs are ranked by importance and profitability, not just movement.
- The system can simulate different safety stock investments and their impact on revenue.
- Allows for periodic review and adjustment of service-level goals.
Forward Buying
- Automates forward buying decisions based on vendor deals, price increases, and carrying costs.
- Prevents overbuying perishables and maximizes return on investment.
Integration with Dakota WMS
- Pre-built interface with Dakota WMS for lot and expiration data.
- Supports integration with other WMS systems as needed.
This content provides a comprehensive overview of how daily forecasting and smarter replenishment can improve service levels, reduce spoilage, and increase profitability for food distributors, with practical examples and detailed explanations of the BFC Replenishment Optimizer's capabilities.
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