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Monday, September 16, 2019

Autonomous Planning in Food Retail

Advanced Planning using machine learning techniques are suggested for procurement.   We always had advanced planning, its just how well you could integrate it with predictions of demand, and in particular unusual elements of forecasts.   New analytics have emerged, but how well will they deliver?

The invisible hand: On the path to autonomous planning in food retail   from McKinsey

It’s not news to food retailers: sometimes your stocks are too high, sometimes they’re too low. Advanced planning now gives them entirely new options for solving the expensive problem—and cuts costs in the process.  .... 

Procurement planners in food retail today are not to be envied. They have to please customers who have never made more exacting demands on availability, freshness, and range. And they ignore such expectations at their peril: the competition is relentless, driving all market participants to seek out improvements incessantly. Those who stick to their legacy processes can only make comparable progress at the cost of mounting stocks, increasing write-offs, and an increasingly complex supply chain.

Internally, planners are often struggling with outdated IT systems that are isolated from each other, unreliable sources of information, and in some cases, largely manual and poorly coordinated processes. Forecasts are commensurately inaccurate and personnel expenses high. Externally, on the other hand, decision makers are faced with an increasingly unfathomable offering from digital service providers that—although they can process huge volumes of data with their solutions—cannot give retailers any advantages of relevance as long as they leave their operating models unchanged.

The future will likely be very different. A look at online retail already reveals the shape of things to come: leading companies are developing highly integrated planning systems that already use the most advanced analytics and machine-learning solutions available today. These high-tech methods, also referred to as “advanced planning,” will, in the future, take control of steering in food retail as well. And they set exacting requirements on companies: they entail tapping the entire wealth of transaction data along with external parameters as sources. Retailers need a completely different process landscape, new capabilities, more computing power, and advanced algorithms.  ... " 

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