E-Commerce Cockpit for Your CPG Supply Chain Fighter Pilots

Matt Tichon
Matt Tichon
VP of Industry Strategy, Coupa

Matt Tichon is the Vice President of Industry Strategy at Coupa, where he serves as a thought leader for the Digital Supply Chain Twin, advanced analytics, and applied AI. With a long history of leading supply chain transformations, he leverages his 25 years of experience in executive and senior-level supply chain roles spanning consulting, technology, manufacturing, and distribution — and is one of Supply & Demand Chain Executive's 2021's Pros to Know.

Read time: 4 mins
E-Commerce Cockpit for Your CPG Supply Chain Fighter Pilots

There has been a fundamental shift in the retail supply chain as commercial leverage has moved downstream from vendors to retailers. Not too long ago, manufacturers had enough influence to establish attributes like package size, case packs, replenishment lot sizes, and, to a large extent, the locations from where retailers would receive their replenishment shipments.

For most manufacturers, controlling those attributes is referred to by industry veterans simply as the "good old days." Manufacturers are now facing a host of emerging challenges as retailers place more constraints on their suppliers. Further complicating the situation are channel shifts and CPG e-commerce demand surges that are taking place due to COVID-19.

From Main Street to the Information Superhighway

The retail environment has significantly changed as consumers have prioritized home delivery and moved their shopping preference from Main Street to the information superhighway.

Amazon capitalized on its first-mover advantage in mass-market e-commerce and has grown to be the preeminent face of many brands to the consumer. A critical aspect that has made this transformation successful is that Amazon created a radically efficient supply chain with advanced analytics, machine learning algorithms, and automation at scale. The mass application of emerging technologies has created a "consumer utopia," where prices have fallen as convenience has skyrocketed.

Amazon's hyper-efficient supply chain keeps inventory levels low by increasing the speed and velocity of products. Suppliers face the increasing challenge of meeting ever-changing order sizes as Amazon passes consumer demand signals upstream at a record pace to minimize working capital while simultaneously trying to meet customer demand.

E-Commerce Supply Chain Challenges for Amazon Vendors

Amazon created Vendor Central to assist their vendors in adhering to the service levels that they have agreed to. Key inventory and sales data is made available to help vendors make optimal decisions on production and allocation of inventory to Amazon's upcoming replenishment orders.

While Amazon created their business model on emerging technologies, that has not been the case upstream in the supply chain for their vendors. Most key vendors have well-established consumer-facing brands supported by monolithic ERP systems. They have invested in supply chain planning systems to create efficiencies and adhere to customer service levels.

More recently, those systems have been augmented with data lakes and analytics to house and contextualize the ever-expanding system-generated data. While this approach does provide a certain level of step change to ensuring inventory availability, it is still lacking. The supply chain planning and forecasting systems they have adopted were not designed to incorporate external data for rapid decision making, thus creating a gap in systems where they do not have a repository to store and leverage data provided by Amazon.

Available Solutions to Share Data Upstream

A translation must occur between a vendor's system that is leveraging internal data and the reems of external data that is being provided by Amazon.

The classic approach to closing this gap is to leverage excel spreadsheets and teams of fulfillment experts that are aligned to the Amazon account. The challenge with this approach is that it is costly, does not scale, and is limited in processing power. This approach also lacks the ability to detect rapidly shifting consumer patterns, nor does it allow for an algorithmically evaluative process to determine the best course of action.

We must find inspiration for a modern solution for our fulfillment planners, and for that, all we have to do is look up to the sky.

A Cockpit for Today's CPG Supply Chain Fighter Pilot

Fighter pilots depend on a highly specialized cockpit outfitted with an array of sensors and intelligent systems backed by powerful algorithms. Those flight systems monitor and respond to external data while simultaneously considering the aircraft's state to assure mission success. As the battlefield evolves and technology advances, it's commonplace to upgrade avionics and battle systems to effectively extend airframes' service life by up to 20–30 years.

The good news is that artificial intelligence makes it possible for CPG companies to quickly and easily upgrade their planners' avionics in much the same manner. Planners can now have a modern cockpit built for the needs of their current e-commerce mission that incorporates external data feeds from Amazon's Vendor Central while considering the current state of their supply chain. They can rely on algorithms that are continually working to power predictive and prescriptive analytics generating critical insights on how to maneuver their supply chain assets to assure success, no matter how quickly the mission field changes.

Coupa provides technology that combines the predictive power of Amazon demand signal data with innovative machine learning algorithms to enable better management on this important channel. Planners will spend less time finding data in spreadsheets and more time confidently acting on the demand predictions to avoid fulfillment issues and make intelligent replenishment decisions to support Amazon at scale.

Let’s have a conversation about how we can help you make data-driven order predictions and gain visibility into the impact of demand volatility on fill rates.