Examinación Articular

Step 2 of developing RDM includes various attributes of the information that have been identified from the literature and case studies.

The cost and benefit of obtaining and using information act as a base line to SC information exchange (Sari, 2008). The cost involved in information exchange is measured either in terms of investment on technology and/or amount spent on obtaining information. The benefit of information exchange is represented through good forecast accuracy. The impacts of information exchange can also be measured through improved inventory, production and replenishment (Gavireneni et al., 1999). This research concentrates on the forecast accuracy as the main benefit of SC collaboration. Although accuracy of information is obligatory in reduction of forecast error, it is highly subjective to the explanatory power of the partner involved in the process of information exchange and also the accuracy of the information at the time of predicting demand forecast (Aviv, 2007).

It is also important to mention that the ability of observing market changes and the descriptive nature of the observer can alter the quality or accuracy of the information used for demand forecast (Aviv, 2002). For example a sudden change in temperature may increase the sale of beverages but will not help to alter the production plan at very short notice. But correct inventory deployment in the supply chain will assist in smooth replenishment. Hence, action-ability of the information obtained is partially related to the agility and responsiveness of the supply chain. This study considers six major attributes of information namely–source, cost availability, reliability, action-ability and importance of information. These attributes act as evaluation criteria of demand factors (see Table 6-2).

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Source of information

The source of information indicates the parties involved in information exchange. In particular, the source can help to identify who observes/owns the data and/or where this information is available. The source can be ‗own‘, ‗supplier‘, ‗manufacturer‘ or ‗retailer‘. In some cases the source can also be a third party information provider or public data source.

Availability of information

Availability indicates the status of accessibility of information with a specific time scale such as always, intermediate, short term, sometimes, after and before the promotional event. The time scale is dependent on the length of the planning cycle and the duration of special events/sales promotions in the case company. This can be referred to in terms of ‗always available‘ or ‗never‘.

Reliability/Accuracy of information

The ability of observing market changes and descriptive nature of the observer can alter the reliability of the information used for demand forecast (Aviv, 2002). Hence, it is obligatory to know the accuracy of information being used in ones‘ forecast. This attribute can be mentioned as correct or incorrect, complete or incomplete and firm or provisional.

Action-ability of information

Action-ability refers to the extent to which the available information can be used in forecasting, production and replenishment. Action-ability represents the capability of using the available information in the SC. All SC information is not always actionable. Some will be actionable most of the times and some may be less actionable, or not at all.

Importance of information

Importance of information in supply chain processes conveys the need for information exchange among supply chain members. Each demand factor and its respective information signals can be weighed for its importance in order to make the decision process easier. Scales for mentioning importance of information can be important, not important, very important, and extremely important. In some cases it is also possible that the importance is not known to the SC decision maker.

Cost of information

The cost of information represents the actual cost of obtaining information from other SC members. This will include initial investment on technology or people and operating cost.

The general scales used for availability, reliability, action-ability and importance of information are different for each cases studied.

Other information attributes, such as capability of using the information and current use of information, can also be added to the above list of attributes. For example, quick transfer of sales information (such as EPOS data) may have a positive impact on the planning and hence improve responsiveness of supply chain to demand fluctuations (Bourland et al., 1996; Chang et al., 2007, Cachon and Fisher, 2000) rather than just using historical data. However, the use of technology can alter the speed of the data transfer and hence the responsiveness of the supply chain will differ. If all information available is used effectively in order to respond quickly to the changes, the benefit to the supply chain will be in the form of, for example: forecast accuracy, inventory reduction, cost reduction etc (Cachon and Fisher, 2000; Bourland et al., 1996).

123 Generally, the capability can be of two sub-categories - technical and managerial. Here, technical refers to IT support to handle huge amounts of data, and managerial refers to the ability to incorporate the information in planning, production and replenishment. In general, the managerial capability is linked to judgmental forecasts. Although, measuring the capability is not the focus of this research, the same can be evident through performance, such as forecast accuracy, of the supply chain. In this research, the current ‗use of information‘ is considered further in the case study analysis; but is not included in evaluation of RDM. Table 6-2 represents the SC information on demand factors and its corresponding attributes. The above mentioned attributes of information will be made clear through the example of Soft Drink Co.

Step 2 of RDM - Example from Soft Drink Co

Source - For the case company, the main source of information is either Soft Drink Co.

or retailers. Sometimes, third party or publicly available information is also used for forecasting.

Availability – Some information is always available, other pieces of information reveal

6 weeks before the promotional event (W- 6), whereas still other pieces of information are confirmed just prior to the event (W-2, W-1).

Reliability/Accuracy - The information exchange between manufacturers and retailers

are made electronically and hence sales data is correct at most of the times, while the other data is correct to a certain extent. In the case of Soft Drink Co, the scales used for reliability are ‗correct‘ (High/Low/Medium) and ‗not correct‘.

Table 6-2 Step 2 of RDM - Attributes of information Observer/ Source of information -Case company -Retailer -Other party

When is the info available?

-Always

-Long term (6-16 wks in advance)

-Intermediate term (1-6 wks in advance)

-Short term (Less than 1 week in advance) -After the event -Never Reliability and accuracy of information - - Correct/not correct - Complete or incomplete - Provisional/Firm Action-ability (responsiveness to information) - Not actionable - Actionable (Please specify who in the supply chain can act on this information Importance of factor? 1 - Not Important 2 - Somewhat important 3 - Important 4 - Very important 5 - Extremely important 6 - Difficult to say Is this factor currently used in forecasts? - Yes, always - Yes, sometimes - No, never Cost of obtaining info? - extra cost involved (high or low) - no extra cost Type of retailer/wholesaler Promotional information  Type of promotion

 Promotional calendar / slots

 Structure of promotion (number of stores running the promotion, promotion advertised or not, size and location of display )

 Changes to promotional plan

Seasonality / Special dates

 Winter, Spring, Summer, Autumn

 Weather / temperature

 Easter & Christmas

 Back to school & Bank holidays

Trend & life cycle info

 Growth, decline, maturity

 New product launch

Regional differences

 Weather / temperature

 Habits / preferences

Pricing information

 Retail sales price

 Whole sale price

 Discount price

Cannibalisation & Competitor information

 Similar products in promotion in the same or different store

 Similar products from competitor is in promotion at the same time (in the same or different store)

Complicating factors

 Poor execution of promotion in store

 New type of promotion with no history

Information attributes

Information – Demand factors

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Action-ability - Action-ability of information varies widely across different information.

For example, early information on any changes to the structure of promotion is useful until 6 weeks before promotions. However, it is more difficult to act upon the information after this period of time. In case of Soft Drink Co, the scales used for action-ability are - always, actionable, somewhat actionable, limited, and not actionable.

Importance - Except for competitor‘s information and information on cannibalisation,

almost all the other information is considered important by the forecasters. In case of Soft Drink Co, the scales used for importance of information are not important, somewhat important, important, very important, extremely important, and difficult to say.

Cost - The Company does not incur extra cost to obtain information. This is because the company is involved in collaboration and information exchange with retail giants who maintain well established information network.

Table 6-3 represents both SC information and its attributes related to Soft Drink Co. Each demand factor is evaluated according to the different attributes. The RDM will be analysed in Step 3.

Table 6-3 RDM of Soft Drink Co

Information attributes →

↓Demand factors & information signals

Source Availability Reliability/

Accuracy Action-ability Importance

Promotional information

 Promotional slots(timing)  Type of promotion  Structure of promotion  Changes to planned promotion  Effectiveness of promotion - during promotion - after promotion - % redemption rate SDC + Retailer (calendar) SDC + Retailer (calendar) SDC + Retailer (calendar) Retailer Retailer (EPOS)

SDC + Retailer (Sales history) Retailer (Sales history)

Intermediate (Week-6) Intermediate (Week-6) Short term (Week-2) Short term (Week-1) During event After event

After event (not all retailers) High High Medium

Known when communicated High High High Actionable Actionable Actionable Sometimes Sometimes Not actionable Not actionable Extremely important Extremely important Very important Very important Very important Very important Somewhat important Pricing information

Retail sales price (as a surrogate for type of promotion)

Retailer Always High Actionable Extremely important

Seasonality/Special dates

 Winter, Spring, Summer, Autumn  Weather/Temperature

 Easter / Christmas

 Back to School/ Bank holidays

Public Calendar

Short term - local weather news; Long term - historical data Public calendar

Public calendar

Always

Short term (Week-1) Always Always Always Correct Correct Correct Correct Correct Actionable Sometimes Actionable Actionable Actionable Important Somewhat important Somewhat important Extremely important Important

Trend and product life cycle information

 Growth/decline  New/established products SDC(demand history) SDC (demand history) Always Always Correct Correct Actionable Actionable Very Important Very Important

Cannibalisation & Competitor information

 SDC products in promotion in the same or different store

 SDC and competitor products in promotion at the same time (in same or different store)

SDC Retailer

Most of the time Not always Correct Correct Sometimes Not actionable Somewhat important Somewhat important Complicating factors

 Poor execution of promotion in store  New type of promotion with no history  Unplanned in-store promotion

 Regional difference (Habits/preferences)

Retailer + SDC Retailer + SDC Retailer Retailer/other party During event Intermediate After event

Sometimes from regional deals

Low Low Low

Requires further analysis – data is not available

Limited Limited Not actionable Not actionable Very important Important Important Important *SDC - Soft Drink Co