How Relationships Can Help with Demand Planning and Forecasting

I’ve noticed that many beverage alcohol brands tend to look towards more complex strategies to overcome their daily supply chain obstacles. Having provided procurement and supply chain services for more than 13 years, I can confidently say that it’s often the simplest strategies that are the most effective. I believe the tips and tricks below can help brands navigate and avoid many supply chain challenges.

Relationship Building
Maintaining strong relationships with customers, sales support, and suppliers has been essential to the success of any project.

Firstly, understanding your retailer’s promotional plan and schedule is critical, including upcoming sales promotions, marketing events, and national holidays and celebratory occasions. This will give you a chance to anticipate and establish consumer demand and pull-through.

Secondly, you must be intentionally aware of what your individual sales representatives are doing on the ground. How much of their time goes towards opening new accounts versus building and supporting existing accounts? Are they programming their accounts with sell-through opportunities like cocktail menus and store tastings? Having a congruent sales strategy will help you, as the brand owner, understand the Rate of Sales. This type of comprehension can only be achieved through consistent dialogue, setting and adjusting sales goals, and advising on strategy.

Thirdly, all this information then needs to be consolidated and communicated to flow regularly to your manufacturer, especially if you are co-packing. Getting a forecast ready and then not having the capacity to produce could damage the relationships that your sales representatives have forged. Out-of-stocks could lead to a loss of listing in stores and on cocktail menus.

Lastly, regular contact with your packaging suppliers helps ensure your producer can make the products that your sales team has worked hard to secure. Understanding the producers’ timelines, calendars, holiday periods, and annual closures can help secure continuity of supply. This will ensure that not only can you satisfy current demand, but also scale up and grow across the states.

Having a consistent dialogue with your suppliers also helps navigate supply constraints of materials. You can either over-order, or potentially pivot to an alternative component. Being a good customer and having a strong relationship with a good supplier is essential.

Innovation
Supply chain challenges come in all shapes and sizes. Sometimes these challenges are relatively short-lived, such as raw material shortages and tariffs, port closures, whereas others are longer term, like geopolitical events and climate change. Some challenges, like the COVID-19 health pandemic and crisis, can even be once (hopefully) in a lifetime.

In school, I was always told that challenges lead toward innovation rather than despair. When facing difficulty, such as a supply chain shortage, there is benefit to simply switching to an alternative bottle, cap, closure, can, or whatever it may be; or it can force you to think outside of the box and actually enhance the brand experience.

Facing a challenge head-on can lead to interesting innovations. Custom bottles, new pack formats and packaging concepts, and environmentally friendly materials are a few areas that lend themself well to creativity. These types of innovation can lead to a greater continuity of supply, more control of your supply chain, improvement of brand packaging, and the potential to obtain new audiences of consumers. This, in turn, would provide additional sales as well as ensure the fulfilment of existent orders.

Systems
The size of your brand will dictate how you capture forecasting and demand planning. If you’re a small brand growing into a medium size, this is when you might want to look to hire a dedicated supply chain manager. Equipping them with the right tools such as an Enterprise Reporting System (ERP), will greatly assist with decision making on ordering, reorder points, buffer stock levels, and the like. While these systems can be expensive initially, they prove their worth in the ways they can integrate demand from customers all the way to the manufacturing side and adjust open raw material orders to satisfy current demand.

If you’re not ready to commit to a dedicated employee or an ERP, there are companies, such as MHW, who specialize in supply chain management and are available for outsourcing. These companies have experienced personnel who will keep track of raw materials and balance existing inventory. This allows the brand owner to focus on their area of expertise: making great products and building relationships with customers to grow sales.

In summation, the Supply Chain world can be overwhelming and unpredictable. Maintaining strong relationships, innovating even in times of difficulty, and utilizing strong systems will set any brand owner on the path to success.

Ian Perez
MHW Brand Execution Manager