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Importance Of Responsive Replenishment In Consumer Products And Retail Industries

Introduction

It has been said that the only thing more difficult than being indifferent to India is to attempt to describe or understand India completely. Most retail and consumer products companies are no longer indifferent to India. It is the fourth largest economy in the world, in terms of Purchasing Power Parity (PPP) and is expected to rank third in 2010, just behind the United States and China. Moreover, recent liberalization of Foreign Direct Investments (FDI) policies for retail trading has reduced barriers to entry for single-brand retailers and for the first time allowed them to control their operations in India. It, thus, comes as no surprise that retail and consumer products are the fastest growing sectors in the Indian market today.

As competitive pressures mount, consumer products (CP) companies as well as retail set-ups, coping up with increasing consumer expectations, more demanding retailers, and maintaining efficiencies is made possible through new technologies such as radio frequency identification (RFID). However, existing strategies to deal with these continuing problems, like making existing processes more efficient, and optimizing the cycle of planning and forecasting, are approaching a limit beyond which improvements will be hard to come by.

The need of the hour for retail and consumer product companies is to build their entire supply chains around their specific business; and to do this, the supply chains need to be tailored to be adaptable and flexible i.e. responsive to fluctuations in consumer demand. The new-age supply chains should be able to sense the variations in consumer demand and buying patterns and respond with managing the production schedules to meet these changing needs.

The heart of such a supply chain would be the "Responsive Replenishment" function, which helps integrate data across various platforms, such that consumer demand data can be used directly to control other functions in a supply chain like...