E2open Unveils Insights from 2024 Supply Chain Study
E2open Unveils Insights from 2024 Supply Chain Study
At a recent customer conference in Orlando, E2open Parent Holdings, Inc. (NYSE: ETWO), a leader in connected supply chain solutions, launched its much-anticipated 2024 Forecasting and Inventory Benchmark Study. This in-depth report provides a comprehensive analysis of supply chain performance during the tumultuous period brought on by the COVID-19 pandemic. It offers valuable insights into the challenges faced by businesses in adapting to rapid changes and disruptions in the market.
The Significance of the Study
The 2024 Forecasting and Inventory Benchmark Study continues the work initiated in 2021, which initially assessed the impacts of the pandemic on global supply chains. Drawing on data from 2019 to 2023, this report investigates crucial questions that arose as companies navigated lockdowns, supply shortages, and volatile consumer demand during these varying stages.
Key Findings from the Report
Consumer Demand Trends
One of the report's primary takeaways highlights a dramatic shift in consumer purchasing patterns and manufacturing strategies. At the pandemic's onset, businesses faced a surge in consumer demand, leading to a 10% increase in shipments and record sales per item. By 2023, however, it became apparent that sales growth had plateaued, sitting just 1% above 2018 figures. To address ongoing supply chain issues, manufacturers concentrated on streamlining their product lines, resulting in fewer but more efficient products. Despite this, the fast turnover rate—where one-third of products are replaced annually—introduces concerns about hidden costs linked to inventory management, packaging, and production changes.
Planning Challenges Identified
Another significant finding was the difficulty companies faced in planning for slow-moving products. The study noted a striking 21-point rise in planning errors for these 'tail' items—nearly twice the 11-point increase seen with their top sellers. With 85% of products designated as slow movers, firms encountered severe service issues and profit losses. Conversely, the top 10% of items remarkably accounted for 75% of total sales, suggesting a pivotal opportunity for companies to refine their product portfolios and focus on high-margin offerings.
Forecast Errors and Technological Advances
The emergence of advanced demand-sensing technologies during the pandemic proved instrumental in mitigating forecast errors. The report found that these technologies reduced errors by one-third compared to traditional forecasting methods. By harnessing AI-driven insights, companies could swiftly adjust to abrupt shifts in consumer behavior, maintaining a level of forecast accuracy that traditional methods struggled to achieve.
Optimizing Inventory Management
The pandemic underscored the crucial need for efficient inventory management. It became evident that striking the right balance between overstocking and production efficiency was vital. Businesses that employed multi-echelon inventory optimization in conjunction with demand sensing managed to decrease safety stock by a considerable 40-50%, significantly enhancing efficiency and minimizing risks during disruptive periods.
Looking Towards the Future
According to Pawan Joshi, EVP of Products and Strategy at E2open, the research findings outline specific opportunities for improving resilience. By integrating AI-driven demand sensing, businesses can enhance forecast accuracy, manage product assortments more effectively, and utilize inventory optimization strategies to maintain appropriate stock levels in times of uncertainty. The report serves as a crucial resource for leaders across industries, providing guidance on best practices to bolster supply chain operations.
About E2open
E2open is committed to revolutionizing supply chain processes, empowering the world’s largest enterprises in transforming how they manufacture, transport, and sell their products and services. The platform connects a vast network of over 480,000 partners across manufacturing, logistics, channel, and distribution, facilitating the tracking of more than 16 billion transactions each year. E2open’s SaaS model ensures that businesses are equipped to foresee disruptions while exploiting emerging opportunities to drive efficiency and sustainability. E2open is headquartered in Dallas, TX, striving to operate as one cohesive network.
Frequently Asked Questions
What is the key focus of the 2024 Forecasting and Inventory Benchmark Study?
The study focuses on analyzing supply chain performance during and after the COVID-19 pandemic, revealing insights aimed at improving resilience and decision-making.
How has consumer demand changed since the pandemic?
Initially surging during the pandemic, consumer demand has since stabilized, with growth now only slightly above pre-pandemic levels.
What technological advancements helped during the pandemic?
AI-driven demand sensing technologies significantly improved forecast accuracy and reduced errors during the pandemic.
Why is inventory management critical according to E2open's report?
Effective inventory management helps balance the risk of overstocking with production efficiency, minimizing costs during disruptions.
What opportunities does the study suggest for businesses?
Companies are encouraged to leverage AI for demand sensing to improve inventory management and focus on high-margin products for enhanced profitability.
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