Suppliers' excessive forecasts are too wasteful, claims Asda

Asda has slammed suppliers for over-forecasting promotional sales, creating strained relationships with retailers and excess unsold stock.

"Who do you think you're kidding putting in a massive forecast when you know we're never going to sell it in 12 months, let alone 12 weeks?" said Asda buying manager Laura Shears.

Speaking at grocery think tank IGD's Availability & Demand Planning 2008 conference in London last month, she warned manufacturers to stop trying their luck with Asda and to co-operate more with the retailer.

In the past, said Shears, Asda's work with suppliers on promotional forecasting had been disjointed. "We were working in a linear process, where you put a product on promotion, sent the stock up, then stores dealt with it and it dropped off the radar."

However, she said Asda had recently developed a much more cyclical promotional process, focusing on manufacturers and retailers giving feedback.

"I realise suppliers are doing a lot of the leg work, but I've worked with account managers who've said [sales are expected to be] 300% up and then when I've spoken to the planners they've said that's rubbish," she claimed.

"There needs to be better communication - it's not just about Asda communicating with its suppliers, but about suppliers aligning their own processes."

As well as souring relations between retailers and manufacturers, over-forecasting could generate waste, said Shears.

"From an ambient perspective, over-forecasting results in stock clogging up the depot and store, but if you send up 300% too much fresh stock, you end up binning it."

Responding to Shears' comments, Chris Devaney, Glanbia Consumer Foods Ireland's planning manager, told Food Manufacture​ that he was shocked at Asda's approach to forecasting.

Devaney argued the retailer shouldn't be asking suppliers' account managers to make unilateral forecasts in the first place, but should be working with them on a joint prediction.

"I'm surprised Asda isn't working more closely with suppliers in terms of collaborative forecasting," he said.

"We've really found the benefit of consensus planning. We do have customers who don't go along with it, but that's not the way to operate. It's beneficial for both parties, because otherwise retailers end up embarrassed because they've run out of stock."

Several case studies of supplier/ retailer collaboration were presented at the IGD conference, including how dairy giant Arla had worked with Asda to improve availability of organic fresh milk by 56% in stores. The work, which took three years, also cut product wastage by 20%.