Following the Grocery Code Adjudicator’s latest survey, there has been a lot of discussion about inaccurate forecasting by UK retailers. Some 17% of suppliers raised this age-old problem, which leaves them burdened with excess stock costs, stock clearance and even fines for under-delivery when excessive orders are placed at short notice.
The latest tactic of placing a sign over gaps on the shelf declaring that the lack of product is a problem caused by the supplier leads to reputation damage, and is particularly disingenuous given that it’s mainly caused by shoddy retailer forecasts in the first place.
It’s a global issue, and the industry’s go-to remedy is typically to introduce a “collaborative forecasting” workstream with their “retail partners”. But it’s time to call out this myth for what it is.
Collaboration in forecasting sounds appealing, but it’s just a gentle name for trying to get the retailer to do their job properly in the interest of efficiency and reducing waste. In practice the only way it can work with major supermarket chains is that the retailer produces a forecast, which the supplier can then check and agree.
The notion that suppliers can, or should, co-create forecasts is outdated and shirks the issue.
Retailers hold all the cards: they have the data, the insight into their own corporate plans, the knowledge of promotions and corporate events, shelf changes, and even access to better weather forecasts. Suppliers, by contrast, are left guessing at demand, trying to fill in the blanks with information which is sometimes held back from them to extract cash.
Major retailers hold all the power
The expectation that suppliers should forecast demand is a relic from the days when independents were strong and suppliers needed to plan production based on their own sales intelligence. But today, with major chains dominating, only the retailer can truly forecast demand.
What’s needed is not just collaboration, but a radical shift in responsibility. Get honest about who controls the numbers, and stop expecting suppliers to pay for mistakes they couldn’t possibly predict. Retailers must take ownership of forecasting, leveraging AI when possible. The supplier’s role should then also be clear: to confirm whether production can meet the retailer’s forecasted requirements within lead times, and to flag any issues as soon as they arise.
From there, the process is about transparent, two-way communication. If the retailer’s orders deviate from the agreed forecast, or if the supplier faces unexpected production constraints, both sides must speak up early. This is the only way to avoid the finger-pointing and cost-shifting that currently plague the system.
Insisting suppliers pay the price for forecasting failures has to change. The industry needs to stop pussyfooting around “collaborative forecasting” and demand accuracy and accountability from those who hold the information and power.
And when retailers step up on this, they should recognise that it’s just part of doing a good job – without feeling the need to impose a new forecasting tax on suppliers.
David Sables, CEO of Sentinel Management Consultants
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