Food industry counts cost of bad planning

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The food and grocery industry is losing millions of pounds every year by encouraging demand for products, then failing to properly plan to meet that demand, according to grocery experts IGD.

Darran Watkins, senior business analyst at IGD, said that failing to plan for demand effectively, leaves suppliers and retailers vulnerable to spikes which they cannot meet, and which can lead to consumers deserting their product.

He said: “To take just one example, FMCG promotion accounts for around half of all marketing budgets, yet many retailers and producers are failing to review the success of previous campaigns, or match production to expected spikes in demand.”

“IGD research shows that when confronted by an empty shelf, consumers are likely to desert a brand for a competitor, and consistent or long-term product scarcity can lead to a loss of distribution or listing by a retailer.”

He also said: “Although the report suggests many retailers and suppliers have room to improve their demand planning, the good news is that it also shows there are opportunities for major financial savings by improving demand planning, which could significantly reduce wasted expenditure along the supply chain.”

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