INFORMATION-DRIVEN
BUSINESS NETWORKS
SYNCHRONIZING OPERATIONS ACROSS THE VALUE CHAIN WITH REAL-TIME INFORMATION
BY DAVID BAUM
couple of years ago, Jack of All Games (JOAG)
approached its retailers with an offer that was hard to
refuse. As the largest video game distributor in the
U.S., JOAG collects point-of-sale data from thousands
of stores. Its analysts had just completed an intensive business
intelligence initiative, during which they amassed loads of data
on which titles customers were buying. JOAG executives saw
the opportunity to share this information with their retailers as
part of a vendor-managed inventory (VMI) program.
“Retailers want us to keep their shelves filled, so our challenge is to determine the optimum quantity of each title based
on the demand trends, local demographics, and other constantly fluctuating variables,” explains Eric Clark, vice president
of business systems and technology at JOAG. “Retailers are
looking for insight into what gamers will buy next.”
JOE GAST
JOAG supplies video games to more than 20,000 retail
stores across the U.S. The company’s state-of-the-art distribution
facilities, centralized location, and highly refined distribution
process have become a model for others in the industry. JOAG
recently installed Oracle’s Demantra Demand Management,
software that enables warehouse managers to sense demand
in real time by capturing point-of-sale information from retailers. JOAG runs the information through Demantra’s analytical
engine; compares it to actual video game titles on the shelves,
in the back rooms, or in transit; and arrives at a fulfillment
strategy for replenishing retailers’ stock. As a result, JOAG’s
retailers aren’t overbuying, and JOAG is sending them the titles
that are likely to be purchased quickly.
In most VMI programs, the supplier takes responsibility for
maintaining customer inventory levels. The concept initially
took off in the grocery industry but VMI is gaining traction in
many industries for its ability to manage demand, increase sales,
lower inventories, and reduce costs. Yet many companies have
difficulty figuring out how to exchange real-time information,
let alone create information systems that can sense demand
signals from customers.
“When suppliers don’t know what, when, and how many
products will be bought, they stockpile inventory,” says Maha
Muzumdar, vice president of supply chain marketing at Oracle.
“If the value chain were synchronized by intelligently sharing
information, suppliers would have visibility into demand
signals, allowing them to supply products as customers order
them. Synchronizing information across the value chain reduces
costs, improves efficiency, and accelerates order fulfillment.”
