The shelf space doesn’t care about your sales aspirations

If 18 years in the consumer packaged goods (CPG) industry has taught me anything, it's that  shelf space is always brutally honest with you. Even if your forecast looked great last month on paper, you might still end up with too much stock, too little stock, or the wrong stock.

We have all been there when a supply manager comes looking for you after the launch has gone wrong. So why do I bring this up? Because a demand planner, and the wider business in general, leans so heavily on a good forecast. It’s what helps protect service levels, control inventory, avoid waste, and keep margins intact. But what we forget is that a forecast is a whole bunch of sales-driven assumptions, based on promising promotions, marketing campaigns, and that can’t miss new product launch.

This means that when an assumption goes wrong it can trigger factory capacity issues, packaging shortages, costly airfreight, or stock that’s obsolete before we can sell it, and that supply manager coming to your desk looking for answers.

A demand spike can be great for your top-line sales but terrible for profitability, and this is often overlooked. If you sold double what you expected, but it came at the cost of choosing which customer to supply, that’s not the business outcome any of us are looking for. It all turns up in your next S&OP review, when you want to high-five each other over the top-line number, but you lost money or had to short-supply a strategic customer.

These operational realities are only going to be tested more as brand loyalty gets thinner, shoppers switch faster, retailers push harder, and every launch adds more SKUs to a network that is already stretched.

So, what does this all mean?

Shelf space doesn’t reward your sales aspirations. It rewards the forecast and the plan that can still work when consumers change their minds, a competitor makes an aggressive move first, or supply conditions change overnight.

And what can we do about it?

We need to connect our business end-to-end, with demand and supply operating with an enterprise mindset, clear on the sales ambition and honest about the operational realities in supply. When it’s humming, we are running scenarios as one team, making trade-offs and decisions with speed, and all using the same numbers and assumptions. It beats finding out after the shelf has exposed the problem, when you are back in fire-fighting mode, trying to explain what went wrong.

Want to know more about how to connect sales and supply in the food and beverage industry? We bundled our insights in an e-book you can download here.