Organizations are grappling with how to effectively manage DTC and B2B inventory, forecast demand, and fulfill orders across disparate channels without excessive stock or customer disappointments. Multi-Echelon Inventory Optimization (MEIO) is a solid way to manage it all.
When channels collide: DTC surge meets B2B foundations
The pros and cons
The incentive to sell direct-to-consumer (DTC) is huge, with nearly 60% of supply chain leaders anticipating it will make up more than half of their overall sales by 2026. In response, 67% increased their investments in DTC fulfillment over the past three years. Hybrid DTC and B2B models empower you to sell complementary products, expand market reach, and set up new strategic partnerships.
But there’s a catch. Going after consumer-direct demand when you still rely on traditional B2B business presents logistics complexities. The hybrid model requires you to manage different order sizes, shipping requirements, and fulfillment processes for both models simultaneously. You may have to “overbuy” stock to keep your service levels up.
Our DTC report shows how to adapt your fulfillment operations for this booming market, including challenges to anticipate and requirements for success.
Standalone forecasting solutions don’t cut it
As supply chain experts working with leading retailers and wholesalers around the globe, we consistently see businesses considering standalone demand forecasting solutions to address these challenges. However, this approach often compounds the very problems they’re trying to solve.
The hidden cost of siloed systems
DTC brands will often experience:
- Stock allocation conflicts between wholesale, online, and retail channels (with marketplaces like Amazon often claiming disproportionate inventory)
- DTC demand streams can be unreliable, and difficult to predict
- Lack of reliable supply chain planning software, leading to imbalanced stock levels
- Inefficient replenishment processes with stock trapped in silos across their network
- Manual, time-consuming adjustments to account for demand spikes and supply disruptions
The initial instinct is to add yet another specialized system to the technology stack to accommodate new demand in DTC. But herein lies a critical insight:
Additional standalone systems create additional silos. Each new solution adds another layer of complexity, another data transfer point, another custom integration to maintain, and another potential point of failure.
MEIO solutions eliminate the blindspots
For many DTC brands we work with, the existing setup leaves stock effectively trapped in location-specific silos. One DC runs low on a certain SKU while another has an excess. A legacy fulfillment system won’t facilitate redistribution—instead, it triggers new purchase orders, driving up inventory costs and reducing capital efficiency.
MEIO solutions completely transform this scenario with:
- Dynamic Stock Reallocation: Automated transfer orders between locations based on demand forecasts and projected stock levels
- Transfer Order Automation: The system promotes redistribution over procurement where possible, reducing unnecessary purchases
- Network-Wide Optimization: Improved service levels across the network while maintaining lean stock availability
With this unified approach to MEIO, businesses can expect improved service levels across the network and lower safety stock requirements at the same time. This is achieved by taking a holistic view of demand across facilities and sales channels, to ensure that inventory is optimally positioned to meet all demand.
Benefits of a fully integrated MEIO solution for DTC
Most critically, what’s the rest of your supply chain doing? What could you achieve with a fully integrated supply chain? Let’s explore the benefits of a platform that integrates Planning and MEIO with the execution side of things, including warehouse management and order management.
An end-to-end supply chain solution with execution, planning and MEIO, and intelligence embedded into one platform integrates value-driving capabilities like distributed order management (DOM), which provides the missing link needed to dramatically improve your inventory available to sell—without increasing overall stock levels.
Everyone wants more ATP stock but watch out hoarding inventory! It’s critical to your mission, but are you finding that you need a treasure map to find it again? Here’s how to say goodbye to excess and obsolete inventory while increasing what’s actually available to promise customers (and come through for them).
This holistic approach to MEIO demand forecasting gives your business freedom to:
- Dynamically automate inventory allocation across multiple locations
- Ensure orders are routed to the most appropriate location for fulfillment
- Utilize inventory in the most optimal way based on configurable business logic
Protect priority channels with inventory segmentation
One particular challenge for multichannel businesses is ensuring that high-margin or strategic channels like DTC do not experience stockouts due to demand from other segments. If you’re struggling with marketplace partners consuming stock that’s needed for core wholesale customers, the easy fix is inventory segmentation within DOM.
Inventory segmentation allows precise stock allocation across various sales channels based on configurable rules—for instance, allocating 30% for marketplaces, 50% for retail partners, and reserving 20% for buffer stock.
The impact? Reduced overselling and stockouts for core wholesale channels and protection of high-priority stock allocation for the most profitable customer segments.
AI-driven demand forecasting: the foundation of just-in-time inventory
Planning capabilities embedded within an AI-driven supply chain platform—vs. standalone forecasting tools—bring tremendous value:
- Demand and Supply Synchronization: Inventory needs are automatically derived based on the demand that is captured on the end to end platform.
- Probabilistic Safety Stock: Safety stock is derived using demand probabilities – which are automatically calculated based on historical demand. This replaces simplistic safety stock formulas that often spread inventory inefficiently.
- Automated PO and Transfer Generation: Purchasing and inventory movements are automated, reducing the risk of errors and inefficiencies of manual processes.
For our customers, implementing these capabilities delivers concrete benefits in the areas of:
- Efficiency: Reduction in manual adjustments can save approximately 20% of planner time.
- Stock usage: 5-10% overstock reduction through automated demand stabilization.
- Customer service: Improved service levels for retail and ecommerce channels through better alignment of stock to actual demand.
Protect against events and disruptions
Supply chain disruptions are a fact of life. Effective planning requires tools to account for these events without skewing long-term forecasts.
An integrated supply chain platform offers capabilities like automatic outlier detection, event calendars, and data masking to remove exceptional data from forecasting. This means a one-time spike in demand (perhaps due to a competitor stockout or promotional campaign) doesn’t inflate future projections.
Clients using these tools have reduced forecasting errors by 15-25%, leading to more reliable planning and reduced safety stock requirements.
Buy what you need, when you need it
The just-in-time philosophy isn’t new, but implementing it effectively requires systems that can account for the full complexity of modern supply chains—including variable lead times, multiple fulfillment locations, and diverse customer channels.
By embracing an integrated platform approach rather than adding another standalone system, businesses can:
- Improve visibility across their entire network
- Automate repetitive decisions around inventory allocation
- Optimize stock levels based on actual demand patterns
- Respond dynamically to supply and demand fluctuations
By combining these integrated demand forecasting capabilities with your supply chain platform, your DTC brand can achieve optimal inventory management: improved product availability at lower overall inventory costs, while maintaining robust service levels across your network.
There is a strong chicken-and-egg response between what the customer wants and how you will address it . Both inventory forecasting and demand forecasting are unique plans within the business, vital and interconnected.
Practical next steps for supply chain leaders
If your organization is considering a standalone demand forecasting solution, we recommend pausing to consider the broader implications:
- Audit your existing systems. Map out your current technology landscape and identify connection points and data flows.
- Identify your bottlenecks. Where are the most significant delays or inefficiencies in your current process? Often, these occur at the handoffs between systems.
- Calculate the true cost of your current approach. Include both technology costs and the operational impact of stockouts, excess inventory, and manual interventions.
- Explore platforms with embedded capabilities such as Deposco. Consider solutions that can address multiple needs within a single ecosystem.
- Prioritize real-time visibility. In today’s fast-moving environment, even just a five-minute lag of information often makes your decisions obsolete.
DTC brands that thrive in the coming years won’t be those with the most sophisticated point solutions, but those with the most effectively integrated operations—systems that provide complete visibility and control across all channels and locations.
In an era of uncertainty and constant change, the ability to see clearly and respond quickly is your most important competitive advantage.