Opinion: The Flow of Goods

UK Grocery retail is impacted by around £9 Billion of lost-sales each year. Supply Chain data is often overlooked, but giving suppliers better visibility of this data is a simple and effective solution.

Grocery retailers and suppliers spend enormous sums on loyalty data, market share, measuring sentiment data from social media etc, and less so on ensuring that the products are always on the shelf.  

These data sources can often leave both retailers and FMCGs frustrated. Commercial teams spend too long interpreting and attempting to act upon it, only to find they are chasing their tails as they try to satisfy fundamentally different customer segments. A number of retailers and FMCGs are turning to a traditional, vital and simple to act upon source of information - Flow of Goods data (or FoG for short).

By joining together supply chain and trading metrics over time you can build a fast and effective picture of what is working and what is not, within the FoG, and where and when to take action. When we combine supply chain data with sales data, we can focus on making sure the product gets to the shelf in the first place.

Fig 1. The Flow of Goods

In a highly competitive market where grocery retailers are desperate to retain and enlarge their customer base, getting it right in the last five meters has never been so important. The best price, promotional, ranging, or media strategy doesn’t matter if the customer cannot buy what they want, where they want it, when they want to - in store or online. Many retailers and FMCGs still fail to act upon the service level indicators available. The FoG opens this up to scrutiny for both parties, so they can collaborate effectively using the same information.

This does more than merely enhance your product availability (and your ability to serve customers); it transforms the relationship between the retailer and the manufacturer. When you understand WHY something does (or doesn’t) happen, it is far more powerful than just detecting what and where it has gone wrong. When you can see over time how your goods flow, you can identify at speed how you can sell every possible unit to every possible customer.

Fig 2. How we address this, using SKUtrak®

As an FMCG NAM or Supply Chain Manager I can see what is happening on the day it happens. I can use my experience to identify where stock cover is going to be an issue and take action, without even worrying the retailer. I can pick out where good, fast moving products are being hampered by limited space on shelf, or distribution points across the retailer’s estate. I can rectify these issues in my production facility, in my deliveries to depot, and go on to help the retailer with their processes between depot to store to shelf in a constructive fashion, having got my own house in order first.

It’s this actionable insight that makes FoG so powerful. Both retailers and suppliers should now be working to fulfill a joint business plan; prioritising effectively on the consequences (or not) of deliveries, display and space allocation, and acting on it in real time.  FoG knits together EPOS sales with the supply chain, giving clarity on how and where to prioritise deliveries.

In turn the relationship between the retailer and supplier changes. Instead of being called out on missed deliveries and low service levels and being threatened with fines, suppliers act ahead of issues or reassure the retailer that sufficient stock is in place to meet forthcoming demand.  When a truly collaborative relationship evolves, suppliers are recommending products to safely delist from their own portfolio or anticipating demand spikes.

Case Study: KPI Alert earns £20k

The days of reacting to and ‘chasing the data’ and of blaming the other side, are replaced by smarter, joined up businesses that share the same information in a way that is easy to use and communicate. It is focused on resolving shared problems in availability, and realising the full sales potential and true demand for each product.

This requires retailers to consistently share data from warehouse to depot to store to till. When we can see demand signals, familiarise ourselves with historic data patterns and create a truly humanised view of data,  we can explore and understand relationships and signals in the FoG together with ease and speed.

The marketing arm can go back to their award winning campaigns...

If you want to learn more about the Flow of Goods come and visit us at www.SKUtrak.com.

ian hall