Opinion: Availability Win-Win
Supply-chain visibility is the key to improving product availability
Customers can’t buy products that aren’t on the shelf. Research by Oliver Wyman (1) states it’s not unusual for a supermarket to miss out on 5% of sales through out-of-stocks. The process of getting product to shelf requires true collaboration between retailers and their suppliers. After all, they share the same objective; maximise sales.
Retailers and suppliers should have a common goal of maximising availability, and minimising waste. This is done through effective management of 'flow-of-goods'. Rather than simply managing supplier-depot service levels, suppliers should be using available data to help retailers ensure that the right stock is in the right depot, and that depots are servicing store demand. Depot to store service level is the key to influencing availability.
As well as answering questions like “Did the amount of product ordered to the depot match what was received?”, you can also look at more effective analysis that will impact SKU availability such as “Are the order levels right in the first place?”
These can be really tricky questions to answer without the visibility and ability to drill down into the data. This is because the data from retailer systems is often hard to access, and difficult to interpret. Suppliers with a large number of products (often in many different depots) have an awful lot of data to trawl through!
That said, there is an assumption from retailers that suppliers are doing this, and an assumption from suppliers that retailers have fantastic, all-knowing systems that produce perfect forecasts to place the right orders. Retailers will inevitably focus on the key volume lines and products on promotion, or fire-fight the ones that have already gone out of stock (backwards looking). Many suppliers will also look at aggregated (weekly / monthly) reports or averages across many products. Therefore, how do suppliers and retailers know they are looking at the right information that directly impact SKU availability?
There's a difference between how you report data over time, and how you use it proactively to make business decisions. Suppliers need to be managing demand at SKU / depot level daily, as well as reporting on weekly, monthly or quarterly performances. This helps suppliers be in a better position to be proactive and influence availability. A further benefit is the ability to prioritise deliveries more effectively, especially when allocating limited stock. As a result, giving both the retailer and supplier a better understanding of how a range or individual SKU is performing.
Atheon’s SKUtrak enables suppliers to do just this. It presents data in a visual, analytical way that is interactive, allowing users to discover and explore what is really happening. This enables improved forecasts, better performing promotions, the ability to spot trends quickly, as well as enhanced product availability. All as a result of better analysis that is purposely built in a way that is easy to understand. As well as having the option to drill down further to answer why did that happen.
Equipping yourself with data-driven evidence fosters genuine collaboration between retailers and suppliers. This does not only help each enterprise sell more, but also improves the share of voice a supplier has through becoming a more trusted, informed partner.
For more information, please visit www.skutrak.com
Ian started his career as a buyer at Tesco, followed by several years in grey-market procurement and supply, as well as branded sales roles. He has been Chief Operating Officer at Atheon Analytics for 12 years.