Probably
three of the ugliest words
for a retailer or vendor are
-- out of stock. Each and
every time an out of stock
(OOS) occurs the retailer,
vendor, and consumer loose.
Revenues go down, profitability
goes down, consumer frustration
rises. This is not a news
flash, one can find a wealth
of OSS research with a simple
Google search. And worse yet
"thought leaders"
have been writing articles
and funding research for decades
to quantify the magnitude
of the problem, diagnose root
causes, and create solutions.
The net benefit of all this
work... drum-roll please....
average OSS rates are holding
steady at about 8 to 10% [double
for promoted items] and have
not changed much in the last
17 years according to GMA/FMI/CIES/VICS.
Why is reducing
out of stocks and improving
self-availability such a hard
issue to tackle? Didn't someone
tell us all that barcodes,
ECR, VMI, RFID, CPFR, and
new POS software would fix
all of these issues and usher
in the age of the 99.999999%
efficient supply chain?
The fact
is most vendors are blind
to actual consumer demand
at POS. At a recent conference
I asked 5 large vendors and
3 small vendors if they knew
their in-stock percentage
at a store level for their
retail customers. It seemed
like a logical question because
they were all describing 7
figure investments they had
just made into trade promotion
software. Certainly if you
are going to run a BOGO you
want consumers to actually
see product on the shelf when
they arrive at the store.
The answer for all eight vendors
was-- NO! They have at best
delayed visibility [usually
3 weeks] into what is happening
at a store level, and in many
cases the only visibility
they have is chain-wide monthly
scorecards the retailer sends
showing their grade on in-stock
%.
This reminds
me of coaching my son's 9
year-old baseball team. While
they want to do all the cool
and difficult things like
turn a double-play, the game
is won and lost on the most
basic elements like running
as hard and fast as you can
down the first base line and
then 10 feet through the bag.
Reducing
out of of stock's is a complex
problem with many moving parts
and multiple parties that
have to execute in harmony
or the entire system breaks
down. But, you cannot manage
and improve what you are not
measuring. And its hard to
believe a vendor is making
an effort to reduce OSS if
they are not measuring on-hand
at their retail customers.
If you are a vendor dependent
on a retailer maintaining
good self-avaiablity to grow
your sales then you need to
proactively manage in-stock.
That means if your retailer
makes POS activity available
at midnight Sunday, your team
should be taking action
by 11:00 am Monday morning.
Not just loading data into
a spreadsheet so they can
start the analysis process.
Or worse yet, not even receiving
the data.
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