Solving the Three Critical Factors That Cause Out of Stocks

Three Critical Areas to Address Before We Can Close the Gap on Out-of-Stocks

Data from the Grocery Manufacturers of American (GMA) and the Food Marketing Institute (FMI) Trading Partner Alliance study shows when it comes to eliminating out-of-stocks (OOS), the industry finds the most discrepancy in defining them, we covered this in last weeks post. If you don’t have time for that one all you need to know is that we determined using a baseline definition for OOS is a necessary procedure, but a definition alone will not eliminate them. There are three other areas to address when it comes to closing the gap between practices and desired results:

We Need More Than Just The Definition 

  1. Process/Practice: There is poor synchronization between retailers and manufacturers on event planning. 58% of retailers claim to lock down event plans four weeks or less before the event, while 73% of manufacturers say they need at least five weeks or more to accommodate these plans. Establishing a period of time providing ample time for both sides will bridge the gap between retailers and manufacturers.
  2. Organizational Issues: There is a lack of ownership of retailers’ inventory. Respondents to the survey said groups such as Supply Chain Planning to Merchandising owned the inventory. Since respondents were able to choose more than one answer, the total percentage of responses was around 150%. Without real ownership, there is a lack of accountability when something goes wrong. Each retailer must determine ownership of inventory and direct all inquiries in their direction.
  3. Technology: Although many retailers and manufacturers claim to collaborate on event forecasts, over 78% of manufacturers say they don’t actually use the retailer forecasts. Instead, they use their own due to a timing gap between when data is available and when it’s actually needed. The problem lies in the large amount of data requiring analysis and each side using a different technology platform. Technological integration between the two is a necessity and will create a single stream of information to increase the use of retailer forecasts.

By aligning on the discussed topics, industry members can begin the process of bridging the gap between industry practices and desired outcomes. New challenges will arise, but only with this foundation can the industry successfully tackle the out-of-stock conundrum and move to improving the overall brick and mortar shopping experience.

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Bruce is the founder and CEO of RW3 Technologies. Having spent more than 35 years in the consumer goods and grocer space Bruce has experienced the industry disruption first hand and understands how artificial intelligence, POS data, and mobile technology can transform a good organization into a great one.

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