Insight is for life, not just for Christmas

Christmas is going to be a little different this year, but not the same different as last year. Back then, with pubs and restaurants closed, grocery experienced a boom in sales. This year’s golden quarter is instead going to be a challenge of balancing supply and demand.

The UK is beset by external supply chain crises that are going to persist well into 2022. It feels like there is very little within suppliers’ control, but this festive season presents a great opportunity to pay attention to the data, tighten business operations, and adapt to working with limited resources.

The Perfect Storm

According to Retail Economics, groceries sales growth is set to fall by 5.8% on last year (https://reports.retail-week.com/the-christmas-forecast-2021/index.html). Early optimism because of the vaccine rollouts has been undercut by a perfect storm of external supply issues, labour shortages, and changes to taxes and benefits. External factors affecting both your supply chain and your customers buying habits will include:

• The ongoing HGV driver shortage - an aging, retiring labour force, growing backlog of tests to grade to back fill vacancies, and lack of incentive for foreign drivers to return are putting pressure on grocery supply.
• Large increases in shipping costs - a worldwide crisis brought on by Covid, import and export prices have risen by between 500 and 800% from/to some regions. (https://www.bbc.co.uk/news/uk-northern-ireland-58474305)
• The lasting impact of the Suez canal delays - the blockage in March only worsened the global trade backlog, increasing delivery times on raw materials such as oils.
• Shortages of packaging supplies - the closure of physical stores and the resulting rise of online shopping has placed extra demand on cardboard and plastic. Some local councils suspended recycled material collections altogether. This has led to longer lead times and many FMCGs ‘panic buying’ packaging. (https://inside-packaging.nridigital.com/packaging_jul20/cardboard_shortage_coronavirus)
• Covid-19 hasn’t gone away - the end of the furlough scheme, cuts to universal credit, and the National Insurance tax hike mean that many families will need to tighten their belts this year. 
• Customer perception of food shortages will lead to many doing their Christmas shopping early - a recent survey by Lumina Intelligence revealed that a third (34%) of consumers either have or are considering purchasing food and drink for Christmas before the end of October. The categories that consumers were most likely to stock up on before then were confectionery (66%), crisps and snacks (57%), tinned and packaged products (55%), alcohol (55%), soft drinks (51%), and frozen food (45%). (https://www.specialityfoodmagazine.com/news/christmas-panic-buying-picks-up)

How insight can help

It’s a complex web of factors, for sure. The only way we will be able to navigate it with a degree of certainty is by making decisions backed by evidence and insight. Suppliers will need to determine where to distribute stock daily, rather than solely relying on predictions based on last year’s sales data. You will need to understand the true demand for your products through good quality data presented intuitively. Using best-in-class data visualisation tools like SKUtrak can help you keep track of how products are moving through the supply chain, including:

• How much stock is present at each of the retailer’s depots;
• Whether orders placed are for the right amount and destined for the most appropriate depots;
• What stock has been sold;
• Where there might be potential book stock errors.

With that data infrastructure in place, visualisation best practices can then help you quickly share insight about true demand with retailers to:

• Ensure that your ‘core’ or most highly perceived SKUs maintain adequate availability;
• See which depots aren't pushing the stock to store and which depots have greater need of stock versus others.

When working with limited resources, faced with the decision of where to allocate limited stock, you need to understand the picture at depot, store and SKU, on a daily basis. It may feel like damage control at times but put in the effort to maximise efficiency now and you will thank yourself next year when you have a working blueprint for dealing with persistent supply chain issues. When the supply chain does return to a degree of normality, you will be at the head of the pack for knowing where to put your product so it has the biggest impact on sales. Put in the work now and we can still have a solid golden quarter.