The objective of both the supplier and the retailer is to ensure that a product is on the shelf when a customer wants to buy it. That way both parties maximise their sales.
Yet we find that many suppliers still focus on supplier-to-retailer service level - i.e. did I deliver exactly what the retailer ordered? And whilst it is true that the supplier-to-retailer service level may make for a nice KPI report (or be used as evidence to blame the appropriate party), it does not actually help improve on shelf availability.
Many suppliers think that depot service level is the retailer’s responsibility. They assume that the retailers have fantastic, all-knowing systems that produce perfect forecasts, whereas in reality, they don’t.
Retailers will also inevitably focus on the key volume lines, products on promotion, or fire-fight the ones that have already gone out of stock. Especially as Supply-Chain Managers can have several thousand products to monitor (across multiple depots).
You could have 98% depot-to-store availability across all items, but really poor availability on one critical product, and 100% availability on another. That failure goes unnoticed without drilling down into the detail. Even if you're drilling into the detail a month after the event, it is too late to rectify any issues that were present.
In order to optimise availability and thereby maximise sales, suppliers should use the data to provide very specific, helpful insights to your retail Supply-Chain Manager. in doing so they can quickly understand the situation and take action (e.g. “We need to order more of this product into that depot, and here’s why”).
Focusing on depot-to-store service level fosters genuine collaboration, which enables:
All major supermarkets provide data about depot stocks and sales through their supplier portals (Sainsburys Horizon, for example). However, these systems supply raw data which is difficult, and not to mention time consuming to translate into actionable insights.
If you liked this then take a look at our other blog 'Getting your availability right'. Discover how your business can get the best out of its most underutilised and misunderstood insights.
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SKUtrak from Atheon Analytics provides a rich, visual, interactive analysis of trading performance to help consumer goods businesses build better, more valuable relationships with their retail customers.