Category Archives: Inventory management

how to improve profitability in retail, Inventory management, Process improvement

Necessity & Innovation

Nearly everyone we ask says that they want to be innovative — the best returns come to those who are first to market with a new product; those who innovate new and better processes can provide much better quality at much lower costs; those who can create a management system or culture that constantly is clicking on all cylinders can have a powerful advantage.

But how often do they happen, and why?

In our experience and research, we find that innovation is truly enigmatic:

  • Large organizations have more wherewithal to invest in systematic innovation, but smaller organizations seem more capable of capitalizing on innovative ideas.
  • Most innovations come not from visionaries at the top but from people closest to the work. Yet paradoxically, strong leadership and vision at the top of the organization are required to create an environment that fosters innovation and risk taking. Without strong leadership, organizations become bureaucratic and risk-averse.
  • Outsiders often have the most innovative ideas, but insiders’ know-how and buy-in are required to get them implemented.
  • And possibly most relevant during the current pandemic, adversity or “necessity” often brings about innovative solutions.

A recent SupermarketNews article notes that current world challenges have been exceptionally tough for supermarkets, and that the associated difficulties have brought about significant and innovative improvements in how stores are being run… now and possibly in the future!

“The first hint of the virus reaching our communities ignited the shock of an overwhelmed supply chain,” said Randy Evins, Senior Principal and Industry Advisor.

“A couple of weeks later, the consumer experience was further diversified with online pickup services, home delivery and special hours reserved for vulnerable shoppers. Some local grocers have also installed plexiglass protectors around their checkout stations and added floor markers to help ensure shoppers are standing six feet apart while waiting in line.

“There’s unquestionably a lot of ingenuity happening in supermarkets right now. But there is one area of the business that still requires attention — especially if grocers want to continue surviving this constantly evolving time as well as the eventual rebound to come.”

The article goes on to stress the importance of leveraging digital technology to ensure that all variables are considered in “real time” when making inventory management and ordering decisions.

“Digital strategies must go even deeper to cover the entire value chain — addressing the need for connected processes, real-time transactional data and immediate visibility into store-level inventory,” Evins said.

“Supermarkets can no longer afford to order new products and additional inventory blindly. They need to know what is available on their store shelves, store backrooms and distribution centers — by SKU and quantity and in light of forecasted demand.”

In support of this perspective, the article cites predictive data indicating that 25% to 30% of a grocer’s sales volume will consist of digital orders by 2025, compared to 6% to 10% today.

Evins went on to say that the use of technology, as described, will enable store employees to “have the visibility and insight they need to work more efficiently, safely and productively while keeping consumers happy and coming back over and over again.”

Certainly, given today’s circumstances, necessity has truly been the “mother of invention.”

Read related newsletter…

customer experience, Grocery shopping trends, Inventory management, Process improvement

Wakefern Focusing on Process Improvement & Customer Experience

Wakefern Food Corporation, a Keasbey, N.J.-based grocery retail cooperative, is planning a 50-store test of a computer vision system that automatically identifies when product stock runs outs on shelves.

As reported in a SupermarketNews article, once out-of-stocks are flagged, the system helps store associates prioritize them as they occur and recoup the most lost sales as possible per labor hour to make the most customers happy. The system keeps track of both lost sales per hour (LSH) and frustrated shoppers per hour (FSH). The company said this information enables them to track an “out-of-stock hours” metric that makes it easier for them to rack on-shelf availability of products from store to store.

“Focal Systems’ out-of-stock detection through computer vision and artificial intelligence has enabled us to automatically identify shelf gaps,” Wakefern Chief Information Officer Cheryl Williams said. “This early success has encouraged our members to opt into a 50-store pilot expansion this autumn.”

Focal noted that its platform allows store associates to spend more time serving customers because it eliminates the need to manually scan for out-of-stock items.

“Customer expectations are high, and retailers want to deliver on those expectations,” stated Focal CEO Francois Chaubard. “Focal Systems provides the real-time data retailers need to run their stores efficiently…”

customer experience, how to improve profitability in retail, Inventory management

Raley’s Innovative Approach to Managing Shrink

Raley’s, a West Coast supermarket chain, has implemented Date Check Pro from Pinpoint Software Inc. to better manage shrink.

In a recent SupermarketNews article it was reported that Raley’s adopted the system after determining that a technology-based solution supporting inventory management would aid ongoing efforts to provide customers with the freshest and highest-quality products. Previously the chain took a more operational approach to flag out-of-code items by bolstering team member training and auditing processes to best manage disposal of expiring products.

Date Check Pro provides real-time updates and proactive notifications on close-dated inventory, establishing more consistency and accountability versus traditional rotation and spot-checking methods, in which out-of-date items can be missed by human error, according to Raley’s. In turn, the grocery chain said it’s able to ensure that it’s offering shoppers the freshest products and recoup savings on what would have been expired shrink

Inventory management, Process improvement

Innovation at Hy-Vee Reduces Food Waste

Iowa-based Hy-Vee Inc. is piloting an innovative mobile shopping app that will reduce food waste, according to a recent SupermarketNews article.

The app is called Flashfood and is designed to let shoppers browse and buy food items nearing their “best before” date at significantly reduced prices. It was developed by a Toronto company of the same name.

“At Hy-Vee, we know it’s important that we do our part as grocers to reduce food waste,” said Jessica Ringena, Vice President of Innovation and Business Development.

Read the full article…

customer experience, Incremental Purchasing, Inventory management

Buy a Car at Walmart?

Continuing a trend of expanding its product offerings, Walmart has progressed from standard “retail” products to food to pharmacy and, now, to cars!

A recent SupermarketNews article reported that Walmart has expanded their CarSaver program with car-buying kiosks in 250 stores.

As you may know, CarSaver is a digital automotive marketplace based in Miami, Florida. The program leverages CarSaver’s network of certified dealerships, banks and insurance companies to support its car ­shopping and buying assistance to Walmart customers.

According to the article, every vehicle bought through a CarSaver kiosk at participating Walmart stores also comes with a lifetime warranty.

The article went on to quote Daniel Eckert, senior vice president of Walmart Services and Digital Acceleration, “We’re constantly looking for innovative services that help us save busy families money and time. CarSaver’s unique platform helps our customers understand the true cost of ownership, while also helping them save money with buying, financing, leasing and insuring a new or used vehicle.”

According to a report in Adweek, CarSaver uses its car dealer network to provide a better customer experience, including upfront pricing.

Read the full article…

Grocery shopping trends, Inventory management, Process improvement

Food Waste!

In a recent video report, Phil Lempert, “Supermarket Guru,” referenced a United Nations’ Food & Agriculture Organization statement indicating one-third of food gets spoiled or wasted.

That translates to approximately $1 trillion per year, or double the dollar volume of the grocery industry as a whole!

As you are most likely aware, to reduce food waste we have to control environmental conditions including temperature, moisture levels, and UV exposure all across the supply chain including on shoppers homes.

The Spoon reports that a group of researchers led by Giovanni Salvatore at ETH Zurich have developed a biocompatible microsensor that can be directly applied to food and is safe to eat. The sensor is made from a combination of edible materials such as magnesium and a compostable polymer made with corn and food starch.

But there is a problem – making them is currently very expensive, compared to pennies or even fractions of pennies for traditional RFID tags.

However, Salvatore predicts that these biodegradable sensors will be part of our everyday lives within 5 to 10 years.

Grocery shopping trends, Inventory management, Process improvement, Systems and scanning

Robots in the Aisles?

A recent video and report by Phil Lempert, founder of supermarketguru.com, shared information about “Tally,” a robot that will be working the aisles at Schnucks looking for items that are out of stock and checking on prices.

The robot is being tested at a store in the Richmond Heights area of St. Louis, the article says. A second will be tested at another store in the Kirkwood area. The tests are expected to last about six weeks.

Tally weighs about 30 pounds and stands at 38 inches tall and has sensors to avoid bumping into things like shoppers and carts. It scans the shelves and notifies the store personnel when quantities are running low.

A new component of the digital trend?

Customer service and loyalty, Grocery shopping trends, Inventory management, Process improvement

Can Digital Resources Solve Grocery’s Inventory v. Profitability Dilemma?

“The biggest challenges that grocery retailers face is excess inventory and profitability,” says Randy Evins, Senior Principal for Food, Drug & Convenience at SAP.

In a recent SupermarketNews article,  Evins explains that grocers face the dilemma of keeping their margins low by spending less while still delivering quality products. More labor requires higher costs, but without the additional attention to fresh foods, products will not be up to standards.

The solution: Grocery retailers should leverage digital resources and process improvement to more easily monitor, plan and execute their efforts.

“It’s critical that grocery free themselves from the constraints of doing everything manually.” Elvin says.

“Automation of simple tasks can help ensure manpower is used in more critical roles rather than routine monitoring and conditions management.”

The article goes on to present ways in which digital information can help supermarket management better-understand what products are most popular and what are consistently undersold, as well as which processes are the best candidates for streamlining. They would then be able to better manage some of the more challenging yet vital areas of the business, such as the fresh foods and perishable sections, which typically comprise up to 50 percent of sales and more than 60 percent of profits.

In addition to leveraging technology to improve operational efficiency, Elvins also stresses the importance of using data to better-understand customer preferences, and to drive the customer experience (CX).

“Stores must differentiate from online by taking advantage of consumer senses, drawing consumers into the store, and using experiences to convert the sale,” he writes.

In-store events like wine tastings, and providing local product representatives and vendors throughout the store to offer expert opinions, are often popular offerings that aren’t possible online, thus creating greater brand-and-store loyalty as well as a competitive edge over online retailers.

Customer service and loyalty, Grocery shopping trends, Inventory management, Process improvement, Shopping Experience, Supermarket competition, Systems and scanning

Check-Out Free Stores?

A December 5th SupermarketNews article shared insights on the latest — and potentially most disruptive — development from Amazon: Amazon Go.

This new convenience store concept will offer consumers grocery essentials, convenience items and prepared foods-to-go without requiring them to check out.

The 1,800-square-foot test store, located in Seattle, is currently open to Amazon employees using the store in a beta test. It will open to the public early in 2017, the Seattle-based retailer said.

According to the article, these new stores will use proprietary technology allowing shoppers to take items from shelves and simply walk out with them to be billed later — “…a potentially big step toward meeting shopper demand for convenience while relieving Amazon the burden of costly  fulfillment as it pursues a greater impact on food retailing.”

“Our Just Walk Out technology automatically detects when products are taken from or returned to the shelves and keeps track of them in a virtual cart,” the company said in a release. “When you’re done shopping, you can just leave the store. Shortly after, we’ll charge your Amazon account and send you a receipt.”

Amazon Go — reportedly known inside the company as “Project X” — has been the topic of considerable speculation in recent months. Recent reports said the company was eyeing the potential to add as many as 2,000 such stores in the coming decade following a test period in major markets before 2018.

Wow! We didn’t see this one coming, but it is certainly a good example of customer-driven decision-making! And as some in the industry are wondering, might this be then next big “game changer?”

Customer Service, Customer service and loyalty, Inventory management, Process improvement, Shopping Experience, Supermarket competition, Supermarket management

Supermarket Customer Experience & Expired Products

frozenA recent datecheckpro.com article referenced a challenge faced by supermarkets as they strive to attract and retain customers by providing a positive shopping experience and outstanding service.

The issue-at-hand is product expiration.

At the corporate level, author   says, “expired product costs generally remain hidden. As a result of date management execution challenges, expired products end up in the hands of customers or on the back of the shelf rather than on the P&L.”

Krawczyk goes on to suggest that the true cost of customer satisfaction, or dissatisfaction in this case remains unseen as well, and cites research from Date Check Pro, the industry’s leading expiration date management software, which indicates the average supermarket has over 1,500 expired items on the shelf within the center store alone!

The article also suggests that while product expiration issues are a preventable problem,  they plague many supermarkets because of:

  • People management – are the right people spot-checking and re-stocking?
  • Setting the wrong priorities – more urgent perational demands result sacrificing the important task of effective spot checking and restocking
  • Trends toward offering a wider selection of products

Given the competitive nature of the industry and the opportunity to positively impact the shopping experience, it would seem that supermarket chains would be best-served by proactively improving these processes on a continuous basis.