Archive for September 30, 2016

Aligning Inventory Investment To Consumer Demand

From the Teradata Conference, September 13, 2016

Atlanta, Georgia

 

 

Presented by Victor-Luis Gualdi , IT Manager at La Anonima in Argentina

And Carlos Machain, Carrefour

 

It is always interesting to hear retailers outside the U.S. present their versions of many of the issues that effect retailers in the U.S.   Such was the case in a recent session at the Teradata Partners Conference in Atlanta, Georgia, where representatives for La Anonima, a Carrefour Supermarket Banner in Argentina presented their case for the investment in inventory and demand alignment. La Anonima is part of a 577 store country wide distribution channel and representing $1.7 billion in sales.

The presenters painted a fairly bleak picture of the logistics of their business back in 2005, prior to implementing automated ordering. Their company wide out of stock rate was over 25%, they were incredibly out of compliance in terms of theirs shelf sets, and the practice manual replenishment.

On the warehouse side of things, the distribution center carried 35 days of supply in house, much too much, given the amount of out-of-stocks that prevailed at retail. Their journey was not dissimilar to many retailers who have come to grips with the financial wreck and ruin they encounter when consumer purchases are not driving the ordering process.

In the current environment it is difficult image any retailer of scale attempting to compete without a shopper demand model generating store orders and warehouse purchases from suppliers. Inventory ‘awareness’ is absolutely essential in executing an omni-channel sells platform. Throughout the retail industry, thanks to more agile and affordable data, much progress has been made, but as the two presenters continually pointed out, there is significant ‘heavy lifting’ in getting to the point where a blend of automation and store level accountability work in tandem to maintain optimal amounts of inventory, while drastically reducing out-of –stocks.

After more than a decade of work, La Anonima now boasts an out of stock rate of less than 5%, while reducing days of supply at the warehouse by over 40%.

Demand planning and aligning is no longer an option, but a requisite for competing in the omni-channel marketplace.

For those just beginning the journey today, they do not have the luxury of building such a platform over ten years, or even half of that of that time, given the progress others, like La Anonima have already made. It will take investment, a very strong commitment, a plan created by experienced experts and the ability to understand the importance of combining the power and scale of an automated system with the flexibility of occasional ad hoc decisions as market conditions continually change.