Most legacy SCM systems are built around optimizing a distinct and discrete function. While these systems may optimize a local function or a local capability, not being connected to the entire supply chain can have adverse effects, such as a lack of enterprise-wide decision making. In most instances, these legacy systems are driven by a push-based supply chain model. Cloud-based SCM systems are flexible enough to support a pull-based supply chain model that is more responsive to consumer demand. With replenishment based on actual consumption, grocers can reduce OOS at the store level, while decreasing excess inventory for optimal OSA and profit.
In addition, a cloud-based SCM system can easily integrate with systems both up and downstream, providing the supply chain data visibility needed to both measure and manage OSA. These systems have the ability to gather, consolidate, and standardize point of sale (POS) data at the store level in order to calculate key performance indicators—such as sales, OOS, and OSA. Additionally, advanced OOS management capabilities allow manufacturers to ensure product availability on store shelves by identifying and addressing the root causes of unavailability.
Having the capability to view inventory levels, as well as measure and compare actual sales to expected sales in real time exposes gaps that can then be analyzed to determine if they were caused by an OOS. If a product outage has occurred, it is flagged in the system. Once flagged, data is gathered to determine the root cause of the outage, ultimately allowing users to create workflows within the SCM system. This predetermined best course of action, from the manufacturer to the individual store, is the key in preventing future OOS.
Improving Retail Insights at Point of Sale
Getting accurate information about products’ performance at POS are essential to avoiding OOS and excess inventories. While legacy system software may still fundamentally work, this is one area where it fails or underperforms. However, an integrated, cloud-based SCM system provides access to current, accurate data throughout the supply chain–including POS.
A cloud-based SCM system can turn complex data into simple, actionable information by consolidating information from multiple POSs into a single dashboard. By using algorithms, these systems can generate immediate calls to action for purchase and transfer teams. This system results in higher product availability and reduced OOS and overstocks. POS information can be used to personalize the in-store shopping experience and for loyalty programs to increase consumer engagement.
Increasing Profits with Vendor-Managed Inventory
Vendor-managed inventory (VMI) can be a powerful business tool. While the VMI concept has been around for years, it is only recently that the technology needed to support a successful VMI program was available. Now, with the advances of cloud-based VMI solutions, it is the perfect time for manufacturers and retailers to take advantage of its benefits.
Since it is demand driven, VMI enables the ability to respond much more quickly to what is happening at the store and/or distribution center level. This provides the end consumer with optimum service, while cutting down on excess inventory and OOS–leading to increased customer satisfaction and increased revenue.
Every VMI partnership is unique, therefore a flexible VMI solution is essential. As the program grows to include multiple retailers and suppliers, the VMI solution must be easily scalable to accommodate additional partners in order to achieve the best possible results.
Along with the technical aspects of the solution, having a trusted VMI service provider is important to the success of a VMI program. Involving a VMI service provider during the planning phase benefits both the manufacturers and retailers.
Look for a service provider that has implemented many different VMI programs, from both the manufacturer and retailer side. This implies they understand the complexity of dealing with different technology, business, and process terminology, and can work with all parties to translate those frameworks so the manufacturer and the retailer are able to better collaborate. They can share general best practices, as well as concepts and processes that would enable you to reach your program’s specific goals.