The COVID-19 pandemic has shone a light on areas of opportunity.
The food retail industry has been integrating structures and systems for years in preparation for the emergence of the digital shopper. Despite sharp growth in e-grocery, many food retailers are still ill-prepared to deliver the right products at the right time to consumers. And, with e-grocery sales expected to reach $143 billion by 2025, food retailers are faced with adapting their processes to support these ever-changing consumer buying behaviors.
As the COVID-19 pandemic exacerbated e-grocery sales, it forced food retailers to speed up the implementation of e-commerce channels and newly added infrastructure to meet demand. It also shone light on areas of opportunity such as disrupted supply chains, inaccurate forecasting and demand planning, requiring food retailers to re-evaluate their processes and technology to close the gaps.
For instance, as food retailers jumped into crisis mode, the errors and inaccuracy of using a manual order system created havoc for many. Others had replenishment systems in place but faced their own challenges, hobbled by department-specific or weekly forecasting. Industry-leading fresh replenishment solutions update their forecasts continuously, as customers make purchases throughout the day. The majority of ordering systems available on the market are designed to manage bulk replenishment of slow-moving, center store products – leaving fresh departments requiring a more agile solution on their own or struggling to extrapolate from erroneous projections.
To strengthen supply chains, fresh food retailers are now examining automated replenishment solutions to improve visibility, stability, and profitability; all while meeting consumer demands.
A fresh automated replenishment software solution can improve inter-organizational communication and provide visibility into:
- real-time in-stock positions down to the item level
- aggregated replenishment quantities for recipe-based food and products that undergo the transformation process
- ordering effectiveness and compliance with customizable reports
- priority items requiring replenishment, filtering out noise.
Because stores and Corporate now have a holistic picture of their fresh inventory and replenishment status, they can work in tandem to reduce duplicate orders, modify pricing to quickly sell slow-moving perishables, or fill holes in supply. Additionally, significant labor savings are a benefit, as store associates do not need to perform a complete daily inventory count, resulting in working more efficiently due to a streamlined ordering process.
Visibility into Backroom Products and Ingredients
Aggregating quantities of all backroom ingredients required to produce sellable products isn’t possible with solutions that focus on center store ordering, which typically only handle ordering by the pallet.
A fresh replenishment solution regulates the ratio of ingredients to recipe yield, which is different for every prepared item. The transformation of ingredients into sellable products is not a linear 1:1 relationship and makes ordering these items extremely challenging. Only a fresh-focused solution is capable of automated ingredient ordering, generating an order recommendation for backroom products that considers balance-on-hand, forecasted demand, and consumed ingredients.
For example, let’s look at chicken. Most supermarkets offer rotisserie chicken, chicken sandwiches, chicken in salads, pre-sliced cold chicken, and chicken soup. An integrated ordering solution predicts how much chicken is required to make the entire assortment of prepared foods.
It also converts random weight items sold by each or weight into case quantities for ordering.
Exception-Based Review: Visibility into Priority Items
Automated replenishment provides grocers with a solution that enables exception-based review. In some departments, there can be a hundred or more items on an order. Many items are low volume and don’t require human oversight. However, a small portion of the list is important – like seasonal, signature, high volume, or promo items. An exception-based review will filter or rank these important items in priority sequence, so store associates can quickly and easily review them. This provides significant labor savings as associates can re-invest labor in more value-add customer-facing interactions.
Corporate Visibility
Orders roll up from the store level to district, division, and finally to the enterprise level. An automated replenishment solution provides Corporate with real-time visibility into in-store inventory positions. This helps to resolve problems at the store level and informs the supply chain to enable concrete decision making.
For instance, if stores have a large quantity of slow-moving perishables remaining, Corporate can help clear it by providing more competitive pricing. It also prevents buyers from ordering additional products.
To provide leaders across the organization a clear view of ordering performance, customized non-compliance rules can be set to measure things like over and under ordering, and orders completed outside the scheduled time window.
As supermarkets transition to corporate-enabled ordering, centralized order managers run orders for multiple stores. This too is possible with automated replenishment, though there is still the need for stores to report back on quality and freshness.
In this situation, a corporate buyer might snag a great deal from a vendor and place a bulk order for a region. They’ll allocate inventory by store and push it out. The automated replenishment solution will then add the corporate pre-order to the stores’ inventory, ensuring stores don’t order duplicate inventory or allow them to order more if the pre-order is short based on anticipated demand.
Conclusion
A fresh automated replenishment solution is one link needed to build the supply chain of the future. Corporate and store teams can work collaboratively, sharing real-time in-store inventory levels and a unified forecast engine. This visibility and collaboration drive improved profitability and labor savings.
