Can you support a customer who needs to double their order and wants it delivered this afternoon? Do you know if you have the trucks, goods, and available staff? What if they need goods because of an out-of-stock?
To ask it another way: what goods, people, and asset inventory do you have available and how fast can you mobilize it?
The only way to know the answer to these questions is if you have accurate, real-time information. Intelligent, relevant data will allow you to understand your operations and performance, so you can know if you’re able to fill that need, plus to see if it’s profitable for you to do so if it means delays elsewhere.
Real-time, shelf-level data is the best way to stop losing that 20% of sales you’re not seeing. Plus, it’s the best tool you have to limit revenue losses when your shelves empty.
Understanding Out-of-Stock Losses
Out-of-stocks can cost companies as much as 4.1% of their total lost revenue each year, translating to much more than $125 billion each year in the U.S. alone.
If you want to estimate what a single one could cost you, fire up your retail shelf management tool really quick and use this formula:
CooS = (AvgUPD x PPU x DoS) + PaC
- CooS stands for your total cost for the out-of-stock
- AvgUPD is the average units sold per day
- PPU is the price per unit
- DoS is the total number of days that you’re out-of-stock
- PaC stands for any additional penalties and outside costs you accrue, both those your vendor imposes as well as any additional
Every day that you fail to fill the shelves is a day of greater losses and more frustrated customers. The name of the game for you is how fast you can identify the empty shelf or related problem and get the right people and goods to fix it.
The faster, the better.
Begin with the Data You Have
Identifying your out-of-stocks starts with a robust understanding of the information that’s available to you. You need to bring everything you can together to create a holistic understanding of your operations and your risks.
Here are a few thoughts to get you started.
What scan data can you access?
Look for access and data from your partners as well as vendors. You might consider acquiring syndicated data from IRI, Nielsen, SPINS, or Spencer — these are the dominant players in the consumer goods industry but ask your partners because they may use other services.
For larger partners, see if they will provide you with information directly. Walmart offers a significant level of data, Whole Foods has the data garden portal and RangeMe service, and Kroger relies on Market6 data. Thankfully, some retailers will provide this data for free.
Distributors also tend to give you access to data for free because it helps them do more business with you.
What can you put together?
Most important to this entire process is the ability to combine all this data into a business intelligence tool, dashboard, or analytics program. Real-time analysis allows you to monitor all of these data flows as they occur, so you can spot and respond to problems more quickly.
If you’re relying on data that doesn’t get delivered until the next business day or the end of the week, you could be losing money as shelves sit empty and consumers walk away with someone else’s products.
Shelvspace is designed to help you mitigate these risks. We set up automated data feeds with your data sources to turn this into near real-time data.
With us, you can visualize coverage gaps and out-of-stocks to see the best steps to take right now. Plus, we’ll help you look across historical data to compare what’s happening today to what’s you normally expect, allowing you to adjust plans to optimize performance and plan for tomorrow’s demand.
Do you have a field team that can collect out-of-stocks and other info in stores?
Adding sights at the shelf give you the full picture of what’s really going on.
Companies with field teams have a built-in force to collect shelf-level information without distracting from selling goals. If you are still using email or Excel to capture this information, it’s time to graduate to the digital age!
Shelvspace provides a quick and easy way to capture this info in matter of minutes. On average our customers spend less than 2 minutes capturing data, with all results are rolled up in real-time. We’re saving them hours every week in manual recapping.
If you don’t have a field team, don’t feel overwhelmed! Even visiting just a few stores goes a long way in understanding what’s going on at a retail chain.
Shelvspace makes this easy by giving you tools for your team to capture shelf data including photos and reports, or crowdsourcing the audit process if you don’t have the field team roster yourself. No matter what staffing route you take, start by auditing a sample set of stores to get a picture of what’s going on in the entire chain or region.
Our goal is to make it easy, and our software supports that aim. Customers tell us that audits are being completed by Key Account Managers, VP’s, and even CEOs.
Communication and Closing the Loop
Now that you have data from your sources and partners, plus some in-field information, it’s time to put it all together to reliably understand what your business is facing. It’s also the best way to help you figure out who is the best person to fix the problem you’re facing.
Part of that problem-solving process involves your reporting and communication tools. If you see an out-of-stock problem, do you have a report template that you can quickly send off to your distributor with specific examples, photos, addresses, and other data? Are your brokers aware of the commission they could gain by fixing voids in specific stores?
Shoring up this process and making it smooth will keep your internal operations running more efficiently. Also, your retail and sales partners will respond best to you when they’re provided with exact examples, pictures, store lists, and other data for solving the problem – this includes your ability to solve problems they feel when a shelf is empty.
We’ve actually put together a variety of reporting tools and options for different stakeholders along the supply chain. So, brokers can collect and share audits instantly to improve visibility and collaboration, enhancing performance. No matter who sends them out, we empower field reps with tools to automatically communicate specific target lists, letting them know exactly where to target and when.
Getting better every day
As you put your store-level data sources together, you will inherently have a way to identify whether or not your actions actually fix your out-of-stock problems. It’s the perfect final step in the process.
Ensuring you are setting up your store level data sources into a consistent pattern or cadence allows you to complete the loop. You can definitively know if you’re quickly identifying the problem, communicating it to the right sales teams and partners, and making sure it got fixed.
Work towards real-time data with unified data sources and a streamlined reactive process that closes the loop. This ensures your gains at the shelf grow exponentially. Not only are you solving existing execution problems at the shelf, but you also get ahead of the problem and identify new opportunities before your competitors even know what happened.
Unsure what your shelves look like? Try a free store audit from Shelvspace and see what opportunities you’ve got, plus any existing gaps in your data.