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Will we ever get to one touch replenishment retail?

26th July 2021

We all know that retail is undergoing massive change and there are aspects of how we do business now that are almost unrecognisable from retail operations 20 years ago.

Yet there have been two constants – people and stock. We know from our studies that the two biggest workload chunks are:

  • Serving customers
  • Getting stock on the shelves

Serving customers continues to change with self-checkout and self-scan technology, and the relentless drive to contactless payment. And while there have been changes to stock management and handling, the pace of operational stock management change is falling behind what is happening at tills.

So, is the time right for stock management transformation? If one of the most important pieces in an organisation’s productivity puzzle is replenishment, could one touch replenishment be the answer?

How to identify issues with stock management

For high volume, low service model businesses, stock handling becomes the single biggest workload element. And unless you operate electrical showrooms with display appliances and direct delivery from a centralised warehouse – you will be spending at least 25% of your total store time on stock related tasks.

Peak efficiency is when stock comes in and goes straight to the shelf, and the only time it is touched again is when the customer puts it in their basket – one touch replenishment

For most, this is still a distant dream, with many retailers touching an item of stock multiple times before it gets into a customers’ hands. Drivers of the multi touch stock processes include:

  1. Inappropriate stock levels – delivering more stock than fits to the shelf means that the stock has to go to the stockroom and be touched a third time to put it on the shelf as part of fill up routines. And that is the best case scenario. The reality is that it may well be taken onto the shop floor multiple times to see if it will fit before finally getting its spot on the shelf. Stores with overflow stock often have more than their stockroom can efficiently hold – meaning that every time the item is counted or checked if it will fit on the sales floor, then stock around it has to be moved to get at it. This multiplies the number of stock touches.
  2. The other side of the issue is inappropriate shelf capacity – if your planograms don’t give enough space to fast sellers, don’t consider outer size or don’t accurately reflect promotional volumes then your head office is creating extra stock handling work for store teams

Want to quickly check if you’ve got a problem? If any store stock room has more than a couple of bays of genuinely fast moving and bulky items, then you have an opportunity to reduce the number of times you touch stock

Retailers that have adopted RFID (Radio-frequency identification) technology have found they can operate on much tighter stock levels as stock file accuracy is transformed, and stock related tasks such as counts and booking in are eliminated. However, the price of RF tags means it will be a while before it makes commercial sense to put one on a tin of own brand baked beans, for example

The top tips for the retailers without the benefit of RFID?

  1. Look around the stock rooms to spot what are the problems. Too much left over stock at the end of the promotion? Review your allocation processes and use sales data to make it smarter. Too many slow selling lines? Review supply parameters to reduce stock cover. A problem with one product category? Review the planogram to make sure space allocated reflects sales.
  2. How accurate are your stock files? Without RFID they are probably not accurate at all. And doing regular counts just makes them even less accurate. We recommend stopping routine inventory counts and to just look at exceptions. If you’ve got gaps, you need to investigate to avoid disappointed customers and lost sales. Got loads of a line in the stock room? Count it once and let it sell through or transfer it elsewhere.
  3. Look at the balance of time spent on putting your delivery to shelf versus time spent filling up from the stockroom. In an ideal world, fill up time would be a fraction of the time to put the delivery away. We regularly see operations where more stock from a delivery goes into the stockroom than fits to the shelf, which creates an industry of popping in and out with stock. Does it add value to try and fit one extra item from the stockroom onto a shelf that already has half a dozen available for customers? Better to save the time and wait until there is almost a gap and use your gap monitoring to pull the stock when you need it.

Stock management sounds simple. Yet the complexities of getting forecasting right and setting up supply parameters that work for stores, commercial and warehouses in ever more complex stock systems make it tricky. And that is without the challenges of judging the right levels of safety stock when covid lockdowns create high or zero demand and an industry wide shortage of drivers is undermining confidence in planned delivery cycles.

Whatever challenges your business is juggling, it’s time to get serious about stock management. We’re experts at helping retailers optimise their productivity so they can focus on developing their people and delivering great service. Contact us today if you’d like to talk about productivity or email [email protected]