OSA continues to be a challenge for Walmart and for Walmart suppliers. Observers say that the solution lies in new technology increased backroom staff, and perhaps a change of viewpoint.
But we know that OSA isn’t just between the retailer and the consumer. Suppliers are also key.
Orchestro‘s State of Inventory Management survey, conducted in partnership with 8th & Walton, looked into the question from the point of view of the supplier, collecting data from small, midsized, and large suppliers. Sales, category management, and supply chain professionals were among the respondents.
This diverse group showed strong agreement on the most important issue for inventory management: increasing on-shelf availability. Suppliers need to see their products on the shelf so that shoppers can buy them, even more than they need to focus on cutting costs or managing their own warehouse inventory. 75% of all respondents cited availability as the top priority.
Retailers aren’t opposed to this, though a recent article in Forbes pointed out that Walmart buyers have to think in terms of a whole category, not in terms of OSA for each product.
So, if everyone agrees that OSA is top priority, why is it so hard to accomplish?
“CPG companies face a variety of challenges in dealing with On-Shelf Availability (OSA),” Orchestro concluded, “but the core problem boils down to one problem: a lack of accessible, meaningful and actionable data.”
54% of respondents to the survey had trouble figuring out whether products were out of stock, and if so whether it was a problem at the store level or in the distribution centers. They also couldn’t tell whether there were single, unrelated problems or ongoing issues.
Not knowing the nature of a problem is a major obstacle to solving that problem. Without an understanding of the root cause of OSA issues, suppliers are stuck putting out fires with rush orders and looking again and again at their processes in hopes of improving the situation, rather than actually developing solutions.
Some suppliers also felt unsure that they had any control over the situation. They are thus in the position of not being sure what caused the problem, not knowing what might solve the problem, and not being confident that the solutions they try actually have any effect.
The most common means of gaining information about OSA issues was physical audits, followed by POS-based methods. 40% of respondents use third-party systems to help identify issues.
Once the issues are identified, managing these issues is the next step. Respondents to the survey talked about issues like these:
- out of stock products
- having the right amount of stock for promotions and keeping displays in sync with promotions
- a desire for more accurate forecasting
- a desire to be able to handle issues by priority and profitability rather than just by fixing what was easiest to fix
“Those in supply chain roles are more focused on better data,” Orchestro concluded from these discussion, “while those in sales roles are more concerned about the actionability of information.”
All in all, suppliers express dissatisfaction with the way they’re receiving and using the data they need to make decisions.
Orchestro is in the business of providing cleaner, more actionable data for retailers and CPG companies. Harmonizing information from multiple data sources and using mobile alerts can transform inventory management.
Orchestro is offering a free webinar on February 3, 2015, from 11:00 to noon Eastern, or noon to one here in Bentonville. They’re also offering a complete report on the survey in the form of a whitepaper.