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Retail Out-Of-Stock Management: An Outcome-Based approach
 

Retail Out-Of-Stock Management: An Outcome-Based approach

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This paper is to comprehend ‘merchandize management challenges’ of retailers, especially those related to OOS, and understand how businesses can gain from a Key Performance Indicator (KPI)-driven ...

This paper is to comprehend ‘merchandize management challenges’ of retailers, especially those related to OOS, and understand how businesses can gain from a Key Performance Indicator (KPI)-driven process framework that aligns stock performance with corporate objectives.

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    Retail Out-Of-Stock Management: An Outcome-Based approach Retail Out-Of-Stock Management: An Outcome-Based approach Presentation Transcript

    • Retail Out-Of-Stock Management: An Outcome-Based approach Your customers get what they want, when they want and wherever they want 1 © 2013 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
    • HIGHLIGHTS Retail Out-Of-Stock Management: An Outcome-Based approach An Aberdeen research indicated that 70% of the surveyed 120 retailers rated the performance of their inventory management function as average or below average This paper is to comprehend ‘merchandize management challenges’ of retailers, especially those related to OOS, and understand how businesses can gain from a Key Performance Indicator (KPI)-driven process framework that aligns stock performance with corporate objectives. 2 © 2013 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
    • The Retail Industry Today  Consolidate existing operations Step into new markets Adopt new channels Find ways to enhance customer experience 3 Hyper-local retailing or “store of the neighborhood” is one definitive trend for brick-and-mortar retail.  The inventory management function ensures that the right product is at the right location and when the customer wants it.  According to a GMA study, worldwide OOS levels for fast moving consumer goods average at 8% and result in losses of up to 4% of retail sales. © 2013 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
    • Key Challenges in Managing OOS Data management   4 Quality of item data and data synchronization are important in retail business as they directly affect ordering and forecasting. Low levels of inventory accuracy also pose a challenge, phantom inventory often leading to OOS Assortment and space planning Item availability  Inaccurate demand forecasts lead to problems with product availability.  Supplier shipment problems, inefficient delivery cycles, improper shelf facings and non-optimal use of shelf capacity all result in inefficient store and shelf replenishment  Instead of using demand and performance as criteria, retailers allocate shelf space based on case pack size for most products  Low planogram compliance due to lack of localization and the long time taken to adopt to planogram changes serve as merchandizing hurdles © 2013 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
    • Proposed Approach – Operational Alignment to Organization Goals • Identify key performance measures and set targets Step 1 • The targets could be derived using industry benchmarks or thorough analysis of the firm’s historical data • Focus on root causes Step 2 • The list of root causes include data accuracy, order cycle, planogram compliance and forecast-sales variance. A framework that quantifies these root causes and ties them to the appropriate KPIs should be developed • Drive action plans at the lowest transaction level Step 3 • The rigor in analysis should be reflected through a view of the process that throws up actionable insights at transaction level Data management is a crucial problem for retailers. Quality of item data and data synchronization are of paramount importance in the retail business as it directly affects ordering and forecasting 5 © 2013 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
    • Benefit Potential for Retailers Revenue Impact  A 5% reduction in stock-outs can boost revenues by about $20 million on a base of $10 billion.  Stock availability for localized assortments results in satisfied customers 6 Cost Reduction  Improvement in shipment service levels drive down safety stock requirement.  Inventory data mining enables case size optimization  Overall, it leads to reduced inventory holding for the retailer, which in turn lowers costs and improves cash flow © 2013 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL Productivity Improvement  Implementing SLA-driven standardized processes for order entry and maintenance results in better in-stock levels  Facilitates tracking of open orders and monitoring of delivery SLAs  Framework doubles up as an early alert mechanism  Supports Management by Exception, wherein thresholds for exceptions and alerts are set
    • Conclusion .  With customers getting more demanding than ever and product lifecycles shortening, inventory management will remain one of the top retail priorities  While it is impossible to attain zero stock-outs without prohibitive inventory investments, the lack of any perceptible improvement in average OOS levels suggest that lot remains to be done in this area  This challenge presents an exciting opportunity to retailers to improve profitability & customer satisfaction, and drive growth in difficult times. 7 © 2013 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
    • For more details please visit the link below: http://www.wipro.com/Documents/retail-out-of-stockmanagement-an-outcome-based-approach.pdf 8 © 2013 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
    • About Wipro Technologies Wipro Ltd. (NYSE:WIT) is a leading Information Technology, Consulting and Outsourcing company that delivers solutions to enable its clients do business better. Wipro delivers winning business outcomes through its deep industry experience and a 360 degree view of “Business through Technology” - helping clients create successful and adaptive businesses. A company recognized globally for its comprehensive portfolio of services, a practitioner’s approach to delivering innovation and an organization wide commitment to sustainability, Wipro has a workforce of 140,000 serving clients across 57 countries. For more information, please visit www.wipro.com 9 © 2013 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL
    • Thank You ©Wipro Limited, 2013. All rights reserved. For more information visit www.wipro.com No part of this document may be reproduced in whole or in part without the written permission of the authors. Wipro is not liable for any business outcome based on the views presented in this document. For specific implementation clients should take advise from their client engagement manager. 10 © 2013 WIPRO LTD | WWW.WIPRO.COM | CONFIDENTIAL