Availability of goods: "Retail, manufacturers and logistics agents must all work together"

IN Customer Experience Grocery — 12 June, 2012

Reassuring: According to the inventory system, there are still five strawberry yogurts in stock.Annoying: Eight customers have already expressed their irritation at the empty shelf.

Prof. Dr. Wolfgang Stölzle teaches and researches in the area of logistics management at the University of St. Gallen. At our Big Data & Analytics Congress he will present approaches for optimizing the availability of goods. We spoke to him about current challenges in retail trade.

Blue Yonder Blog: Professor Stölzle, every purchasing manager tries every way he can to prevent out-of-stock situations. Why are retailers still always running out of goods?

Prof. Dr. Wolfgang Stölzle: On the one hand, the assortment of goods is expanding and differentiating itself more and more. In addition, there is aggressive competition and marketing actions. On the other hand, customers are becoming ever more unpredictable consumers. Even satisfied customers will not necessarily select the same store for their next purchase. All of this increases the volatility of demand and makes purchasing ever more complex.

Blue Yonder Blog: What effect are the increase in online trade and the transformation of classic retailers into multi-channel retailers having on logistics?

Prof. Dr. Wolfgang Stölzle: Online retailers and their logistics partners are required to deliver very small shipments directly to the end customer – and this ideally precisely when the customer is at home. This form of distribution does not necessarily simplify processes.

Blue Yonder Blog: What opportunities does the analysis of Big Data offer for improving the supply chain?

Prof. Dr. Wolfgang Stölzle: There is a paradox: although today retail companies possess huge amounts of data, they lack the data relevant for making decisions about out-of-stock situations. In addition to particular data dependencies, external factors such as the assessment of customer reactions to empty shelves frequently play a role.

Blue Yonder Blog: What do you recommend in order to increase the availability of goods using software?

Prof. Dr. Wolfgang Stölzle: Using the inventory and sales data, retail companies can approach the current situation on the shelf. The concentration on inventory data alone is not sufficient for it can happen that a particular item such as strawberry yogurt is still present in the inventory control system even though the shelf is empty. Maybe the goods were arranged incorrectly, the packaging damaged or a carton was stolen. The sales data alone also does not guarantee that you can draw firm conclusions about the current situation. If ten units of a particular item are always sold on a particular day of the week and this is not the case on a certain Monday, it may be that the product in question has run out.

Blue Yonder Blog: At the Big Data & Analytics Congress on June 19 in Cologne, you will explain how retail companies can optimize the availability of goods using automated estimation systems. Can you give us a few hints here about current weak points and possible starting points?

Prof. Dr. Wolfgang Stölzle: Unfortunately, given the number of tasks and challenges, strategic improvement of the inventory situation is often neglected in day-to-day business. Purchasing, Logistics, and Sales frequently do not communicate well enough. There are target conflicts and sometimes nobody feels like taking responsibility. The top management must deal with this. The topic of optimizing the availability of goods must always compete with other topics, and interest will always die down. Companies need to take a deep breath and transform their "data cemeteries" into a database they can use to better control logistics processes. There are neither standard methods nor routine processes, but one thing should be clear: in the long run, the availability of goods can only be improved if the retailers, manufacturers, and logistics agents all work together.

Prof. Dr. Wolfgang Stölzle
 
Prof. Dr. Wolfgang Stölzle

 

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