Barry Evans from the Cardiff Business School talks about one of the burning concerns in FMCG at the most recent IRI Seminar
Availability remains one the most pressing concerns for the FMCG industry with lost sales opportunities running into billions of pounds every year. Research by Deloitte indicates that product availability was at 90% in 1999 and in the seven years since has not improved at all. Retailer initiatives have addressed many supply chain issues, mostly up to, but not including, the last 50 metres, arguably the most important part of the supply chain.
The Chartered Institute of Logistics and Transport (CILT) supply chain forum aims to champion the understanding of critical supply chain issues in the last 50 metres. The goals of the forum include developing practical solutions to address some of the key issues and sharing understanding and lessons learnt to other supply chain professionals to perfect availability, the ultimate goal for both manufacturer and retailer.
A number of tactical issues prevent success in the last 50 metres, including inappropriate layouts, little training, back of stores problems and poor compliance, challenges which are neither unique nor insurmountable.
The question that needs to be answered is ‘what matters if I’m shopping?’ The answers are multiple but are all variants on availability – line, basket, annual and lifetime. By having anything less than 100% availability, we let down the majority of shoppers in every basket and every single shopper over the course of a year. Naturally, this isn’t helping with achieving what must be every supplier’s aim – lifetime loyalty.
To help increase availability, a combination of people, systems and process must be used. People who are trained and capable; processes that are defined, robust and more importantly used; and systems that identify replenishment priorities and schedule replenishment activities. Only with these in place can the holy grail of 100% availability be hoped to be achieved.