supply strategy

4 signs that your supply strategy must change

There is no point in having a perfect pricing strategy, developing the ideal product, having the most effective promotional campaign if, at the time of purchase, the consumer does not find your product fully available on the shelf. Remember: the success of your sale depends a lot on your efficiency in the supply strategy.

In this scenario, it is essential that the path traveled from the factory to the hands of the shopper is fail-safe – which we know is extremely difficult in supply logistics. Hence, taking responsibility and tackling problems in a collaborative manner is crucial.

That is why the manufacturer’s relationship with retailers must be very close, after all, in the supply of the Distribution Center (DC) there are potential root causes of several problems related to on-shelf availability that can impact your products.

Have you thought about it? Here are 4 signs that show your supply strategy must change:

1 – Out-of-stocks are common

Systemic out-of-stock is a silent hazard that has a high impact on the assortment of stores and results in false perceptions for the manufacturer and retailer.

As the average sales of a product is impacted by constant out-of-stock events, there is a great risk of starting a deadly cycle that can even turn a product into something that apparently is not sold at a certain point of sale.

Escape from this systemic out-of-stock quicksand immediately.

2 – Forgotten supply policies

When was the last time your supply processes were revised?

We ask this because one of the best ways to avoid deadly cycles of out-of-stocks and unavailability is to revise supply policies. A simple adjustment of parameters can be the great turning point for recovery of the entire supply strategy.

When it comes to supply, constantly reassess two crucial expressions: when and how much.

3 – Frequent communication and alignment problems among Manufacturer – DC – Store

The retailer must share with the supplier the full supply routine, whether of the store or the Distribution Center, and the manufacturer must understand the importance of meeting these deadlines. Out-of-stock often occurs due to the manufacturer’s not understanding the consequences of, for example, not meeting the delivery date and time.

The manufacturer meets the retailer’s demand and supplies via DC, but are the products missing on the shelf in that interval until supply is completed, not respecting a minimum period stipulated between the parties? So, it is a problem of alignment between retail sectors that should be considered.

Another example is when the manufacturer conducts a promotional action without notifying the retailer, or the retailer creates a promotion without contacting the manufacturer. Misaligned promotions are high-risk factors, as they lead to the chaotic scenario of overwhelming shortages. If there is no planning between the manufacturer and the retailer, the risks are high.

4 – Often empty DCs

Out-of-stock issues at the DC are quite serious because they impact the entire production chain. The supply routine of the product manufacturer at the retailers must be efficient to avoid that the DCs are often empty.

Through closer contact with these processes, it is possible to detect valuable opportunities with the DC that can be converted into improvements at all stages.

Understanding that the problem is occurring is the first step to be able to solve it. When detecting supply problems, it is necessary to have a joint effort between manufacturer and retailer to act on the causes and remedy them. More than looking for “culprits”, it is important to understand that the supply chain is more efficient when all players work together.

Autor
We are experts in synchronising your business to actual demand - by always making your product available to the consumer, at the right place, time and quantity. We are Neogrid - a company providing automated supply chain management.
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