Recently, NeoGrid North America’s senior vice president of marketing and sales engineering, Paris Gogos, co-hosted a webinar alongside Mojix’s Johan Abadie titled “Where’s Your Inventory?” During the webinar they focused on accurately measuring on-shelf availability (OSA) and the technologies that help retailers and manufacturers achieve this goal.
When it comes to OSA there is often a disconnect between retailers’ and manufacturers’ definition of what this means. For example, many manufacturers may perceive on-shelf-availability to be in the 97 to 99 percent range, while in reality it is measured to be in the 90 to 95 percent range. The gap between reality and perception is vast and provides an opportunity for significant improvement.
Here are four current practices of measuring OSA that have contributed to this disconnect:
- Using warehouse in-stocks to measure what is available at the consumer level. Some retailers use warehouse in-stocks as a proxy to determine OSA, leading to a disconnect of what is available in the warehouse and what is available to the consumer on the shelf.
- Relying on perpetual inventory systems for data. Studies show that 65 percent of perpetual inventory data have some level of inaccuracy. Without accurate data, businesses risk making decisions based on incorrect insights.
- Measuring on-shelf availability at the wrong time. Retailers often measure OSA after the morning or evening restocking the shelves, which does not accurately show what the availability was throughout the day.
- Collecting incorrect data from customers. When asked “Did you find everything you were looking for today?” many consumers will respond “yes” because they don’t want to hold up the line. While it is polite, this data collection methodology leads to deceptive survey results.
The reality to measuring OSA is that there are a lot of complex analytics and algorithms that are needed to detect whether or not an inventory is accurate. This allows retailers and manufacturers to understand what the expected sales are and the probability of a decrease in sales due to out of stocks.
To learn about the effective practices for measuring and responding to on-shelf availability, check out the full webinar here.