Getting to the shelf on time…

Food retailers and suppliers are facing increasingly complex challenges to ensure they make sound business decisions, in addition to satisfying burgeoning regulations regarding food safety and traceability. Knowing when, where and how much product to make available to consumers is crucial to managing margins, maximising profit and minimising potential losses. While everyone acknowledges the need to be compliant with safety regulations, the struggle to marry good business processes with assimilating and acting promptly on continually emerging guidelines with ease, is difficult.

Best practice supply chain management seems to go through frequent change. The possibilities of RFID, the expansion of the Global Data Synchronisation Network (GDSN) and development of Electronic Product Codes (EPC) signify that new technology developments will ease the burden of making business more effective, but for most companies are not yet reality.

In order to gain real advantage with these new developments it is important to have real-time visibility throughout the supply chain. By permitting potential problems to be identified at source and averted accordingly, kinks in the supply chain will be unblocked before it costs money.

Most retailers and their suppliers already share information electronically, but not all of them make the best use of the data they have to hand. If data is not clean and accurate to begin with for example, innovations such as RFID will only enable you to track the wrong items faster, to the wrong place at the wrong time. This will not help the bottom line.

By standardising, matching and synchronising critical data, supply chains can operate more efficiently and profitably – and that stands whether your business operations are regional, national or global. Incorrect data contained in your and your partners’ systems, such as obsolete items, incorrect price information and inaccurate product definitions, creates a wealth of problems. Special offer sizes, available shelf space and time of shipping and display are all critical functions. Such errors have an adverse effect on the revenue potential of both manufacturers and retailers, as well as resulting in problems such as goods out-of-stock or insufficient shelf space for over-sized items. While automation of data exchange can turn this around dramatically, it can be a minefield for some organisations attempting to manage all of this themselves in-house. Many firms have found peace of mind in outsourcing this capability, which leaves them free to focus on their core business.

Many brands spend huge amounts on developing new products in a cut-throat environment which ensures only the fittest survive. If there is no visibility into stock control and availability, an expensive product launch can fizzle into an even more expensive damp squib if it sits in storage rather than reaching the shelves promptly – and in appropriate amounts. If product doesn’t shift, the whole re-ordering process and growth potential becomes moribund and the product fails.

Having visibility into all aspects of the supply chain, from order placement and acknowledgment, order filling, advanced shipping notices and delivery advice means that any issues occurring can be managed effectively or nipped in the bud. Advance warning of new product permits retail staff to make appropriate space to both receive the shipment and handle it appropriately once it’s in store. As products make their way to store, they can be vulnerable to logistical problems – traffic jams, meaning a hold up in deliveries, or broken refrigeration or freezer units which might cause food to spoil rapidly and be unfit for display and consumption. Notices can be communicated and responded to when there is access to such information. Beyond this, critical back office functions such as accounts and finance and production, also know what to expect and can plan and execute accordingly.

When data is exchanged electronically, there is a clear audit trail and communication is instant and accurate. Not only can information be transmitted, acknowledgments can also be promptly issued. The entire process from order to invoice reconciliation is visible to all appropriate parties, enabling those with operational and strategic responsibility throughout the business to make the best decisions from the forecasting stage, right through to processing payments. The data trail also acts as ‘one version of the truth’, an indisputable resource which affords security and peace of mind for partners in the transaction.

The flipside to this are those companies that do not have an electronic or automated system. They are faced with a high percentage of incomplete orders and inaccurate data due to human error and the lack of automation between sequential business documents, such as purchase orders and invoices. Without real-time exchange of information companies, and their extended supply chain communities, cannot view, transact and collaborate on order, shipment and settlement processes efficiently – there is no ‘clean’, centralised source of high-quality supply chain data.

With an accurate and smooth process flow of business documentation, it is easier to integrate new guidelines that may arise from food safety scares or as a result of legislation. It also provides clear data which can feed into the next round of forecasting and planning for both retailers and suppliers, improving inventory planning, lowering transportation costs while increasing productivity and minimising risk of waste in store. A lack of shared view into demand results in high inventory and frequent running out of stock – or waste and price reductions from excess stock. When both sides have an insight into what demand actually is, tied into how quickly stock is moving, a far smoother and more profitable supply chain with shorter lead times can be effected.

The benefits of advocating a stronger visibility programme cannot be underestimated and the costs and complexity of ‘getting online’ with such a programme need not be prohibitive. The benefit gained from embracing automated communication with a focus on visibility very rapidly pays for itself in any case. Recent research from Quocirca has established that the significant amounts of communication between trading partners remains via phone, fax and email. This inevitably also means that the number of errors resulting from manual communication and processing – and the subsequent costs – also remain high. When there are errors, there is also uncertainty, visibility brings absolute clarity.

Steve Keifer is VP of Industry and Product Marketing at GXS.