on-shelf availability - the root of all evil?

Maybe that is a tad dramatic, but yet again that tedious subject of availability to purchase is rearing its ugly head.

During a recent hypermarket shopping trip with my family (yet more quality time with the loved ones!), I was struck once more by the enormous number of gaps in the fixture.  The main reason this impacted me, was the absence of a particular snack my daughter dotes on.  It was not only the fact it was missing, but also my wife’s reaction that raised the big question, when she said “oh yes, I forgot it is now the 15th, they always go off sale mid-month!”  If the availability issue is such a standard pattern that Shoppers are becoming “trained” to it, this really is a dire situation.

What made this even more worrying was that when checking through some notes made when I arrived in Malaysia in 2000, I saw an entry from a market visit “Availability is terrible, huge opportunity”! I’m not sure we have made much progress in capitalizing on this opportunity, which seems strange at a time when everyone is searching desperately for growth, and cost savings.

At engage we often quote a research-backed hypothesis that up to 70% of all Shopper Marketing expenditure is wasted, and much of this is due to availability issues.  But there is more to consider than just immediate lost sales and wasted investment, what about the long term damage to Brand health, as Shoppers switch Brands, what about the substantial impact on Supply Chain as it tries to cope with the yo-yo effect of going off sale?

From the retailer’s perspective, they clearly have a grasp of the critical nature of this issue, but to be realistic, their approach tends to be actions against suppliers, fining them for short deliveries, rather than engaging them is delivering solutions.

So what can be done to ensure your product is always on sale and available to the Shopper?  

Availability starts with a good forecast, and then an efficient and effective Supply Chain.  Bearing this in mind, there is no single area to focus on which will deliver great availability, but rather a number of areas, involving Retailer, Supplier, third party service providers, and within those organizations, several different functions.

Four Steps to start the process of ensuring your product is available to purchase;-

Evaluate the Issue – The first step has to be a very clear picture of the true impact of not being available to purchase.  This means measuring availability at every stage, including (especially!) when on promotion, then accounting for all the other areas of waste.  It is really important to understand the actual lost sales are only the tip of the iceberg.

Create the Burning Platform– Once you have a figure on the true cost of availability, or rather lack of it, then this needs to become a mantra within your business.  High profile champions, constant communication, alignment of KPI’s, all play a part in making this core imperative part of your company’s DNA.

Select a Partner – One reason many suppliers find it difficult to get started, is the whole piece becomes overwhelming, and falls into the “Too difficult” camp.  Select one partner at first, someone who shows a willingness to work with you, get a project rolling to improve availability, learn and then extend.  Trying to start everywhere and solve everything in one shot, is not an effective place to start.

Get Pro-active – One of the reasons retailers have started trying to fine suppliers for poor service levels, is they have had little success in driving improvement through other means.  There are positive steps to be taken, such as Supply Chain implants, Joint KPI’s, joint forecasting arrangements, etc., which all show a desire to fix the core issue, rather than play tit for tat over whose fault it is.  The other element of this segment is to seek help, whether it is Regional/Global support teams, or consultancy.

These four steps will set you off on the right path to improve on shelf availability, and lead into an effective Root Cause Analysis (the basis of the process, and the subject of a future blog).  Always remember, it is not the “how”, that is only the strategy, it is meeting the objective that matters, and clearly the objective is, your products are ALWAYS available to purchase.

And the ultimate conclusion is peace for father, as beloved daughter gets her favorite snack!