Retail

How do I know if the solution can help me?

Do you believe you can get much better Like for like (Same store sales) growth ? Will it be beneficial to increase your store inventory turns? Are you struggling to get the right product in the right stores at the right time? If the answer is yes to any of the above, it is a high chance that you can benefit from applying the TOC concept of retail in your company.

If you look at the entire value chain in Retail, for a company with good supply chain practice, the final constraint is the market. What we call as traffic in the stores. Before asking for more traffic in our stores, we must first ensure that we are fully able to ‘exploit’ the current traffic in our stores.

  • The short answer? Right product at the right place at the right time.
  • The long answer: Ensure that you have the right amount of stock, the right amount of varieties and ensure that you know you are taking the steps to ensure that products are not getting stuck in our stores and there is constant freshness
  • The level of freshness is tied to the expected customer frequency and expectation of level of freshness.
  • You need to ensure that the amount of stock in stores is taking care of the variability in demand (sales) and the variability in supply (level of reliability of vendor / supply chain)
  • First, you need to ensure that what portion of your assortment is effective today. Effective means selling more than a threshold. If most of your options in a category sell very well then maybe you can add more options (after checking the right options are present in the stores).

Yes, forecast at an SKU level is getting tougher. Primarily because of the below 3 reasons.

  • Customers today want high amount of personalization. Due to this, companies have much higher amount of options than before. More number of options means forecasting is tough
  • In today’s world of immediate gratification, customer’s expect very quick delivery of the goods. But high unpredictability in demand results in major headache for forecasting
  • The need for new products is much higher today than compared to the past. How well can one forecast sales of an absolutely new product ?
  • For this, you need to understand what are the attributes of your product and which ones are being preferred in a particular store. Ensure that you send to the stores the stock the attributes which are preferred by it.
  • By applying the above concepts, one retailer grew by 20% in LFL and also increased turns by 30%.
  • Another retailer used the above concepts and increased the inventory turns by 22% and increased their sales by 12%. The average age of inventory in stores decreased from 125 days to 75 days.

Ready to Optimize Your Supply Chain?

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