The Search for Out-of-stock Solutions Continues

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The Search for Out-of-stock Solutions Continues

By John Karolefski - 01/03/2017

Upon reviewing the interesting tech stories of 2016, I wasn't surprised to see more solutions for reducing out-of-stocks. This Achilles Heel of grocery has hovered around 8 percent for years, or has it been decades? Nobody's been able to slay the beast yet, but there's new hope.   

In midyear, a new tool to help trading partners analyze and improve stockouts was announced by the Trading Partner Alliance (TPA), an industry affairs leadership group formed by the Grocery Manufacturers Association (GMA) and Food Marketing Institute (FMI). Its best practices guide addresses root causes – and potential solutions – of challenges across five retail functional domains: Store Execution, Ordering and Execution, Forecasting, Manufacturing, and Category Management and Merchandising.   

“Our project team is seeking companies willing to implement these practices,” said Daniel Triot, senior director of the TPA.

I’m not aware of any companies that have done so, but I assume there are some. It’s just that such tests and results haven't been announced yet.

King’s Hawaiian isn’t afraid to take the plunge, but with a different solution. The maker of Hawaiian foods is the first consumer packaged goods company to use new so-called “smart shelves” in supermarkets to reduce out-of-stock incidents and ensure that shoppers can find their desired products on the shelf. The Internet of Things (IoT) shelves are installed in 15 supermarkets of a leading Midwest supermarket chain, which was not identified in an official press release..

The IoT unit consists of a Powershelf that displays products. Built-in technology tracks product availability. When a shelf is empty, a restocking alert is generated and automatically sent to store personnel. The solution uses Microsoft Azure and Microsoft Power BI to analyze when, where and why products sell so fast. This supposedly enables retailers and CPG companies to avoid out-of-stocks.

King’s Hawaiian and its participating retailers will be able to access data gathered by the units in real time – including historical out-of-stock incidents and loss of potential sales – through the IoT with a customized digital dashboard co-developed by Microsoft and Hitachi Consulting.

There’s an old saying: The more things change, the more they stay the same. So let’s revisit the nettlesome issue of out-of-stocks a year from now. Both solutions listed above sound great, and I wish the participants good luck. But there will surely be other new solutions in 2017. So let’s hope that in January 2018 the rate of out-of-stocks is still not the same 8 percent.