Featured Program
We chose Retail Solutions because their offering enables our suppliers to immediately and effectively leverage our data to drive improvements in our joint supply chain. Retail Solutions’ technology and services provide an effective solution to share near real-time data in a way that enables suppliers to take immediate
action.
- Pete Bonneau,
Vice President of Efficiency and Productivity,
Food Lion.
Retailer Program: Food Lion
Reducing DSD Out-of-Stocks
Vendor Pulse Supplier of the Month:
March 2009
The goal:
Determine why some key products in PepsiCo’s high-margin, noncarbonated beverage portfolio frequently reported zero sales on one or more weekend days. The initial hypothesis was that these items were experiencing out of stocks on the shelf due to their high sales variability, fairly low space allocation and their propensity to be affected by the typical weekend spike in demand. This issue was a cause of concern to Food Lion, PepsiCo and the Pepsi bottler due to the potential for lost sales, lost profits and consumer dissatisfaction.
Using Vendor Pulse data, PepsiCo set out to determine the scope of the issue, identify the items involved and to design and implement a strategy to correct the problem.
Data leveraged:
PepsiCo used Food Lion’s sales at the day-store-SKU level provided by Vendor Pulse to infer an out-of-stock condition when zero unit movement was reported for the selected items on a Friday, Saturday or Sunday.
Business process:
PepsiCo used Food Lion’s POS data to identify eighty-eight stores where zero sales consistently occurred on a key noncarbonated item on one or more weekend days. Performance was monitored over a fifteen week period and weekly scorecards were sent to the appropriate bottler. These scorecards were cascaded throughout the bottler’s organization for follow-up.
Using that information, PepsiCo applied strategies to correct the problem:
- All eighty-eight stores were audited to identify root causes of the zero sales over the weekend.
- For the stores where the quantities were insufficient to cover consumer demand, out-of-stock information was channeled to the appropriate Customer Sales Representative in the bottler’s field sales organization. The Customer Sales Representative made the necessary adjustments to replenishment patterns and/or order quantities.
- On a case by case basis, the bottler’s sales force also spent time with Food Lion store and department managers with the highest, most recurring out-of-stock conditions to discuss how to improve availability by changing merchandising practices and shelf restocking processes.
A common thread across all processes involved placing extensive focus on underperforming stores and items, to ensure that energy and attention was directed to the areas where problems existed.
The outcome:
By implementing these processes and leveraging the Food Lion Vendor Pulse Data, PepsiCo achieved over a 20% reduction in out-of-stocks, driving consumer satisfaction as well as increased sales and profit for Food Lion, PepsiCo and the bottler.