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
Optimizing a New Package Introduction
Vendor Pulse Supplier of the Month:
May 2009
The goal:
When Coca-Cola launched 18-pack cans at Food Lion, they were determined to find new ways to manage the process as effectively as possible. The introduction of any new product requires forecasting demand without prior history, managing unpredictable inventory, and avoiding the pitfalls that out of stocks can bring. As an in-and-out package with no permanent in-store location, 18-packs also presented a logistical and supply chain challenge. Coca-Cola had to produce the right quantity to prevent out of stocks, maintain displays, and optimize brand mix for the Food lion shopper -- maintaining an accurate inventory level was essential.
Data leveraged:
To achieve its goal, Coca-Cola leveraged daily by store, by item sales and inventory trend information provided by Vendor Pulse. Coca-Cola was able to group stores based on sales velocity and inventory levels to adjust forecasts and predict field orders for supply chain. Daily communications were sent to supply chain to predict store orders in advance. Coca-Cola’s supply chain team used the data to manage production forecasts and inventory levels at the branches to ensure product was available when actual orders were received.
Business process:
During the entire promotion, Coca-Cola monitored POS and on-hand inventory by brand, by store and implemented forecast and replenishment adjustments on a daily basis when necessary.
- Replenishment and Store-Level Intervention: on the first day of the promotion, Coca-Cola was able to identify 27 stores with zero inventory on the promoted items and alerted the appropriate Coca-Cola resources. On a systematic basis, Coca-Cola was then able to drive targeted replenishment by store, by brand to minimize out of stocks and maintain appropriate inventory levels.
- Sales-driven forecast: by projecting expected orders to the source branches from the field based on real-time sales data, Coca-Cola was able to ensure that their source branches had adequate inventory available to meet store demand – ensuring that all orders for stores were filled on-time. Coca-Cola was able to quickly adjust sales forecasts and replenishment plans during weeks 2-5 to try to avoid inventory build-up.
Insights and methodology from this event have already been incorporated into subsequent promotions by Coca-Cola at Food Lion. Coca-Cola used these learnings to also engage several additional departments in the process. As a result of Vendor Pulse and the opportunities it provides, Coca-Cola now has weekly supply chain meetings designed to develop reporting and best practices to better manage all Food Lion inventory going forward.
The outcome:
Daily access and use of Vendor Pulse enabled Coca-Cola to:
- Adjust forecast to better meet demand on 18 packs & manage supply chain & logistical costs
- Ensure that store inventory levels decreased on 23 of the final 28 days of the promotion
- Engage field sales force on appropriate daily on-hand quantities, therefore, maximizing brand availability and avoiding OOS. (Maintained brand availability on all 18-pack offerings for duration of the introduction)
- Effectively build an exit strategy and prepared the system for future package innovations
This process also proved that data provided on a daily basis provides a platform for successful new product introductions with limited strain on supply chain, sales force and retailer.