Sunday, September 29, 2013

Inventory vs. Stock

In my entrepreneurial quest to redefine how shelf stock levels are managed, I'm coming into a rather interesting dilemma in choice of words to use in the English language.  Generally, I am using "stock" to define items on a shelf for sale and "inventory" for items that will be for sale, but are not yet customer facing (ie... in the stockroom!?!, on a truck being delivered to a store, etc.).

As an example, if something is "out-of'stock" what does that mean to you?  According to its general definition, it means the store no longer has that item available for sale.  However, what is it called when the customer facing shelf is empty with the item you want to buy but the stock room is full of that item?  In the this article about Walmart's inability to keep its shelves full with goods, they refer to it as "out-of-stocks".  You see the confusion?  They have goods in the back stockroom, but the goods are not on the shelves for sale.  Do those of you in retail have different words for these two issues, because I'm not able to find a clear separation between them.  I've seen somebody refer to missing items on shelves as "stock gaps" but I don't see it being used anywhere else.

For the solution I'm working on, I'm only concerned with fixing the gap that the customer sees.  "Stock gaps" or "out of stocks" or whatever you want to call them, is what I'm trying to fix.  I am not (yet) trying to make my own inventory management system, as there are a plethora already out there (albeit most of them are horrid and have poor usability and data analytics).  So, in the meantime, I'm focusing on stock levels, not inventory levels, if that makes any sense at all.

In the VMI world, the two words stock and inventory are almost used interchangeably, making it even more confusing and even more difficult for me to articulate the problem I'm trying to solve.  Maybe the specific words or meanings exist and I just don't know them, if so, I'd like to hear them so I can use the proper words in describing what I'm trying to solve. Anybody?

Sunday, September 15, 2013

Rebooting the Blog - Hello Again! ;-)

Well hello again, it has been a while since my last post :-) I've been enjoying life so much that I've not thought much about posting. However, summer is ending and I'm self-inflicting some new misery on myself by developing some new software to deal with a little problem that always bugs me: empty shelves.  Not just any old shelves, but I mean shelves that should have things on them, usually things that I want, and they don't. Being empty in the age of Big Data (current leading trend word in the logistics world, slightly ahead "in the Cloud") is simply unacceptable although understandable: Big Data is basically dependent on a slow, analytic process of trending future market events.

Data collection this way almost never happens in real time (usually in scripted collections during off-peak hours), and this is why it may take a day, 2 days, or even more for your favorite goodies to reappear back on the shelves.  Even systems that work in "real-time" don't work in real-time.  Some more agile systems (usually in smaller stores with more agile POS systems) don't collect the data until an item is sold.  What if you remove the last item off of a shelf and then keep shopping for another hour?  A few more people will miss getting what they want and the store will lose another sale.

How can this be solved then?  Simple: By tracking product movements at the shelf-level.  This type of tech has been on the radar of big players like Walmart for years, betting on RFID to help do it, but because of continued RFID tag costs and the extensive labor needed to implement and maintain, it hasn't come to fruition. Thus, stores like Walmart openly say that they have a 90-95% in-stock level.  More so, it seems the items aren't out-of-stock, they're just sitting in the stock room.  In Walmart's case, that 5-10% "out of stock gap" is worth billions alone.  Hmm.

Anyway, back to me. :P  I'm making some simple, agile software that will send alerts when stock is getting low and/or empty, so stock people know exactly where and what to re-stock.  I'm currently targeting VMI vendors, so they get an alert when to re-stock the shelves in the buyer's location (or can keep pressure on the buyer to keep their goodies stocked).  It'll be a good performance management tool to measure a product's popularity (time/dates they move off shelf, location, etc..), how fast the buyer re-stocks (if they're responsible) or if the vendor is responsible it will help them organize their supply-chain/human resources, on a real-time basis, in order to keep their goods on shelves for sale.

So the next time you go shopping at any FMCG store, see how many stock gaps you can find and then see how long it takes for them to be filled. You'll be amazed.