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On-Shelf-Availability (OSA) touches on the ability of retailers to bring the inventory closer to the customers. Effective management of inventory throughout the supply chain requires tactical and strategic approaches coupled with right tool-set, information, knowledge, and skills (On Shelf Availability 2013). Supply chain planning systems have assisted retailers in balancing inventory across the supply chain by ensuring that the OSA is guaranteed.
In general, OSA deals with efficient inventory management. Retailers must ensure that they have stock that customers can access beyond the physical shelf given the current technological developments. For instance, grocery retailers should grapple with ways by which consumers can order and pick products using the current technology.
Online shopping is an example of one method that grocery retailers are opting for in order to bypass the traditional setups of stores (Corsten & Gruen 2003). Online services are quicker than traditional store setups as orders can receive responses within an hour of placements.
Even though grocery retailers are still facing challenges of managing physical stores amidst the rise of internet orders, consumers remain the final target in this process. In OSA, retailers are striving to ensure that the products are not only present in the stores but are also available to the customers at the right place and time.
Retailers are also grappling to test how different store sizes can execute efficient inventory management (Bowersox, Closs & Cooper 2007). Clearly, the present adjustment in technology and e-commerce have complicated the meaning of what entails a ‘shelf’ to retailers since there are different platforms for displaying products. For instance, super centres can display their products in several locations such as at the ends of aisles, internet and the register.
This essay analyzes contemporary practices that grocery retailers employ in managing the OSA in ensuring that the products are close to consumers as possible (On-Shelf Availability 2011). These practices have assisted grocery retailers to balance their merchandise availability between the expected market demand and the market supply.
The matching of the parameters remains the key issue that grocery retailers have strived to work on as a way of preventing making losses and losing customers to their competitors.
OSA may seem simple as a way of availing right products to consumers at the right time and place; however, the process is so complicated that it faces many factors in the entire supply chain. The mutually dependent factors involve suppliers, stores, and grocery-retailer warehouses (Dobson 2005). Retailers have to identify the parameters in the supply chain that need to act together in order to guarantee on-shelf availability.
Currently, OSA remains an essential issue that retailers must address to ensure that the products in the supply chain reach the final users. OSA has a direct effect on sales volume for retailers such that if they are faced with an Out-Of-Stock (OOS), over 40% of customers do not go for substitutes products, but move to other outlets. When such a situation occurs, more than twice of such customers never return to purchase the products.
Poor availability of stocks mostly grows in situations where retailers manage high levels of inventory. High levels of inventory pose great challenges to retailers, as they are not able to determine the right inventory to be at the right place and at the right time. Grocery retailers in addressing availability problems must understand that the problem is due to the inefficiencies at the ends of the supply chain (Fernie & Sparks 2009).
In addition, the retailers must understand that they have to address both the problems of poor availability and the underlying issues in order to achieve improvements. Retailers must design successful management programmes that address the poor availability on the shelf in order to have sustainable impacts (Fernie, Pfab & Marchant 2000).
The aim is to maximize on-shelf availability and minimize inventory levels in the business by applying sustainable advancing programmes. These retailers also understand that merchandise unavailability may imply lost sales and stocking more inventories are difficult with unpredicted demand. Therefore, these contemporary practices have helped them to stock right products that have demand from consumers.
There are approaches that grocery retailers can follow in order to improve the availability of products on the shelf. For instance, grocery retailers measure the causes of product availability as a way of achieving excellence. The retailers ensure that the measurement criterion reflects the OSA that consumers want and applies it consistently (Retail Consulting 2009).
These retailers have also been asking consumers questions that touch on their shopping experience and product availability conducting data analysis to ascertain the availability of products, using recent technological applications to monitor the flow of products on the shelf and even conducting a manual check on the shelves through external firms or in-house options.
Grocery retailers apply the customer-oriented one-zero approach to measure product availability. A store is considered in stock if one or more SKU is on hand on the right shelf hence noted as ‘one’ (Harding 1990). However, if they are not on hand, the store is OOS and is marked zero. Retailers mostly use stock files to ascertain performance given the intensive labor that OSA requires.
Grocery retailers have understood that suppliers are significant actors in the supply chain; therefore, they have strived to build rapport with this group of actors. This action has improved their transport availability in which the products are delivered in time when the customers need them most hence improving effectiveness (Lysons & Farrington 2006).
Grocery retailers also manage their stocks by focusing on specific products after comprehending that business is not only about creating demand but also accomplishing it. This method is customized to produce a narrower range in the volume of products that are sufficient for the whole market. The method dubbed ‘centre of excellence’ focuses on specific inventories.
Here, retailers understand that in the case of fewer locations, the market will require less stock than in many locations. Retailers, who remain key controllers in the supply chain, exert strong control over their activities thus resulting in success. The current globalization trend has made retailers carry out international sourcing as a means of meeting the needs of consumers (Harrison & Hoek 2008).
Customers always have diverse and dynamic targets that they want retailers to meet; therefore, the process of meeting the needs of customers is beyond the availability of commodities. Therefore, grocery retailers have to adopt inclusive, efficient, and effective dimensions that customers will accept. Grocery retailers always have direct access to final product users, as opposed to major supermarkets.
Therefore, they strive to meet the needs of customers by availing the products to consumers through many channels (Leak 2007). In the grocery market, retailers have maintained their own brands that give consumers the opportunity to differentiate and select the products that meet their tastes and preferences.
The move has seen the loss of independent brands that supermarkets had come up with in order to compete the grocery retailers. The grocery retailers have been able to strengthen their market presence, share, and profits since the move have increased the products presence in the minds of consumers.
Notably, grocery retailers have lowered the prices of their products as a way of attracting and maintaining their customers. The cost-cutting business strategy has enabled retailers to expand their coverage to premium segments. In the UK, for example, retailers’ own brands in supermarkets comprise of 50% share of food sales (Inventory Management 2008).
According to the British Brands Group, the retailers’ own brands are increasingly squeezing branded goods given that the shelf space is finite. However, supermarkets still enjoy the economies of scale in sales promotion as they can meet the cost of the advertisement in their corporate promotion overhead.
A leading consumer watchdog, CHOICE noted that the Australian market has recorded a rise in retailers’ own brands and loss of individual brands (Wood 2002).
The fruit market has realized the imbalance economic advantage among the actors in the supply chain. The supermarkets have been offering huge discounts as a way of inducing low buyers in the market, and the move has resulted in losses or little profits for producers but maintaining high prices for consumers. Some grocery retailers have also opted to bypass the suppliers in the supply chain so that they can source for the products directly.
This option reduces the logistics involved in clearing products and even the charges that suppliers do levy for their services. Supermarkets have also bypassed the standard business practice of consenting on a price for a given volume of products even before packaging and dispatching (Jader 2010). In this situation, the suppliers can only find out the selling prices after the sales have taken place.
This option has assisted supermarkets and importers to receive fresh fruits on their shelves. Further, grocery retailers have adopted the practice of conducting over-procurement as a manner of ensuring that the shelves are full (Saxena 2011).
Even though this method transfers risks to suppliers, it assists in ensuring that consumers can easily access the products. In this dimension, grocery retailers have tried to solve the problem of product uncertainty and price to consumers. These practices have helped in ensuring the sustainability of supply and implementing the standards of the public.
Currently, grocery retailers have adopted the use of the internet as a way of reaching their consumers. Retailers can display products that are on the shelf for customers to view and even take orders. The new method is in line with the replenishment system where retailers are able to meet demands in real time.
In this supply and demand situation, the suppliers minimize the cost of inventory overstocking and optimize service levels, as there are efficient orders, which support the flow of inventory throughout the supply chain (Jacob 2009). The grocery retailers have balanced the short and long-term benefits after focusing on the areas of highest competence.
They have developed first level forecasting in store-level competence. Effective forecasting has enabled grocery retailers to plan their future operations. For instance, proper environmental forecasting and scanning assists in predicting future occurrences in the grocery market. It also helps the retailers to foresee consumer behavior towards their products that is the changes in tastes and preferences.
Also, the right forecasting has assisted grocery retailers in ordering the right product quantities. Cases of Out-Of-Stock (OOS) mostly arise due to poor forecasting and poor ordering. These retailers have practiced ensuring that they have accurate Perpetual Inventory (PI) data (Hugentobler 2009). Inaccurate PI can show that a product is available on the shelf, but it is not there.
Majorities of grocery retailers have fed their forecasts that they have obtained from the PI data into a computer programmed ordering system. In this way, retailers can stock and display products that match the needs of the consumers. Moreover, grocery retailers are prioritizing on issues that lead to poor availability. In this manner, the retailers become efficient in managing inventory to ensure that destined goods are on the shelves.
The retailers are also practicing effective cross-functional management as a way of aligning the availability of merchandise on the shelves (Locke 1996). They have tried to solve the isolated supply chain issues of demand and supply on a sustainable basis.
Grocery retailers keep updating their programmes frequently. They embed successful programmes in their working cultures through training, education and refresher training. Effective training and retraining of people have produced sustainable results.
The scrutiny and monitoring of the new initiatives have assisted grocery retailers in understanding the cross-functional effects that the services may have on the supply chain hence enabling them to meet customers’ want (Why On-Shelf Availability Is Critical for Retailers 2012). The training also help in aligning the shelf spaces with the sales volume and the potential of the actors in the supply chain.
The grocery retailers are also addressing the OSA as a multifaceted programme in order to ensure high levels of accountability. OSA plans address the root causes of the poor availability, not as a single task, to unearth the underlying interconnections hence providing inclusive options of prioritizing resources (Spielmaker 2012). The grocery retailers act in unison or as a team in carrying out stock availability.
In addition, retailers are setting availability targets in managing the OSA. The initiative has ensured continuous precision, consistency in measurement of both on-shelf availability and stock file accuracy. This has also helped the retailers in understanding the merchandise that they have stocked and replenished over a given time.
The lifecycle analysis of the products has enabled retailers to set different OSA targets that are suitable since products have different demand profiles and lifetimes (Morschet 2011). As a result, grocery retailers are able to stock and display their products at the right place and at the right time given that most of their products are perishable.
Additionally, these retailers have engaged and collaborated with their trading partners through communication. The actor’s exchange information during the entire process, such ideas have proved helpful to retailers in improving their OSA.
For instance, manufacturers can inform them on the rate at which they have been processing a given product in the past years or consumers can give them feedback on the form in which they want the product to be available on the shelves (Branch 2009).
Since OSA does not only means availing products on the shelves but also considering the time and place of the availability, grocery retailers have been able to improve their services active participation with the trading partners. Clearly, the approach has enabled the grocery retailers to maintain their customers hence continuing to purchase their products.
These retailers also prevent loss in sales by providing real-time visibility of their products on the shelves. For instance, the Tesco Supermarket in the US, apart from displaying its grocery products in a spacious position that is visible to all customers, has also developed a mobile application that has enabled customers to know the products that are available on the shelves in real-time (Branch 2006).
Again, the mobile application alert has also improved the rate at which store associates replace products that are not on the shelves thus preventing lost sales.
The current grocery retailers also stock more substitutes for several collections of products than before. For instance, if pineapple juice goes OOS, the demand for another fruit juice goes up. This is a way of optimizing OSA for customer service and profit since the juices have high levels of substitutability (Grant & Fernie 2008).
This approach has enabled grocery retailers to maintain their customers without any complain of frustrations due to products unavailability.
Conclusively, OSA being a key performance indicator for the retail industry, has attracted due attention from the grocery retailers thus forcing them to apply numerous approaches in order to maintain customers’ loyalty and, at the same time, make a profit (Waters 2007).
The current global, dynamic, and competitive market have made grocery retailers, and suppliers emphasize on improving performance through the above options that the essay has analyzed.
References
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