The Simple Supply Chain Fix Grocers Must Make to Improve Customer Satisfaction
For grocery buyers, success is a fully-stocked shelf, a glistening fruit display, and a customer who finds her favorite deli salad for a weekend picnic. Experienced buyers know these perfect moments don’t come easy. They know that consistently stocking a diverse array of high-quality fresh foods that delight customers is rather the result of tremendous back-end labor and complex ordering procedures. But there is a simpler way to declutter broken systems and get a little closer to perfection in fresh food ordering processes.
While traditional Computer Assisted Ordering (CAO) tools were introduced more than a decade ago with the promise of retail disruption, they continue to fall short of enabling any real improvements in fresh food ordering processes, sales, or waste reduction.
Part of the problem is that to be successful, CAOs require accurate master data, including delivery times for certain products, product sizes, assortments, order minimums, and supplier details. Any errors embedded in the system can result in breakdowns somewhere along the ordering cycle, leading to more manual work (and less time) for buyers. This and other flaws in CAOs (such as immature forecasting and cumbersome technology roll-outs) and other forecasting solutions have stunted the benefits technology can deliver to grocers.
As an alternative to CAOs, a Results as a Service (RaaS) or scan-based trade model allows grocers to transfer all of their fresh and perishable buying to a single supply chain solution provider that handles ordering and assumes all risk for unsold products. If this sounds too good to be true, it’s not. At Shelf Engine, we make this work for our grocery partners by pairing the scan-based trade model with our powerful AI-powered demand forecasting technology. Our platform ingests inventory data daily and overlays what is actually happening in the store with machine learning and probabilistic models that generate highly accurate orders.
The system submits PO’s directly to vendors and provides supply chain auditing across stores and vendors on fill rates, shelf lives and in-store operations, and merchandising. No new hardware or complex system changes are required, and anything that doesn’t sell is bought back and removed from the grocer’s P&L. Grocers don’t have to worry about complicated processes, and because there’s nothing to install or physically deploy, they can allow employees to put all of their time and energy into creating an amazing customer experience.
Analysis of this model has shown that most grocers using CAOs and one-dimensional forecasting software consistently waste upwards of 20-30% of their fresh food inventory. In contrast, stores that have embraced transformation, with advanced demand forecasting and scan-based trade, have significantly reduced waste and increased sales by up to 60% for fresh food categories.
Fresh departments provide opportunities for customer delight at every turn. It is possible to transform your produce, deli, bakery, and dairy departments with fresh technology and business models that increase sales and margins, reduce labor operating expenses, and enhance customer value.
What to learn more? Read The Grocer’s Guide to Growth to learn the three key levers to delight shoppers, optimize operations, and win market share.