Reducing grocery out-of-stocks
Increasing on-time and in-full performance through better collaboration
One of the largest grocery retailers in the United States, with nearly 500 locations, sought to improve its performance around out-of-stocks and on-time and in-full (OTIF) shipments. Reducing out-of-stocks is critical to both grocer and vendor success, but difficult without a shared version of the truth. Without a system to facilitate collaboration, both the grocer and its vendors were missing out on sales opportunities and experiencing slow inventory turns.
By using the SPS Commerce Supply Chain Performance Management solution, the grocer can collaborate more seamlessly and effectively with vendors—boosting on-time performance by 4-8%, in-full performance by 2-6% and reducing overall out-of-stocks. The result is a higher-performing and more profitable supply chain.
The challenge
Prior to working with SPS, the grocer and its vendors could not share and work from a single version of the truth. This affected OTIF performance, increased out-of-stocks and hindered the company’s ability to deliver the best customer experience possible.
Real-world results
Leveraging the SPS Commerce Supply Chain Performance Management solution, the grocer:
- Gained complete visibility into every part of the purchase order lifecycle
- Increased on-time performance by 4-8%, depending on commodity
- Increased in-full by 2-6%
- Decreased late ship violations by 52%
- Decreased SKU short shipment violations by 30%
- Reduced overall out-of-stocks
On-time and in-full challenges
While the grocer and its vendors worked together to improve performance, they lacked the collaboration tools needed to optimize their efforts. Core business data and metrics, from fill rate and OTIF to ASN accuracy, were locked away in core execution systems requiring significant time and effort to navigate. By the time stakeholders had worked through the phone calls, emails and spreadsheets required to get answers to their questions, the data was out of date.
Without a single version of the truth, the grocer and its vendors struggled to increase inventory turns, which are critical to grocery success. According to one estimate, stockouts cost retailers nearly $1 trillion worldwide annually. And research shows that 75% of customers leave a grocery store without purchasing due to empty shelves alone.
Due to these challenges, the grocer brought in SPS. Using the SPS Commerce Supply Chain Performance Management solution, the grocer can aggregate data from disparate systems to develop a unified understanding of their supply chain and share it with their vendors. That shared truth helped the grocer and its vendors become true partners and improve each other’s success. Over the course of a year, the company increased on-time performance by 4-8% and in-full by 2-6%.
In addition to improving vendor relationships and communication, the SPS Commerce Supply Chain Performance Management solution helped accelerate inventory turns and—most importantly—provided a comprehensive view of the entire supply chain that got all stakeholders on the same page.
Unlocking increased performance through better collaboration
Traditionally, vendor coordination requires navigating phone calls, emails and spreadsheets to get even the most basic information.
With the SPS Commerce Supply Chain Performance Management solution, the grocer and its vendors can seamlessly share information critical to their success. Through their customized vendor portal, the grocer’s vendors could access vendor requirements, training documents, videos and vendor scorecards.
With everyone on the same page, the grocer and its vendors significantly improved supply chain performance. Over the previous year, the company decreased late ship violations by 52%, short shipment violations by 30% and OTIF violations by 33%.