How a 20 year-old theory has finally been proven by modern retailers - Geoff Chaplin Managing Director WIS International
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
How a 20 year-old theory has finally
been proven by modern retailers
Presented by
Geoff Chaplin
Managing Director
WIS International
January 14 2021
etailers in the wa e up to realise Strate ic
Inventory outines increase sales revenues by
up to per year
Introduction Waitrose has driven sales usin the
multiple count strate y
Twenty years ago, Stanley B. Vogelsang wrote
what would later prove to be one of the single Waitrose had a game plan. To take an old
most insightful descriptions ever of how to process, largely driven by a year end
succeed in retail. He wrote: compliance audit, and introduce world-class
strategies that would drive availability and
The physical inventory or merchandise in the so increased sales revenue, just like Wal-Mart
store is each retailer’s primary asset. How that and Asda had done. Just like Vogelsang
asset is managed will likely determine the success predicted.
of the retailer.
In 2018 after two years of collaboration,
Vogelsang wrote at a time when the online working alongside Waitrose, WIS came up
marketplace was the territory of digital pioneers, with an inventory programme that included
notably a nascent Amazon that had been founded strategically counting the Waitrose estate
in 1994 by Jeff Bezos. Online accounted for 1.4% of between 6,5,4,3,2 and one cycles.
total retail sales (as opposed to 36% in 2020). The
concept of a multi-channel retail offering was still By analysing their store portfolio in great
only hypothetical. detail, Waitrose could see that, by simply
making sure that the right product was in
Wal-Mart then Asda adopted multiple the right store at the right time a multiple
counts with reat success count strategy realised a sales uplift of
between 2% and 6% per store.
Vogelsang’s article detailed how significant retail
partners in the USA had found that multiple Sales up by as much as plus
counts, at SKU and barcode line detail level, other si nificant benefits
brought significant advantages - especially sales
revenue growth. He showed how better stock Waitrose is a significant player, reporting
control led to sales uplifts of 2%-6%. £6.4 billion British Pounds in revenues
in 2019. And the case study included later
Wal-Mart in the USA had adopted Vogelsang’s here supports the conclusion that, by
approach with great success. And after acquiring counting key locations up to six times a year,
Asda in 2002, they asked WIS International to set they have added between £140 - £420 million
up in the UK - to provide stock taking services to pounds of sales growth. Remarkable
Asda just as we had done to Wal-Mart. So, when I However, the same benefits are available for
joined WIS as Managing Director in 2002 our one any retailer prepared to look afresh at their
primary account was Asda Wal-Mart. stock count cycle strategy…
Fast forward eighteen years, and WIS has firmly I recently re-read Stan Vogelsang’s article.
established itself as the most accurate and reliable He was the father of WIS inventory control,
service in the UK. We still service 100% of Asda, and I had the pleasure of spending time with
but we have added other significant grocery him early after joining.
clients to our portfolio too, including Waitrose…Multiple counts brin multiple benefits ever has it been more important to have an
accurate, timebound Masterfile.
It struck me that Stan was way ahead of us all
back in 2001, with so many benefits to strategic The importance of being able to pick
count cycles more than relevant today. Here are a accurately for mass online orders is critical.
few of them: Picking substitutes is intensively labour heavy.
And then, when you do, the customer will
educed Inventory In-store I guess having the often reject the substitutes. ot only that, but
wrong product at the wrong time in the wrong also guess where they are shopping next week
place springs to mind. Well, it’s not with you
educed Store abour References the point If you think online pick accuracy is critical,
above. ever has it been more important to have a think about click and collect. I have
increase e ciency in-store. ritical deployment personal experience of this, driving 50 miles to
of experienced staff to drive customer service is collect tins of fence paint only to arrive and be
imperative. Wasting resource to move overstocks told we are out of stock I am never going back
is the definition of insanity
And so, to my conclusion. Sharing the past
Improved Merchandisin Once again knowledge and referencing the success story at
reinforces the point of maintaining the integrity Waitrose has at last sparked considerable
of the store’s Masterfile, allowing staff to focus on interest within the UK grocery sector.
service and “where am I going to put this
Finally significant players are working
Improved Customer Satisfaction Having the through their numbers and having what I
right products available drives loyalty and would describe as a light bulb moment.’ It is
repetitive shopping and creates a true USP - “the this…
a wa s ha e e er thing I want
For a small additional investment focussed on
Increased Sales evenues If I asked 100 store Inventory frequency retailers can deliver
managers if they wanted between 2% and 6% multiple returns, and they can do this quickly
sales increase, and all they had to do was to and efficiently, securing many benefits to their
prepare their store for multiple outsourced stock organisation at a time when every aspect of
counts, how many would bite my hand off every business is under scrutiny.
ou can find Stan’s original article form 2001 in I have seen nothing make such a dramatic
the appendices of this document. impact during this ovid-19 pandemic than
the application of multiple count cycle
he li ht bulb moment for retailers strategy.
has arrived
And so I would urge you to think carefully
This brings me to 2020 the challenges of multiple about the strategy, read the case study and
lock downs and the mass migration to online testimonials and revisit your stock count cycle
shopping. Maybe even a little click and collect strategy urgently.
For more information around increasing your sales revenues between
2% and 6% please get in touch with me at WIS International.
eoff haplin, Managing Director
gchaplin@wisintl.com + www.co ntonwis.comAppendices
A Case Study Waitrose
2 ata Inte rity he hysical Inventory
Issue of oday and omorrow
by Stanley el anAppendi
etail Inventory Services
A Case Study
Waitrose
November 2020e a nven ory erv e
A Case Study Waitrose
When it comes to managing their most valuable continued to improve, with the addition of extra
assets, Waitrose start with knowing what and count teams to support the heightened count
where their inventory is. frequency. More and more import is being placed
on the counts to drive on shelf availability and of
Determining the quantity of items that they have course sales. Waitrose reported revenues of £6.4
on hand within their stores and their price points billion in 2019, and with between 2% and 6% sales
is an essential part of running an e cient increase potentially driven by consistent world
operation. With WIS International’s help, the class count cycles, WIS have played an integral
inventory counting process is completed part in developing Waitrose into market leaders of
accurately, on time and e ciently. Inventory ontrol.
Who are Waitrose enefits for Waitrose
A supermarket, a specialist food shop, an ethical Accuracy Waitrose benefit from our attention to
buyer, an environmentally sound business There detail, audit trail and customised process. Our
are a lot of ways to describe Waitrose Partners. WISard data collection terminal has built-in
es, they are passionate about food and about alerts to assist WIS International auditors in
the people that they sell it to but they are never providing accurate results and helps to eliminate
complacent. With 384 stores they can’t afford to common count errors.
be. rocery retailing is fiercely competitive one
that challenges constantly to find new ways of rained Wor force Trained, direct employees
maximising every opportunity. provide the inventory expertise facilitating a
smooth and accurate count. The use of R.F.
ecent History technology provides real time insight into an
inventory’s progress.
WIS International and Waitrose have worked
closely together since the start of 2015. Following ro ect Mana ement pertise Successful
a rigorous testing and tender process, WIS were Physical Inventory takes planning to succeed.
awarded 50% of the Waitrose stock taking With sixty years of project management expertise
programme. we take care of all the details to ensure awless
execution of the inventory
By the end of 2015 the other vendor involved had
been deselected and WIS awarded with 100% of echnolo y Technology is an important
the count portfolio for a three-year period. During component of an accurate stock count. WIS
this time a close partnership developed and using International provide to Waitrose the latest
dedicated count teams, building on experience bespoke developed equipment and software to
time after time, service, accuracy and timeliness ensure the utmost data integrity.
kept on improving.
Count Assurance Utilising the latest tools and
In 2018 another rigorous tender process the vast array of data available to interrogate, data
commenced, even more demanding than in 2015 dashboards have been developed that enable
with a greater emphasis than ever on count and Waitrose to view in real time not just the progress
counter assurance. WIS were again successful, of the count, but also after the event in depth
retaining 100% of the count portfolio for another analysis of key performances buy store, count
three years. manager, counter, sku and category. Absolute
count assurance is guaranteed, total transparency.
In 2019 and beyond count standards have
ea nven ory erv e a e u y a ro e n erna onahe Service the count is progressing whenever they wish.
The warehouse is counted before store closing and
WIS International provide full-service inventory handed back promptly to the store for
counts in all 384 stores multiple times a year. replenishment. The sales oor starts before
closing, once the warehouse is complete and is
The frequency of counting is determined by the completed within a pre-defined run time.
count results of each store as they are generated,
timings between counts lengthened or shortened Throughout the count, store staff can audit the
as required to ensure best on shelf availability and counters using wifi and tablet technology, the
comprehensive management information that days of paper audits are long gone, very green….
means any local issues are understood promptly.
Using the latest on hand stock files, variance
A full-service inventory count really does mean reporting on the night is carried out, another layer
full service. of checking to ensure the most accurate count
possible.
From the initial consultancy, understanding
needs, developing software, rigorous testing, Finally, the count is complete, the result agreed, a
thorough training, calm and e cient scheduling, survey completed, and the files transmitted
continuous improvement, and detailed reporting promptly to Waitrose for processing.
and analysis.
The morning after WIS field management review
At each count WIS International arrive in each count for its performance against key
company mini buses as a team in full uniform. performance indicators.
WIS International provide all necessary The data dashboard is updated automatically and
equipment to complete the count, all that is asked shared both within WIS and Waitrose.
for is a table and a plug socket
Working together to improve, through data,
The store is included throughout, first in the team understanding, knowledge, customer service,
brief and then continuously during the count. performance and results.
With the latest tablet technology, store
management can observe and understand how One click at a time.
What people are sayin
“Very efficient, informative and very positive. Great morale and great team spirit”
“Went very well. and his team were very professional a pleasure to work with. The audit was
one of the smoothest have done”
“The stock take was very professional, very efficient and well timed and very well managed. Good
team to have in.”
“Great manager and team very e i le to our re uests and e cellent communication. Thank you,
we would very much welcome and his team ack here again.”
“ am proud of the work we do with Waitrose, it has een fantastic ourney, elieve we have oth
learned much a out how to deliver a world class count programme. The latest developments we
have put in place to deliver count and counter assurance takes us oth to another level of
understanding.
Geoff Chaplin Mana in irector WIS International
ea nven ory erv e a e u y a ro e n erna ona“ s you would e pect Waitrose is a very demanding customer, always seeking world class service delivery. verything we do is focused on delivering the est e perience for our customers, making sure that their e pectations of stock availa ility are e ceeded at every visit, and when we are in store counting stock the customer does not notice . ur relationship with W nternational is very much a partnership, already four years in and a commitment in place for another three years.” eith osser artner Mana er Contract and Service evelopment ohn ewis artnership WIS International WIS International has been delivering accurate results to many of the biggest names in retailing and manufacturing for more than sixty years. With more than 200,000 physical inventory counts taken every year, WIS International has become one of the industry’s largest and most trusted suppliers of Inventory ounting Services worldwide. In addition, WIS International also provides merchandising services such as new product placement, point-of-sale display services, fixture installations and product recall return services. ssimmon s@wisintl.com www.co ntonwis.com ea nven ory erv e a e u y a ro e n erna ona
Appendi 2
ata Inte rity
he hysical Inventory
Issue of oday
and omorrow
by
Stanley o elsan
ebruary 2001./01/2345#67/78191/2#
Data Integrity - The Physical Inventory procedures, programs and actions to
assure the benefits noted above are
achieved.
Issue of Today…and Tomorrow These partnering teams are
looking at ways to impact the main
If the retailer’s masterfile quantity on-hand data is causes of inventory data mistakes
which include:
accurately maintained, the benefits are assured. 1. Selling errors - two different
3. Reduced store labor - not but similar looking items are
!"#$%&'()"#!*#+,-)($&'-#
handling excess inventory. being sold by twice scanning the
T he physical inventory of
merchandise in the store is each
retailer’s primary asset. How that
asset is managed will likely determine
the success of the retailer. This has
4.
5.
Reduced store labor - price ticket
removal.
Correct item pricing - price look-
up.
barcode of only one item. This
selling error causes the on-hands
to be understated for the item
scanned and overstated for the
item not scanned.
always been the case. However, the 6. Reduced/eliminated out-of-stock 2. Receiving errors - items that
explosion of technology in retailing has of items. appear similar when they arrive at
amplified both the benefits of physical
7. Improved in-stock of the store are grouped to a single
inventory asset management and the
merchandise. SKU or UPC and cause an under-
down-side of inaccurate inventory
statement and overstatement in
information.
8. More competitive pricing. the on-hand file.
Historically, inventory information
9. Improved customer satisfaction - 3. Merchandise stocking and shelf
was developed at each store for financial
items are available. alignment errors - each item has a
reporting purposes, and was not kept at
10. Increase sales to the customer “home” location on the shelf, peg
the unit or line item level of detail. Now
or display. A shelf label identifies
many retailers are controlling their
Tomorrow’s successful retailers will the location and provides a
physical inventory by SKU or UPC item
demand these benefits. descrip-tion to help stock and
number. The SKU masterfile maintains a
align the items on the shelf.
quantity on-hand for every item. This If the retailer’s masterfile quantity
When items are misaligned or
quantity on-hand controls and initiates on-hand data is accurately maintained,
mixed together, there exists an
the programs for automatic the benefits are assured. If the quantity
increased chance of inventory
replenishment and much of the store’s on-hand is not accurate, the system will
counting error for the item.
merchandising activity. automatically order more of items
already instock and not order enough of 4. Masterfile data base errors - the
Inventory integrity is the accuracy
items in short supply. The result is fewer masterfile may not contain all of
of each item’s quantity on-hand in the
benefits, and in fact worse merchandise the SKU or UPC numbers for
store masterfile. This quantity on-hand is
and sales conditions than originally merchandise located in the store.
initially determined by a physical count
existed. When selling, receiving or
of the entire store at the SKU or UPC
counting items not found in the
level. It is maintained between Because of this heightened
masterfile, the use of a generic
inventories by adding goods as they are importance of creating and maintaining
SKU number to speed the flow
received, subtracting items as they are this on-hand masterfile, many retailers
will result in an on-hand error.
sold and properly identifying and are forming partnerships with
recording returns, markdowns and manufacturers and third-party inventory 5. Physical inventory counting errors
damaged goods. Periodically, another services to increase the accuracy of the - the inventory counter groups
physical inventory count is performed to physical count, and to improve the two similar looking items and
update the on-hand file for each item. maintenance of the on-hand file between combines them to a single SKU or
inventories. UPC. This usually happens
The masterfile quantity on-hand for
because of misalignment and/or
each item drives the automatic These partnerships are also
mixed product on the shelf peg or
replenishment process at the store. The including representatives from many
display.
benefits of programs such as Automatic functional departments within the
Replenishment, Just-In-Time retailer’s organization such as store These partnering teams are also
Replenishment and Quick Response are operations, internal audit, loss looking at ways to eliminate these
well known and include: prevention, and inventory accounting. inventory related errors. The selling and
These partnering teams investigate the receiving mistakes are eliminated by
1. Reduced inventory in the store.
factors that impact on- hand data educating store associates on how their
2. Improved cash flow - not spent on integrity and develop actions impact the accuracy of the on-
excess inventory. hand file. This education and awarenesswill enhance the discipline of store Recent surveys of retailers have
personnel to maintain an accurate on- found that 70+% of chain retailers in the
hand system, every day of the year. United States utilize an outside counting
service for all or part of their physical
The merchandise stocking and shelf
inventory program. Our experience is
alignment errors are being addressed by
that more retailers are converting to
creating shelf labels that include a better
using an outside service, especially as
description of the item so it is easier to
the demand for SKU or UPC level
identify where the item should be
inventories has increased. The
stocked. These shelf labels may include
independent inventory counting services
the item’s style number or other
have developed special purpose
identifier.
handheld data terminals and in-store
An even greater opportunity to PC’s that run unique software. These Stanley B. Vogelsang is Vice
impact the alignment problem exists by inventory-specific counting and President for Strategic Global
partnering with the manufacturers to exception reporting systems are Accounts at WIS International. He
package their product with bright color designed to help the inventory counter has over 35 years experience in
differences for different items. When do a more accurate job, and to identify providing inventory counting service
items are differentiated by bright colors, missing and incorrect data in the store to retailers. His email address is
it is easy for stocking associates to see masterfile. svogelsang@wisintl.com
the item that is misaligned and stock it to
The service can afford to make the
its home location.
capital investment in these systems as
Store personnel who are doing pre- their associates utilize it for many
inventory straightening can easily see different retailers throughout the year.
the items which are out-of-place and can This full utilization of the equipment
properly align the same goods on each also translates into a more accurate
shelf peg or display. Retailers are physical count since the third-party
working with manufacturers to color service associates are highly trained and
differentiate their products to aid in experienced. Counting inventory is their
proper stock alignment and in retail job.
identifying similar but different items at
In summary, the benefits of an
the check out. This partnership between
accurate automatic replenishment system
the retailer and manufacturers will
are significant now and will likely
enhance the on-hand data integrity and
become even more important to all
assist the third-party service doing the
successful retailers in the future. The key
physical inventory count in the correct
to achieving the benefits of reduced
separation of multiple items.
inventory, better in-stock position,
The remaining causes of inventory reduced costs, and increased sales is a
data errors of the on-hand file are related store masterfile that maintains an
to the periodic physical inventory or accurate quantity on-hand for every
count of merchandise in the store. The item. The accuracy and integrity of this
primary way to correct the on-hand on-hand quantity is impacted by the
masterfile is to perform a wall to wall training, awareness and discipline of
physical inventory and count each item store associates; by the packaging, color
by its SKU or UPC number. Many coding and marking of product by the
retailers have developed partnerships manufacturers; and by the counting
with outside inventory counting services accuracy of the associates and third-
to perform their physical counts. These party professional inventory service that
services provide a third-party performs a periodic physical SKU/UPC
independence that is especially inventory. The accomplishment of this
beneficial for chains that cover a wide task lends itself to a partnering team
geographic area. It is possible for store effort between the functional
employees to manipulate inventory departments within the retailer, the
results; the outside service is motivated manufacturers who package and bar
to count only the merchandise that is code the product, and the independent
actually in the store. inventory counting service that
maintains the people, equipment and
software to enhance the counting
process. This TEAM, working together,
will assure data integrity.You can also read
