Sales and marketing agencies are using technology more than ever before to assist in making sure new products are cut in properly at retail, but sometimes retailers' own systems can cause out-of-stocks, according to brokers.
One example of the use of technology to monitor retail compliance is a system recently launched by The Performance Group, Santa Fe Springs, Calif., which uses auditors with hand-held scanners to give real-time updates of store conditions.
The company's recently launched "Performance at Shelf" division consists of a five-person team that acts on the reports of the auditors to determine what actions, if any, need to be taken at the store level to make sure stores have new products displayed correctly.
"It's a relatively low cost to send an auditor in, so it saves retail resources," said Drew Trujillo, partner, The Performance Group.
As an example of a new product that was misplaced, he cited a recently introduced cookie kit for children that allowed customers to decorate the products themselves.
"It belongs in the baking section, but we were finding it all over the store," he said. "It was turning up in the cookie section, in the snack aisle."
The company was able to work with the retailers to re-set the product where it belonged, he explained.
Technology can also cause problems for brokers, however, especially where it concerns computer-assisted ordering.
Although brokers said they see the need for such systems, they also said they can contribute to out-of-stocks when mistakes are made.
"In general, I think computer-assisted ordering is a great thing," said Ben Fischer, president of sales, Crossmark, Plano, Texas. "But like anything with a computer, if you put the wrong information in, you are going to get the wrong information out, and there's a lot of touchpoints. All it takes is one miscue, and you are loaded with one out-of-stock situation or ultimately a void.
Computer-assisted ordering is leading to the growing prevalence of "phantom inventory," he said.
"The computer has a log of what's in the store, so let's say that when six pieces get damaged, they get put in reclamation, but they don't get entered into the system," he said. "The computer still lists six pieces in inventory, and they never get reordered."
When that happens, sometimes the broker will have to go in and do a background inventory assessment, "purge" the system and load it with new data.
"We find phantom inventory to be a growing issue in the industry today," he said. "Virtually every retailer that uses computer-assisted ordering runs into those situations."
