ORLANDO, Fla. — Ahold USA, Quincy, Mass., plans to launch a vendor collaboration initiative next month that will include sending POS, supply chain and merchandising data via a third-party to some number of its CPG suppliers in order to improve product availability and customer satisfaction.
Ahold USA thus becomes the latest food retailer to focus on exploiting the vast reservoir of data at its disposal.
“We were data-rich but data-underutilized,” said Tim Rohrbaugh, its senior director, replenishment and forecasting, during a presentation last week at the Supply Chain Conference here, sponsored by the Food Marketing Institute and the Grocery Manufacturers Association. “So we are moving to leverage the data and analytics to improve execution from vendor to consumer.”
Ahold USA will transfer more than 51 data feeds to suppliers via Retail Solutions Inc., Mountain View, Calif. All 773 Ahold USA stores — which operate under the Stop & Shop, Giant-Landover, Giant-Carlisle and Martin’s banners — will participate in the initiative. Rohrbaugh declined to name specific vendors, or the total number, participating in the program.
Rohrbaugh described a three-stage rollout of the vendor collaboration initiative. In the initial “crawl” stage, Ahold USA will begin to develop collaborative forecasting with vendors and “utilize quick hits to increase the adoption rate,” he said. Next, the retailer will implement collaborative forecasting and pursue assortment clustering, shelf optimization and flow optimization. In stage three, “we want to leverage our shared asset base and enable optimization across the whole value chain.”
Under the initiative, Ahold USA, which has $25 billion in annual sales, will “set targets for improvements in on-shelf availability, inventory management, unsaleables reduction and promotional execution,” said Rohrbaugh.
For example, Ahold USA has built “actionable alerts” to improve on-shelf availability, looking for “phantom inventory, distribution voids and out-of-stocks,” said Rohrbaugh.
To improve promotional execution, Ahold USA will monitor whether promotional inventory is at stores on time and whether it is available at the DCs prior to the promotional selling period; inventory will be redirected to DCs short on promotional stock. The retailer will also implement promotions based on store clusters.
In targeting unsaleable product, Ahold USA will address “chronic unsaleables,” including “pack sizes that cause excess inventory or unsaleables,” he said.
The retailer also plans to address the failure rate of new product introductions, which ranges from 70% to 80% industry-wide, noted Rohrbaugh. “We will monitor new-item execution and acceptance throughout our entire network,” he said. “It is imperative that there is consistency and accountability in new item launches.” To that end, Ahold USA will identify stores and distribution centers that are “chronically out-of-stock” on new items.
Ahold USA and its suppliers will measure improvements generated through their collaborative efforts by using a monthly scorecard.
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