Challenging times offer the chance to find a better supply chain

Randy Evins is Senior Principal and Industry Advisor – Food Drug & Convenience at SAP, the global software and business management corporation. The views expressed here are those of the author.

With every week that goes by, the COVID-19 pandemic further magnifies previously unseen gaps in everything from our government systems and work experiences to family relationships. But for grocers worldwide, it’s becoming a defining moment in how they will run their business for the next decade.

The first hint of the virus reaching our communities ignited the shock of an overwhelmed supply chain. A couple of weeks later, the consumer experience was further diversified with online pickup services, home delivery and special hours reserved for vulnerable shoppers. Some local grocers have also installed plexiglass protectors around their checkout stations and added floor markers to help ensure shoppers are standing six feet apart while waiting in line.

There’s unquestionably a lot of ingenuity happening in supermarkets right now. But there is one area of the business that still requires attention — especially if grocers want to continue surviving this constantly evolving time as well as the eventual rebound to come.

The New Mandate: Digitalize, Digitalize, Digitalize

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When I say that digitalization is the new mandate for the grocery industry, I don’t mean merely e-commerce. Digital strategies must go even deeper to cover the entire value chain — addressing the need for connected processes, real-time transactional data and immediate visibility into store-level inventory.

Supermarkets can no longer afford to order new products and additional inventory blindly. They need to know what is available on their store shelves, store backrooms and distribution centers — by SKU and quantity and in light of forecasted demand.

Take, for example, a store manager who sees only four boxes of a popular cereal brand on an aisle shelf. It would be helpful to know that a case of it is still sitting in the backroom of the store and five more pallets will soon arrive on the next truck delivery. But without that visibility, the manager may needlessly submit a new order to the distribution center that would result in unnecessary overstock of the one product. In fact, in the future of grocery digitalization, the store manager wouldn’t even look at this content; instead, the business system would do all the work.

Meanwhile, digital ordering is becoming a significant trend in the shopping experience. Over the past two years, FMI has predicted that 25% to 30% of a grocer’s sales volume will consist of digital orders by 2025, compared to 6% to 10% today. However, the trajectory of this new reality will likely accelerate dramatically as consumers continue to restrict their exposure and practice social distancing.

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Let’s face it: Every aspect of the grocery business is connected, and so are consumers. It’s time to become digitally connected — the store, inventory management system, warehouse and distribution centers, suppliers’ value chain and even the consumer.

When stores use technology to manage their inventory with precision and visibility, warehouse systems can use the information to anticipate which products will likely need to be replenished in the next shipment. Store managers can also pull transactional data to predict how specific promotions can shift consumer demand, point-of-sale orders and stock movement. Category managers can optimize their allocations, prices and replenishment orders to strike the right balance between minimized costs and maximized revenue. Even consumers could benefit from real-time stock information while placing their order online or with a mobile app — with the system only showing items that are in stock and providing available alternatives for out-of-stock items.

The Future of the Grocery Store

It's incredible to think that everything that was once predicted for the future of the grocery market is already here. Not 10 years from now. Today.

With the right digital strategy in place, the entire grocery value chain can set the foundation it needs to support the changes that consumers demand, store managers need, and suppliers could benefit. More importantly, your employees have the visibility and insight they need to work more efficiently, safely and productively while keeping consumers happy and coming back over and over again.

Hopefully, supermarkets will never again experience a destructive disruption like the one induced by the current pandemic. But to every grocery worker in the world, I want to say thank you for helping us keep our families and communities fed and protected during this extraordinary ordeal. We are all indebted to you.

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