Food Lion Improves Promotion Inventory

JULIE GALLAGHER

SALISBURY, N.C. — Food Lion here, in conjunction with trading partner Kimberly-Clark, drove a triple-digit sales improvement by reducing promotional out-of-stocks.

The collaboration was facilitated by Vendor Pulse, Food Lion's data-sharing tool.

K-C is one of close to 80 Food Lion suppliers receiving daily data feeds and/or scorecard measurements from the retailer. POS sales related to the more than 250 K-C products that Food Lion sources, including units sold, and store inventory, distribution center inventory, shrink, out-of-stocks and reclamation items, are among the data sets shared. Participating suppliers are also measured with a scorecard in areas including inventory levels, margin and shrink. Later this month, they'll be ranked relative to their peers.

“It's becoming clear that one of the most powerful ways to leverage Vendor Pulse is in the area of promotional execution,” Troy Prothero, supply chain manager for Food Lion, told SN.

Indeed, after analyzing inventory data related to a chainwide, weeklong temporary price reduction on K-C's Scott and Cottonelle brands of bathroom tissues, the manufacturer discovered that out-of-stocks ran as high as 18%. The promotion was supported by supplemental displays and advertised in sales circulars.

“It was on the more aggressive end of our standard events, but not earth-shatteringly different,” said Greg Pike, leader for the Delhaize team at K-C. “We did not think [out-of-stocks] would be that high.”

Since an almost identical promotion was planned for the following month, K-C quickly approached the retailer's category managers with the results of its analysis. It included information related to stores that had run out of stock, and sales rates at locations that maintained their inventory throughout the promotion.

The quick action allowed Food Lion to adjust its inventories. Promotional out-of-stocks fell 8 percentage points to 10%, and sales improved 167% as a result.

Prothero attributes the dramatic lift not only to the availability of product during the promotion, but also a better inventory position exiting it.

“Food Lion wins by improving sales, and the customer wins by having the products available on the shelf,” he said.

Still, the program has its stumbling blocks.

Since hundreds of K-C SKUs are merchandised in 1,300 Food Lion locations, the supplier receives information related to more than 300,000 data points daily.

“With such mass volumes of data, we needed to find the right technology to see the forest from the trees,” said Pike, whose team quickly learned it couldn't rely on Excel spreadsheets.

K-C has found success with Retail Solutions Demand Signal Management technology. Vendor Pulse data feeds are sent from Food Lion each day to Retail Solutions, which in turn distributes it to suppliers either as free raw data or in the form of paid reports.

“Rather than having to sift through the data, the tool provides clarity and allows us to combine information much more efficiently,” said Pike.

It also helps K-C validate patterns so it can dig deeper and understand their root causes, he added.