Food Lion Expands Data-Sharing Program

MICHAEL GARRY

SALISBURY, N.C. — Food Lion here has ramped up a program to share a wide array of daily retail data and “scorecard” calculations with its suppliers in exchange for a commitment to collaborate with the chain on issues such as shrink reduction and promotional planning.

The program, called “Vendor Pulse,” began in March. By September, Food Lion was sharing retail data with 24 suppliers and scorecard metrics assessing their performance with 36 suppliers (many suppliers receive both), said Troy Prothero, the chain's supply chain manager.

“The number of participating suppliers is increasing on a weekly basis as they recognize the value of receiving the data and scorecard and how it enhances collaboration,” he said.

By next March, he added, Food Lion aims to have 100 suppliers in the program.

So far, the program has resulted in a reduction in unsaleables delivered to Food Lion stores as well as better allocation of promotional products, said Prothero.

Vendor Pulse is gaining recognition as one of the largest retail data-sharing programs in the industry, along with Wal-Mart Stores' Retail Link program. “Food Lion is one of the leaders in this area,” said Mike Griswold, research director, AMR Research, Boston.

Unilever, one of the suppliers in the Vendor Pulse program, receives data from 60% to 70% of its retail customers, said Andy Patel, manager of business capabilities for Unilever. However, “few have the rich and robust data of Food Lion,” he added. “It's got 14 metrics around each individual UPC, while some other retailers have only got two.”

Prothero and Patel talked about Vendor Pulse recently at the Grocery Manufacturers Association's Merchandising, Sales and Marketing Conference in St. Petersburg, Fla. Last week, Prothero also provided an update on the program to SN.

Apart from Unilever, Prothero declined to identify any of the suppliers receiving Food Lion data, though he acknowledged that “we are sharing data with most of our key, strategic suppliers.”

The daily information Food Lion is sending includes each supplier's POS sales and units sold, store inventory, distribution center inventory, shrink, out-of-stocks and reclamation items, among other metrics; cost and margin data will soon be added to the list. “Suppliers can see through to the register at store 406 at Richmond, Va., for example,” noted Prothero.

“There are no more data requests from suppliers [in the program],” he added. “Anything they would have requested comes to them daily.”

The daily data is sent initially to Retail Solutions, Sunnyvale, Calif., which in turn provides it to suppliers either as free raw data or in different levels of paid customized formats and reports. Food Lion neither pays nor receives payment under the terms of the Vendor Pulse program.

Key vendor scorecard measurements include inventory levels, margin, shrink, reclamation level, service level and on-time delivery. Raw calculations based on these measurements are shared with suppliers directly by Food Lion (or in more customized form by Retail Solutions). “The goal is that a vendor should be able to completely re-create the scorecard using the supplied data and calculations,” said Prothero. “This ensures that we have joint confidence in the measurements.”

In January, Retail Solutions will begin channeling the basic scorecard data to suppliers as well as provide an “expanded, dynamic” scorecard, said Prothero. “Vendors will begin to be scored against their peer group as opposed to all vendors.”

Retail Solutions also handles data sharing for about 24 other retailers, including Walgreens, CVS and Duane Reade, said Cedric Guyot, vice president of marketing for Retail Solutions. Other suppliers that are receiving retail data through Retail Solutions include Kraft, Procter & Gamble, Hershey's, Kellogg's and Smucker's.

Food Lion is also running a separate program called the Shopper Insight Portal through which it is providing suppliers data on shopper segmentations, market basket and other shopper metrics.

COLLABORATION SOUGHT

In return for providing suppliers data and scorecard measurements, Food Lion expects them to collaborate with the chain on achieving the following goals: a better balance between minimal on-hand inventory and service levels; a reduction in shrink and unsaleables; and improved promotional planning and allocation. So far, said Prothero, “we have ongoing collaboration with key suppliers that has been very successful and continues to improve and expand.”

For example, Food Lion has already gained “a significant reclamation victory” in the reduction of unsaleable products shipped by suppliers that would otherwise be sent to reclamation centers, said Prothero. This was accomplished by “jointly analyzing the data and looking at the most granular level at reclaim opportunities,” he told SN. “We and our vendors have been able to make decisions on SKU authorization and merchandising standards that have positively impacted the reclaim results on the affected items.

“In addition, Food Lion has begun collaborating with suppliers to set proper individual store-level quantities for promotions based on item sales history, historical price elasticity and product inventory at the start of promotion. Through the use of the data, we were able to send stores the right amount of promotional product to meet their needs during the event while minimizing shrink, reclaim, and remaining inventory when exiting the event,” said Prothero.

From Unilever's point of view, its participation in the program has resulted in a 9% greater forecast accuracy, resulting in a “15% reduction in safety stock for Food Lion,” said Patel.

Despite these gains, Prothero acknowledged that some suppliers did not know how to respond to the data. He's encountered suppliers that “act like we're trying to burden them with another program, although we're giving them information and tools that can help them leverage their relationship with Food Lion.”

Still, “there is a steady evolution in how suppliers handle the data,” he added. “It's coming fast and every day.”
Additional reporting by Julie Gallagher