Archive for October 2008


Fresh retailer’s dilemma continues….

At its core, fresh retailer’s dilemma (read freshness / wastage predicament) is an inventory management issue.

But is it only a supply chain problem? What about impact of merchandising – their planograms, displays, promos and Store operations? What about procurement department which has to lift committed quantities oblivious of front end needs? What about logistics which has to honor vehicle movement restrictions put by city administrators? What about loss prevention (ironically responsible for reducing shrink) who have to seal fresh breathing produce in sealed closed trucks?

To make a dent into what look like a simple inventory management issue, a fresh retailer has to take a multidisciplinary and multi departmental approach to manage complexities that may eventually leads to new business processes, perhaps a new business model or altered organizational structure.

Beginning of course has to made by capturing data to get insights into what causes freshness leading to lesser dumps and vice versa. Though not a resource hungry approach but it is easier said than done. Are metrics available on FRESHNESS? What about its alter ego, dump / shrink? Let’s start with measuring that without each element in the value chain accusing one another as a dump / shrink contributor. To be continued..

Fresh retailer’s dilemma

Some one has said….. ‘The concept ‘fresh’ is in the limelight. One often asks, for example, what is considered fresh and what not. ‘Fresh’ is a multi-faceted concept. To the retailer, fresh is a product segment, while it actually also connotes quality. In logistics, fresh has a uniform message: a fresh product is perishable. It is this that makes the work of a fresh products purchaser for a retailer so special. The purchaser has to buy products of the right quality which a) cater to market demands, and b) fit the timing necessary for distribution and marketing. Orders of fresh products for the shop floor have to be estimated correctly because empty shelves are a no-no, on the one hand, while product waste due to decay has to be minimized, on the other. Value decrease due to quality loss can result in price reductions, or even result in products being thrown away. If product waste in a retail outlet is too low, this could signify a risk of empty shelves and an inability to offer fresh products to the consumer (nil sales). This smaller assortment will lead to drop both in turnover and customer service. If product waste is too high, one could increase the returns of the fresh segment by counter measures’. But what are those counter measures? Some other time..