Off the Shelf: The Retail & CPG Blog

The first set of things we learn about warehouse management, when we start to read about it, is that there are a set of defined processes - Receiving, Putaway, Picking and Shipping. Simple and well defined. In the most typical scenarios, we have the receiving dock at one end of the warehouse and the shipping dock at the other. Goods arrive, stocked inside and then leave.

More often than not, a lot of time of the warehouse folks is spent in transferring of the goods from the receiving to putaway locations and then from putaway to picking. In order to have a quicker and responsive supply chain, it is always expected out of the warehouse to devise a strategy such that the lead time of delivering the goods is as less as possible and also reduces the operational cost of the warehouse. Especially in case of grocery or fast food industry,  products arrive in the warehouse just in time and the turnaround time to the stores is just about a couple of hours.

So the poor doughnut which arrives in the warehouse first steps down at the receiving dock, walks and sits in the storage area for a while and when the store calls, walks down all the way to the picking slot waiting to be picked and loaded in the truck to be finally sent away to the store where it can now display itself proudly.

It could be a good solution if the warehouse structure is such that receiving and shipping locations are in vicinity of each other such that there is more opportunity for immediate loading of goods in the shipping carriers as soon as they arrive in the receiving dock. This is more like an alibi for cross dock and can be very handy in the case of food items where the size and volume of the goods are also not very big and direct transfer from receiving to shipping is easy. Immediate benefits could be:

·         Reduced cost of transfers within warehouse

·         Reduced lead time of shipping and delivery

·         Works better for food items as more freshness is maintained

There can be a few difficulties in terms of charting out the infrastructure for correct routing of receiving and shipping trucks or better coordination required for loading the right items in the right trailer.

Receiving and Shipping can work as pillars of support to each other and result in a more effective supply chain. Not to forget, a responsive supply chain would result in happier customers - both internal as well as external. After all, Customer is KING!

Posted by Sneha Tarang Randev at 5:29 AM | Permalink | Comments (0) | TrackBacks (0)

Recently owners of a small time fast-food joint filed for bankruptcy. The fast food joint did not have a dedicated FB page. The petition was declined by the magistrate who commented, "One who never existed can never die!" As the word goes, either you exist on FB or you don't exist at all.

With the ever rising popularity of social networking sites like Facebook and My Space, the virtual taste of food is certainly on an upscale. I was reading an article on the invasion of social media in the fast food industry and was amazed to find that almost all known / little known restaurants and fast food chains in US today have a dedicated facebook page which is full of apps and trigger points for drawing customer attention.  An interesting example was of a restaurant called Lenny's sub shop which launched a campaign offering free half pound sub to every new and existing facebook fan for a week and tripled their fan base in 3 days. Meanwhile, it has to be seen if this fan base is converted in footfalls.

Social media sure facilitates a more advanced and far reaching awareness of the brand and is a cheaper and easier tool these days to gain publicity. Let's list down the various advantages of having presence in social media sites:

·         Increased brand awareness

·         Reviews and feedback on regular basis

·         Innovative ideas at times suggested by consumers themselves

·         Easy place holder for promotions and campaigns

As they say, "All that flutters are not eagle wings" we don't know if the presence on social networking sites is quite the winning stroke.

Imagine a scenario where a small fast food chain named "Beans n Dough" develops a dedicated page on FB. The average footfall on weekdays is 500 and on weekends is 1500. It designs a campaign to attract new customers, increase popularity and improve sales. The FB page has a food puzzle game, solving which the user is entitled to a complimentary coffee on a minimum bill of $10.  The puzzle game is a major hit and has everyone on FB going gaga about it. Suddenly it has a fan base of 15000 over a period of a week and has thousands of 'likes' and innumerable 'shares'. One of the user releases the crack of the puzzle and as a result everyone who visits cracks it. The following week there is a sudden surge of customers. The promo team has done its job. Now the store faces the tricky part. The weekday footfall has surged to 1500 and the weekend rush has reached a dizzying 5000. The store doesn't have the capacity to handle such numbers and the customer service starts to get affected. The workflow is not followed to satiate the numbers and the product quality deteriorates. To fulfill the rise in demand, the store has to order raw material at ad-hoc quantities and at non-economical prices. The whiplash effect of the sudden rise in demand sends shockwaves backwards and the buying department orders large stocks of raw material for the following weeks. At the store, customers aren't happy. The existing loyal customers switch on to other fast-food joints to stay away from queues and the new customers don't bother to visit twice owing to the sub-standard product and the service. What started as a superb marketing campaign proved to be a perfect recipe for disaster for the fast food joint.   

What could be the repercussion of such a situation on the fast food chain?  Negative publicity, customer's criticism, blasphemy. What initially sounded a cool marketing strategy, ended up creating a negative impact on sales and brand image.

Since the nature of food industry is such that there is a need of constant marketing / publicity of products to entice the customers with something new, social networking sites serves as the perfect platform for it. Put some cool aaps on your page, let the customer explore what you have to offer through games and contests, gain word of mouth by expanding your fan base and you sure can do a lot of marketing and that too at a price which you would be too foolish to ignore.

But is this publicity translating directly into increased sales or new customers? What the seller should not forget is that campaigning through social media can fetch one time sale or may be a few more times but an elevation in the number of loyal customers can only be achieved of the rest of the P's of marketing are not ignored.

Unless the promotions are supported by solid pillars of product, price and place - and this holds very true in case of fast food industry - the hype of social media will not last long.

Lets take the example of the big players like McDonalds, Sub way etc.

When they promote the product on a face book page, the user is also made sure of the fact that the product will be fresh and of good quality, it will be easily available and the price will be affordable. The item is absolutely fresh, the supply chain and logistics are completely supporting the warehouse - store business and pricing is sensitive to the average customer's pocket.

Any fast food player, when plans to venture into a new media platform, should make sure to get answers to the following questions:

·         Does increasing fan base translate to increase sales?

·         Do the fast food chains make permanent customers via this media?

·         How long lasting is the effect of every campaign launched?

·         Does liking the FB page actually yield in liking the food?

·         Is it just the freebies which attract customers?

Marketing through social media surely has a lot of advantages these days, given the kind of penetration it has amongst the consumers. But a player has to carefully play his cards to ensure that the visibility it attains through campaigning fetches more and permanent customers instead of shoving them away.

Going back to the stated illustration on "Beans n Dough", can we have ways to control how a viral promotion is limited like a nuclear reaction to harness its unlimited energy to good use? Your suggestions are welcome to be a part of the next blog in this series.

Co authors: Sneha Tarang (sneh_tarang@infosys.com) &

                     Harshad Deshpande  (harshadhanumant_d@infosys.com)

Posted by Sneha Tarang Randev at 4:13 PM | Permalink | Comments (7) | TrackBacks (0)

In the modern fast paced life, everbody needs everything quicker. Food is no exception to this theory. QSRs - Quick Service Restaurants or commonly referred to as Fast Food restaurants, are a big hit and an answer to an increasing demand of food-served-fast. How often we have seen a long bee of cars waiting in a McDonald drive thru during breakfast or lunch or dinner time?

This article is not to talk about the good and bad of eating out in a fast food restaurant. But instead, I want to talk about how the operations of QSR are different from a classical restuarant. I want to look at the challenges of QSR both from its internal operations standpoint as well as from a distributors standpoint.

Large Inventory Turnover

The first fundamental difference is that the menu of a QSR is thin. They dont carry too many items on the menu, but they thrive on the volume. Due to that, the inventory turnover is very high and the storage facility available in a store is very limited. Imagine you walking into the kitchen of a medium-sized classical restaurant and you will find that they will have enough storage capacity to last them for at least a week. Of course, fresh produce is a different animal altogether and you cannot stock it for more than couple of days.

But if you walk into a Taco Bell or Burger King's kitchen, you will be amazed that the size of their "warehouse" will be no larger than your master bath cabinets. Since space is scarce, the need for a better inventory management is extremely critical. But unfortunately, most of the QSRs struggle with this. The inventory visibility, leave alone the corporate, even for the store manage is very poor. It is extremely difficult to account for inventory by comparing the sales

Shrinkage

Another related challenge is the amount of shrinkage a QSR store has. I was talking about the difficulty in tying the inventory to sales. That is mainly due to large amount of shrinkage. Just visualize this situation: you order a ham burger and the guy will flip couple of buns, stack it with the patty and stuff various vegetables like onions, lettuce, tomatoes, etc. The chef (so to say) will pick a bunch of lettuce leaves, tear some of them to stuff in your burger and throw the rest. Based on analysts report, the amount of shrinkage is sometimes is as high as 40%

Too many drops

Due to the limited storage capacity, the number of drops from a QSRs distributor is very high - sometimes more than once a day. QSRs are not adequately staffed and equipped to handle receiving these frequent inventory drops which results in wrong entering of inventory data in the system.

The margin in this type of business is very low, primarily due to issues like these. If you have to look at it positively, there are multiple opportunities for any QSR to improve their bottom line.

We will talk about the challenges a distributor to QSR face in my next post

Posted by Prasanna Ramaswamy at 6:14 PM | Permalink | Comments (0) | TrackBacks (0)

One of my Infosys colleagues, Madhu Janardan, blogged right before the Holidays last November about how consumers are suffering from “item variety overload” when confronted with 24 varieties of mustard, Heartburn pills that are either fast-acting or long-lasting (wouldn’t you want both?) and the like.  Now besides being an expert in Grocery Retail, my friend Madhu is an excellent cook, so he knows his way around a Grocery aisle and knows the pain of which he writes.  But Madhu and consumers aren’t the only ones that may suffer from “item variety overload.”  Grocery category managers and IT executives are straining under the weight of all the data that this “variety” is causing. 

Continue reading ""Enough already!" - Too much variety, too much data but not enough insight for Category and IT executives" »

Posted by Don Vangeloff at 7:09 AM | Permalink | Comments (0) | TrackBacks (0)