Catch Me If You Can.... the continuing evolution of catch weight items
We are familiar with the subtle and distinct shifts in item handling and pack sizes as products move from suppliers to customers in a retail supply chain. For example, apparel sourced from India or footwear from China is packed in boxes and loaded on to shipping containers. Subsequently, these boxes move on trailers to warehouses from where they make their way to retail outlets or directly into customer homes. While I acknowledge the complexities in this supply chain, I would also argue that there exists significant predictability. Shipments are ordered in container sizes, suppliers are paid for units purchased, items are stored inside boxes for easy transportation, and at the 'last mile', items are sold as discrete units. Contrast this with an industry that is traditionally more fragmented, has elaborate storage conditions, is prone to spoilage, and yet is attempting a game-changing attempt in its push online. This blog is about the changing dynamics within retail grocery in general, and catch weight items in particular.
Catch weight items refer to fresh produce, meat, cheese etc that are sold by weight. In general, produce gets weighed at the time of arrival in the warehouse in order to record inventory receipts and facilitate supplier payments. Subsequently, weight is not recorded in the strictest sense as the item moves through the warehouse and to stores. The unit of measure for these items instead now becomes the holder in which they are stored (totes, crates or sacks). Store ordering and warehouse picking are also made in the same (holder) unit. Since there exists a reasonable estimate of the weight per holder (using principles of average unit weight), inventory adjustments in warehouses & cross-charging of stores are enabled. Item weights come back into picture when the shopper arrives at the check-out for payments.
If you think this is not sufficiently complex, consider the fresh set of challenges (pun intended) that online ordering has created due to the fact that fulfillment of such orders occurs from stores.
- As shoppers, we really do not really buy a pound of bananas or 3 lbs of lobster. Instead, we pick a dozen of the former or 2 of the latter that we then pay for based on weight. In an attempt to mimic shopping styles into the online experience, it has become imperative for retailers to offer the ability to order such items in both eaches and pounds (note: some retail grocers are completely doing away with ordering in pounds; instead the shopper can only order in EA and pay in lbs/kgs).
- Well, if a shopper is ordering bananas by the dozen, it means that the store picker would need to capture the quantity picked on the handheld as well as have the ability to capture the extended weight and total amount of these bananas once weighed. This just illustrates the fact that online ordering and fulfillment processes require information to be captured in a completely new unit of measure (even though nobody really is going to record the inventory of bananas as 10,542 EA).
- A complete reevaluation of the interfacing systems within a store is now required. (Take the electronic weighing scale as one example. Changes are warranted in label printing logic to include the final weight and amounts.)
- Most importantly, this process has forced a radical rethink on some fundamental questions around pricing and promotion. What is the price that will be honored at check-out? Is it the price at the time of order capture (what you see is what you get)? Or is it the price at the time of check-out? Or is it the 'best' price (customer always wins)? Or it is a mixed flavor (viz. catch weight item pricing based on the date of weighing while the pricing for others is based on order date)?
It is our experience at Infosys that it is in thinking through answers to such questions - and a lot more - that retailers would be able to evolve robust fulfillment strategies in the retail grocery space. After all, nobody likes a Catch-22 midway through the implementation cycle, do they?