Counting stock is not fun, let technology help you
It’s time to talk about audits, and for good reason.
Perhaps one of the most established and consistent ways to count inventory within grocery retail is an audit.
Whether that be a full inventory or a cycle count, it provides a snapshot of the truth, and allows you to make informed decisions within your replenishment process.
But as useful as these are, there are two major challenges:
- Any audit is out of date the moment it’s complete; and
- They are manual in their nature, taking up valuable time for your in-store associates.
The unique challenge with cycle counts
For convenience retailers, this is epitomized by cycle counts. They are manually conducted as part of a daily list of tasks, often on products that are multi-located and prone to disruption.
To demonstrate this, let’s consider a product like Reese’s Buttercups.
As an employee of convenience retailer ‘X’, you are tasked with conducting a cycle count on this product at the start of your shift.
This is a fast-moving item and will likely be located in several parts of the store. For argument’s sake let’s say each cash register, several endcaps and a dedicated space on the aisle.
As an associate, you not only have to count each stock-keeping unit (SKU), but you also have to find them and ensure an accurate count. Given it’s a fast-moving product, the count can be 300+.
Imagine this being repeated across an estate with 700+ stores. The cost implications for convenience retailers are not insignificant.
If we assume that a cycle count takes 0.166hrs (10min) per day, we can do some a simple calculation to understand the potential financial implications:
0.166hrs x 365 days x 700 stores (average) x $12 (average hourly rate is the US)
$508,956.
And this is for one product.
It can be cold work
Another factor to consider is that this example is for an ambient product. Cooled SKUs present their own challenges.
Direct-store delivery (DSD) vendors stock SKUs in the cooler and stack the remaining products on shelves behind the cooler.
This means in-store associate has to count the items stocked in the cooler sleeve (which, from personal experience, is quite long and hard to count, and I am average height).
They then have to locate the products stocked on the shelf, and when you have multi-flavor drinks, it can be hard to visually identify the products whilst trying to find all of the crates.
During this count, the temperature is typically 35 degrees F or lower, which is not a pleasant working environment.
Is there a light at the end of the cooler?
Given these two different scenarios, it is easy to see why convenience retailers would want to find a solution. Not only could you realize substantial labor savings, but you could also improve the working environment for store associates.
The good news is that there are plenty of solutions on the market that can solve this. Whilst I have already summarized a number of these as part of another piece for GCSF, I think retailers stand to make the biggest gains in the fastest timeframe through utilizing their data.
All retailers, regardless of their technological journey, will have access to point of sale (POS), inventory or waste data, and for most, this will already be feeding some form of forecasting and replenishment system.
Within this treasure trove, retailers can leverage artificial intelligence and/or machine learning to drastically improve their inventory record accuracy and even automate its maintenance.
At Retail Insight, we leverage a cloud-based solution called InventoryInsight, which does just this. It uses historic data to build and train a data model for each product and every store.
Our solution maintains an up-to-date view of your inventory record, can alert you to potential stock issues, and can automatically correct them.
What does this mean for your counts? Well, one of our convenience customers currently leverage InventoryInsight to detect and automatically correct inventory position for high-count, high-value and high-accuracy products.
Around 80% of interventions fall into this category which means that a significant proportion of cycle counts are removed from the list of daily tasks. This not only improves the working environment for their employees but allows them to focus on other higher-value tasks.
Let’s move away from relying on audits
The beauty of solutions like this is that they are quick to implement and quick to scale because they embed into existing technology and processes.
As I say, though, it’s not the only solution that retailers can look to implement, and regardless of what you choose to do for your business, it’s clear that relying on manual audits is ineffective.
Convenience retail is fast-moving, and with such high footfall and turnover, the chances for error within your inventory record are remarkably high.
Whilst they may always have a place, they aren’t the solution, and retailers that capitalise on the opportunities available will stand to gain the most.
