Now, some of you still reading this are thinking, “This guy doesn’t know what he is talking about.” Well that may appear to be true, because I am thinking outside the box, and anyone who dares to think outside the box is definitely suspect. One thing three decades of experience in this industry has taught me—thinking for myself is immensely more rewarding than subscribing to some general opinion that seems to prevail as everything around me is changing. Struggling retailers moving slowly down the slippery slope toward bankruptcy are low hanging fruit, and they are likely to fall for most anything if it gives them hope. The easy way out is to follow the leader, hence the 1970s belief, “Nobody ever got fired for buying IBM”.
There are still several unknowns that need to be solved
before the topic of ASR is settled, and waiting around to see if someone
‘smarter than you’ can figure it all out, is a poor excuse for not taking the
action to improve your lot. Else, you will be right back to where you are today,
doing what everybody else is doing.
You may be one that thinks, ‘everything is fine the way it
is’. Believe me, a 2% ROI is not a sign of prosperity, and I think you can do
better than that, a whole lot better. As it stands, there is no conceptual framework
that makes the adoption of ASR possible, and it suggests to me that we may not
be able to get there from where we are today. In other words, the status quo is
preventing us from succeeding.
The main purpose of ASR is to prevent out-of-stocks while at
the same time, lowering the overall levels of inventory. So there is dichotomy
of sorts to be dealt with. In an industry where a condition of overstock is
common for the prevention of out of stocks, cultural differences get in the
way. For example, to justify overstock, we are often told shelves that are NOT
full create a poor store appearance. There is a lot to be said in defense of
that statement, but I have found nowhere it is stated that it has to be stacks
of the same stuff.
With the general opinion in most operations being to err on
the side of overstock, it has led us to a situation where it has gotten WAY out
of hand. For example, if analysis shows you are selling four items per month on
one particular brand (not uncommon), and you get two deliveries per week,
common sense tells us we do not need a box of 36 on the shelf, but we may not
have a choice. I was talking to a store supervisor this morning and she said,
“If we have an item that only sells once a month, it needs to be replaced with
something else that will sell”. However will the V/P of store operations allow
that? Probably not! That’s why we rely on a re-order trigger. We can set the
trigger to whatever we want based upon the desires of the person running the
stores. If we have an item that comes in a box of thirty-six, we can set the
trigger to eighteen so when it reaches half a box the system will automatically
re-order another box.
There are alternatives to making the store appear to be
full, and one of them is to remove gondolas and widen the aisles. However,
convincing most operators is fighting a losing battle. They won’t listen to
anybody. They think they’re smarter than everyone else. Examining the problem
closer, often you find their primary concern lies with all the kick-backs and
perks they get from their suppliers and they’re likely to switch suppliers in a
heartbeat if they misses out on a big screen TV or a trip to Kauai.
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