Featured Program
We chose Retail Solutions because their offering enables our suppliers to immediately and effectively leverage our data to drive improvements in our joint supply chain. Retail Solutions’ technology and services provide an effective solution to share near real-time data in a way that enables suppliers to take immediate
action.
- Pete Bonneau,
Vice President of Efficiency and Productivity,
Food Lion.
Retailer Program: Food Lion
Cutting Inventory Levels
Vendor Pulse Supplier of the Month:
April 2009
The goal:
Kellogg Company was aiming to reduce high inventory levels, which tie up capital and can contribute to product obsolescence, which in turn have a tendency to drive up reclaim. Both goals were identified by Food Lion as high priorities within the Vendor Pulse program.
Data leveraged:
To achieve its goal, Kellogg combined Vendor Pulse inventory reports with Food Lion item velocity classification.
Business process:
Kellogg began by utilized Food Lion’s item stratification and excess inventory reporting to identify opportunities for reducing excess inventories. Food Lion assigned a letter from A to F, describing how fast the products move at Food Lion stores, A being the fastest moving items. Using Vendor Pulse data, Kellogg then started looking at inventory reports. For items A to C, Kellogg found that excess inventory was typically not a very large issue. However, for items D through F, Kellogg found that there was an opportunity to both change structural replenishment practices and implement tactical measures to reduce inventory and inventory obsolescence.
- Kellogg first adjusted its replenishment practices for some of the D through F items. Some items, for instance, were ordered in pallets, while ordering in tiers made more sense. Kellogg also modified ordering triggers for several items, using Food Lion Vendor Pulse sales and inventory reports.
- Once adjustments were processed in APO, Kellogg started to regularly pull inventory reports to identify problematic SKUs. Kellogg then designed tactical initiatives (such as adding these products to upcoming promotions) and submitted them to Food Lion for approval.
- Once approved and implemented, Kellogg monitored the success of these initiatives – as well as their associated impact on inventory level using Food Lion Vendor Pulse inventory reports at the DC and Store level.
- Kellogg also involved their field team in the process: for instance, the retail team was in charge of applying stickers to items with very high inventory to speed up sales and avoid reclaim.
The outcome:
By implementing these processes and leveraging the Food Lion Vendor Pulse Data, Kellogg achieved more than a 17% reduction in DC excess inventory and managed to cut inventory older than 60 days from 15% down to 6% over three months.