Out-of-Stocks have Remained at 8% to 10% for More than 25 Years…
We Now have the Most Effective and Least Costly Solution to this Problem
In spite of heavy investments to improve supply chain operations, out-of-stock levels remain at 8% to 10%, and with items on promotion, out-of-stock’s averaging 16%. From the shopper’s perspective:
- For every 13 items he/she plans to buy, one item will be out-of-stock.
- For items on promotion, there is one out-of-stock for every seven promoted items a shopper plans to purchase.
Shoppers switch store and brand loyalty if they encounter persistent out-of-stocks. If you are able to reduce out-of-stocks by a minimum of 25%, the positive impact on your sales will be between 1% and 4%. This should be a priority.
Despite Retailers having Best-in-Class IT systems, Out-of-Stocks Persist
Major retailer IT departments have focused on procurement, warehouse management, logistics, and have not given the same attention to the last leg – the journey from the warehouse to the store to the shopper. There are several reasons why!
- Computer Assisted Ordering (CAO) does not use adequate predictive analytics and is costly. A license may cost $1.5 million or more and may take 1.5 to 2 years to implement. Change management is intrusive.
- Electronic shelf sensors detect when a product is removed from the shelf and alerts store staff accordingly, but it cannot predict out-of-stocks. The capital cost across stores can be unaffordable.
The causes of out-of-stocks worldwide are store ordering and forecasting at 47%, in the store but not on the shelf at 25%, and total upstream causes at 28%.
NextOrbit is the Answer…The One Affordable and Most Effective Solution
NextOrbit is a cloud and subscription model capable of significantly reducing out-of-stocks. It is a cloud platform that predicts and mitigates retail out-of-stock with a platform methodology built with a continuous learning loop.
NextOrbit predicts when an item will go out-of-stock. Because NextOrbit looks at each SKU, it can affect top line and bottom line results and reduce OOS by at least 25%.This 25% reduction in OOS can lead to a 1-4% sales increase.
NextOrbit has unparalleled capability to significantly reduce out-of-stocks resulting in higher sales revenues
NextOrbit enables the above by using predictive analytics and data sciences. It combines POS (streaming and history) and other history with context data such as weather, local events and social feeds to produce fine grained predictions at the SKU level. With this information, NextOrbit creates store orders, store allocation and personalized store out-of-stock alerts.
The NextOrbit cloud and subscription model generates ROI within 6 months with no huge upfront costs. Its subscription cost is based on the number of sku’s and stores. There is no need to change existing IT systems and implementation is non-intrusive. It is the most cost efficient and effective out-of-stock solution!
About the WWA/NextOrbit Partnership
In line with the WWA commitment and leadership to a “truly” shopper-centric retailing model, NextOrbit’s capabilities align with our emphasis on the evolution of category management and related businesses processes to a shopper-centric retailing approach that focuses on the shopper and enhancement of the shopping experience. We now have the ability to address the key barrier to an effective shopping experience. The one affordable and effective solution that finally fixes the out-of-stock problem.
It is important to mention that in 2015 NextOrbit was recognized by CIO Review as one of the top 20 customer experience management solution providers in the world. In 2016, RBTE, Europe’s largest end-to-end retail solutions event featured NextOrbit as one of the top 16 companies in their Innovation Trail and awards.
We Add Considerable Value
The Quantitative Benefits of NextOrbit, supported by WWA include:
- A reduction of at least 25% in OOS
- A 1% to 4% improvement in comp store sales
- A 10% reduction in store inventory
The Qualitative benefits of NextOrbit, supported by WWA include:
- Improved loyalty and repeat shoppers
- Enhanced promotional effectiveness of the retailer and the supplier
- Improved basket size
- Better planning which lowers shrink