Innovative Retail Technologies

JUL-AUG 2017

Innovative Retail Technologies (formerly Integrated Solutions For Retailers) is the premier source for innovative yet pragmatic technology solutions in the retail industry.

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Our initial survey solicited insights from both sides about the main issues and op- portunities surrounding fill rate, as well as the level of importance they assign to related business processes. The findings of the sur- vey, presented in this white paper, enabled us to identify areas of agreement and align- ment, but also confusion and disconnect. This information will guide our next steps and help us craft a 2017 action plan for sup- porting RVCF members. Fill Rate Is Now A Front-Burner Issue Fill rate is always a priority, but when it comes to the most important trading partner relation- ships in terms of revenue and margin, fill rate takes on a much higher level of importance for both retailers and merchandise suppliers. Our survey data suggests that fill rate performance is currently moving toward the top of the list of supply chain purchase order management challenges faced by trading partners. If you look at past years, much work has been done, and much progress has been made, in addressing a variety of supply chain purchase order management issues, such as providing an accurate and timely ASN and improving on-time delivery. During that time, fill rate performance may have taken a back seat to problems that could be more easily improved. The reason might have been the sig- nificant effort required by a retailer to produce a high-quality order forecast and, in return, be in the position to expect a full purchase order fill rate. Now, it appears fill rate has become a front-burner issue. What Are Retailers Doing To Improve Fill Rate Performance? The majority of retailers are already measuring fill rate performance by making it a scorecard KPI and a part of their compliance require- ments. Nearly half are making it an area of fo- cus in discussions and meetings with suppliers. Clearly, attention is being given to this issue by retailers, and suppliers are constantly hearing about fill rate performance as an area in which retailers expect significant improvement. Retailers also know they need to reduce forecast volatility. The efforts made internally by retailers to develop a better forecasting capability, as well as the collaborative efforts with suppliers to share and align around the forecast, will likely yield the highest potential for fill rate improvement. What Activities Do Retailers Believe Can Improve Fill Rate Performance? Retailers are increasing attention and effort to achieve fill rate improvement, both internally and with their suppliers. However, accord- ing to supplier responses to our survey, two areas that would benefit suppliers – increased shipping windows and extended purchase order lead times — are not viewed as viable solutions by retailers. Retailers have been working for years to get closer to "just-in-time" ordering and receiving, so they can better react to consumer demand patterns and optimize inventory productivity. Although adding more time back in would give suppliers more flexibility to expedite and jockey around available inventories, adding more time to the supply chain would be a step backward for retailers in inventory manage- ment, even if it helped to improve fill rate performance. In today's retail environment, competitiveness requires speeding up, not slowing down. Eighty percent of retailers believe improv- 21 Jul-Aug 2017 0% 20% 40% 60% 80% 100% N/A For Some For Most For All Total Have it on their scorecards 14.71% 5 14.71% 5 8.82% 3 61.76% 21 34 Have it as part of compliance requirements 27.27% 9 3.03% 1 12.12% 4 57.58% 19 33 Making it an area of focus in discussions/meetings 5.71% 2 20.00% 7 25.71% 9 48.57% 17 35 Working to reduce forecast volatility 11.76% 4 32.35% 11 26.47% 9 29.41% 10 34 Retailers said Do you currently provide forecasts to the suppliers you want better fill rate performance from? Please tell us a little about how you are currently working to improve fill rate performance with your trading partners. (Please check all that apply.) Yes - to all Yes - to some No Other Retailers said

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