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Retail supply chain rehab

By Gary Forger, Editorial Director -- Modern Materials Handling, 11/1/2006

It's early November and I just finished reading a story that says price wars are ahead as retailers battle out the holidays. Basically, the consumer was not as strong in October as had been hoped. And now is makeup time at store shelves.

Hey, everyone likes a bargain. And in November and December, it's even better. But what I'm wondering is: Will we be able to buy what we want at those great prices when we're in the stores? And the answer to that is: It depends.

According to Eric Peters of TrueDemand, the out of stock rates at retailers is 8%. "And it hasn't improved in the past 10 years," he adds.

So the bad news is we should be successful 92% of the time finding what we want during the next few weeks. And the good news is we won't be any more frustrated this year than any other in the past decade. Unless, of course, you're looking for that new Elmo toy, but that's a different story.

So what are retailers going to do about this? Well, we all know what Wal-Mart is doing with RFID to reduce stock outs. But certainly there have to be more options than that. And there are.

Take a look at Bob Trebilcock's story "The New Retail Supply Chain" to see what's going on here. In a nutshell, retailers are working to shift the center of their supply chain from the DC to the store. As Bruce Bowen of Aldata says in the story, "Warehouses and stores have traditionally been autonomous. Now, they (retailers) want DCs to be responsive to the stores."

Wow. What a concept. As a consumer, I always thought things should work like that. But given my day job, I knew otherwise. However, that appears to be changing. Or at least starting to change.

In fact, one company already moving down that road is Cott Beverages. In our 60 seconds interview, we talk to Jeff Stites, vice president of Cott's North American supply chain. He points out that it is possible to react to what happens at the store shelf in a matter of days, not weeks or longer. But it first takes people and metrics then technology.

In other words, there are no easy fixes here. Clearly, the retail supply chain needs a bit of rehab. Just don't expect to see the results this holiday season.

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