SCDigest: Warehouse Management to the Rescue for Retail Out-of-Stocks?
By Dan Gilmore, Editor-in-Chief, Supply Chain Digest
Consumer goods manufacturers and retailers have been chasing the out-of-stock problem for decades, the latest iteration being RFID.
Studies have shown, especially in the mass merchandise and grocery sectors, that a high percentage of the time, the item for which an out-of-stock exists on the shelf is available in back room inventory, but hasn’t made it to the floor.
This problem, I believe, could potentially be well addressed with a form of warehouse management system (WMS) tailored for a retail setting. Specifically, this would happen through use of one of the core capabilities of a WMS — the task management system.
There is already use of a form of task management in some retail workforce scheduling applications today. But that is at a very high level — blocks of work, like "price ticketing" or "cycle counting."
A true WMS task engine operates at a very granular task level — e.g., this SKU in this forward pick location needs to be replenished, because it has fallen below the minimum set for that location. A work "queue" of dozens or even hundreds of these tasks is managed by the WMS task engine, which doles them out to workers via commands to wireless terminals of some kind, based on who has permission to do the task, the task priority, the operator’s location, etc. The operator confirms through scanning or other means that the task was complete, and immediately receives another.
Why couldn’t this same approach work for shelf level "replenishment"?
What it would take is:
- A perpetual inventory (PI) system at the store level (largely in place)
- A basic inventory location system in the back room (sometimes in place, but easy to create)
- Wireless terminals (largely in place, almost always underutilized)
- The task management engine, integrated with the other pieces (or maybe all from one source).
Retailer Target said early on in the RFID saga that it has a light form of this — its system generates a type of "pick list" for shelf replenishment, based on POS. But that is a paper-based system, and not really capable of dealing at a specific task level (or so I think — haven’t really seen it).
Pretty simple — the PI says a location needs replenished (at whatever level is set for that SKU), and a specific task is set for the move. It goes into the queue, and is prioritized based on other variables (just for example, perhaps high-margin items generally go to the top of the queue); if more units of that SKU are sold, meaning it is increasingly in danger of going to zero at the shelf, the task rises in the queue.
Stock personnel don’t have to wonder what to do — their terminal tells them exactly what to do, and they confirm it is done electronically.
Yes, PI accuracy could be an issue, but this would have the effect of greatly improving that accuracy.
There is more than I have room for here, but shouldn’t more retailers be looking at this? Couldn’t we take a big chunk out of the overstock problem at shelf right away, without a whole other industry program that never seems to work?
Discussion Questions: Can warehouse management systems significantly solve retail out-of-stocks? How does and doesn’t this technology apply to restocking issues at the retail level?