In the first part of our exposition, we simplified the general problem of order flow. We identified three primary stake holders of an order distribution chain.
- The Brand or the manufacturer or the marketing firm
- Vendor, Distributor, Supplier or a C&F Agent, and
- The Retailer or purchasing manager for various business
#3 – The Retailer is the point of delivery for the product, and either he himself or the purchasing manager is responsible for ensuring that they have just enough to serve the customers. Not too much and certainly not too less.
On average a convenience store grocer deals with about 3000-5000 SKUs and a grocery chain store would contain about 25,000-30,000 SKUs.
The retailer caters to immediate demands and must plan his supplies in advance.
He also has limited shelf space for which all brands compete.
He also understands localized consumer behaviour better than the best marketing minds out there.
A smart purchasing manager has a decent understanding of his market and can more or less predict his demand.
But the problem is, if you have not guessed it so far, Supply.
This is a usual order slip.
This is a stack of slips.
If a picture could speak a thousand words, I have put in two and if you add two and two together logarithmically, you get a lot of decimals i.e. variables.
A retailer depends upon distributors and brand representatives to fulfil his orders. Those two have bigger concerns and run top heavy institutions that leaves a lot of margin of error.
To overcome that margin, there is oversupply and wastage.
To overcome that margin, higher capital allocation.
And other financials and logistical sins.
There is another legitimate concerns of retailers – huge dependability on the distributor or brand rep take their orders and corresponding unreliability of them doing so.
A small survey displayed huge dissatisfaction in terms of frequency of reps visiting them, lower fulfilment and untimely delivery.
The demand more or less remain constant for a specific geographical area, only the preference changes. This is a key point. It is easier to change preference than alter demand. I think I digressed here a bit but I feel this is a good point to keep.
So, for to fulfil the same demand, inefficiencies lead to higher capital allocation. The biggest fear for a retailer, is the fear of stock-out and to quell that fear, he buys more, the distributor stores more and the brand manufactures more – a lot of wastage of men, material and horsepower.
These are lots of challenges and solving all of these challenges for all of the stake holders simultaneously, was not humanly possible, and the last time I checked most of us who work at Hashbrown Systems were humans.
We broke the whole thing down to granular level, Part I explained the overall ordering problems. Here we drilled a bit deeper into how an retailer or your everyday purchasing manager is affected by the inefficiencies of brands and their distribution network.
But do we have to offer anything by way of solution?
For purchasing managers we have an excellent product called, purchasing.ai – it is an intelligent smart phone application that performs the most important basic task Web, Google Play Store and Apple’s iTunes Store, don’t take my word for it, check it for yourself.
Daily orders, repeat orders, bulk orders, you name it. When it comes to ensuring that your order reaches before time to your supplier, purchasing.ai is the solution.
This is retail solution for purchasing managers, food & beverage service manager and anyone or everyone who is involved with forecasting, planning and ordering of products (SKUs) in a business or an organization.
In the next part we will move up the chain and look into how Hashbrown Systems serves distributors, vendors, stockists and suppliers.