The key indicator of any retail supply chain is out-of-stock inventory (OOS). This is an issue found at the forefront of retail challenges and one that continues to harm the profitability of companies everywhere as well as their customer experience.

Although discussions about out-of-stock (OOS) inventory are nothing new, we find they are increasingly important in today’s business environment.

• The global retail landscape has undergone dramatic changes in recent years – the acceleration of e-commerce; retailers striving to fulfill more orders for more items faster than ever before; and shoppers who buy fluidly across in-store and online channels are all established realities of today’s consumer environment
• Retailers are the last direct link to consumers – this proximity is both powerful and complex to manage. It creates an environment where availability and speed of reaction are key. Cycles are shorter and solutions must provide results fast. Retail is a fast-paced ‘by design’
• In a customer-centric and omnichannel environment, inventory availability is one of the key levers for seamless customer experience. To manage the flow of goods from suppliers to shelves, minimizing out-of-stock across the channels whilst keeping acceptable levels of inventory remains one of the greatest challenges for any retailer.

Retail is a complex and dynamic environment. We help our clients pick the right battles and move fast to address them, generating rapid and continuous results.

1. Optimize replenishment strategies per category
   • Managing OOS inventory effectively across multiple categories and product types often require a variety of strategies to be applied within a single retailer. However, many retailers apply similar, one-size-fits-all approaches to their categories, despite very different contexts.
   • We pay close attention to your reality, tailoring our solutions to the specificities of each category’s ‘replenishment DNA’. For that, we assess the impact that different categories make on your company’s bottom line and identifying the strategies that are most important to your inventory assortment
2. Create alignment across the organization
   • Game-changing technologies are helping retailers both manage and reimagine the entire value chain. These technologies—and robust technical expertise—are critical components. However, based on engagements with our clients and supported by persistent global out-of-stock figures, we believe technologies alone don’t guarantee transformation: they require people to bring to life.
   • The operational backbone starts in the Merchandising area and ends in Store Operation, and all the areas in-between need to be involved and to collaborate on the journey. We secure top-level sponsorship and work across areas, building commitment and alignment through engagement, change management, processes, shared KPIs, and rituals.
3. Prioritize, act and generate results
   • For companies dealing with tens or hundreds of thousands of SKUs, it is literally impossible to control everything at once, even with a clear understanding of category demands and replenishment strategies.
   • We zero in on the biggest problems first, addressing the root causes for issues across categories. We then move fast from strategy through to execution to deliver results, always finetuning actions to match your specific context.
4. Maintain control, consistency, and discipline
   • Achievements in out-of-stock inventory rates can easily backslide as new initiatives, operational changes, or SKUs are introduced. We help you develop routines, strategies, and governance and train your team “on the job” to prepare them to sustain the new process; enabling you to maintain consistency and discipline and achieve long-term continuous improvement.

• -20% to -70% reduction in out-of-stock levels
• -15% to -40% inventory levels reduction, achieving a better balance of the capital invested in merchandising stocks
• -15% to 30% reduction in products write-off – especially important in perishables and produce categories
• Reduce mark-downs and increase margins and GMROI⁽¹⁾ – especially important on categories such as apparel or home appliances
• Reduction in the product conversion cycle
• Sustain brand equity and grow sales due to out-of-stock reduction

⁽¹⁾GMROI = Gross Margin Return on Investment = is an inventory profitability evaluation ratio that analyzes a firm’s ability to turn inventory into cash above the cost of the inventory (GMROI = Gross profit / Average inventory cost)

Our projects typically progress through the following phases in an effort to deliver a balance of specificity and speed.

Across this journey, we combine robust technical expertise, real-life experience, and an understanding of people and culture to tailor the best solution for our clients.

We appreciate that technologies and analysis alone don’t deliver transformation, they require people to bring to life. That’s why you can rely on us to go deep into the technical side, setting the inventory policies, processes, KPI’s and routines that orchestrate the flow of goods; whilst at the same time, ensuring sound change management to ensure we have the buy-in and collaboration of all the areas involved in the backbone of the operations.