Now is the time to apply the intelligence being infused into various retail technologies to fresh item management software platforms. It’s also time to ensure that nutritional information, recipes and other information like country of origin are passed along with the products themselves. Money is literally being thrown away, and it’s time to stanch the messy flow of products into the trash.
After all, it’s no secret that fresh items are the most profitable items in a supermarket/grocery store. Whether prepared foods, baked goods, meat and poultry, or produce, the raw gross margin on these items far exceeds anything in the center aisles of the store.
High margin, high shrink
It’s also no secret that fresh items tend to have the highest shrink in a supermarket. The reasons why are myriad:
- Fresh items have a short shelf life. Over-buy or over-bake, if you don’t sell a fresh item in a timely fashion, it has to be thrown away.
- Too many cooks can spoil the prepared food kitchen. It’s hard to keep recipes consistent in a world of relatively high turnover, and a staff that tends to be doing many things at once. Absent specific recipes tied to specific prepared foods, over-cooking, under-cooking or just poor cooking can drive a department manager to throw away an entire batch of food. In a time of almost full employment, this risk only rises.
- Too many butchers can make a mess of meat. It’s standard practice to trim fat and gristle off of fresh meat as it is being broken down, but care must be taken to not over-trim or butchers remove value from the product.
- The meal kit trend can be really costly for the seller. Again, recipes are key, but so are buying and deploying the right amount of ingredients and packaging them efficiently.
So, what’s a grocer to do? The management of fresh items has been a topic of conversation for years, but the generational movement towards fresh makes its management more critical than ever.
The need to forecast, manage and track the status of fresh items has only grown over the years, and with the consumerization of IT, demands for access to product-related information have grown as well. Consumers want to know the calorie count of items they are going to prepare. They’d like to know reviews of various recipes. And they’d like to see those recipes on demand, whether on their phones, desktop computers or tablets.
What should you expect from a comprehensive software solution?
In our view, the requirements for fresh item management software go far beyond the original thoughts of the early 2000s.
Now, software systems need to be more than reporting mechanisms. They also need forecast engines to help insure that the right amount of product is bought, based on recipes and, of course, demand. Building meal kits in the store or warehouse sounds like a great idea until you start to imagine being out of stock on one critical ingredient.
In addition, in the modern era, it’s hard to imagine a comprehensive fresh item management software solution without an accompanying set of master data. Master data management (MDM), is the home for recipes, nutritional information, country of origin, reviews, and provenance (organic or not).
The advent of grocery home delivery also demands accurate and up-to-date information on substitutes, in the event products are out of stock. One of the biggest complaints around grocery home delivery is the poor nature of the substitutes selected by the retailer. For example, while Quinoa burgers may be desirable for a customer, the same burgers in a spicy version may be inedible by the consumer. This is a double-whammy problem.
- The delivery company must refund the customer’s money for selecting a bad substitute
- The product will end up being thrown away by the consumer, effectively doubling the waste
Times have changed. Today’s consumer has many choices of where to shop. And retailers have intelligent computing power at their disposal to finally gain a better understanding and management of fresh, enabling them to attract and retain customers. There’s no longer a good excuse for leaving customers without the many choices they’ve come to expect.
Learn more about fresh item management in new eBook, “Is your supply chain missing half the customer forecast?”
Also, watch our on-demand webinar on The Ingredients of Fresh Item Management.