Interview by Symphony RetailAI’s Paul Hoffman. Jason Burnett spoke at Xcelerate 2017 about the journey SpartanNash are on to ensure inventory is at the point of customer need.
From your perspective, what has been the biggest change or challenge in inventory management over the last few years and how is this impacting retail?
First, I think the change in consumer preferences and the ability for the CPG companies to keep up with them is big. It’s caused an explosion of new items that have been introduced to the marketplace and now there are more SKUs to manage. Most of it has to do with flavor variations of existing products, there are new products as well, but first and foremost, there are a lot more SKUs in the grocery industry than there used to be. I think SKU counts have increased by about 25% over the last two years.
The second piece is that the consumers are going through an evolution of where they buy products. Consumers are purchasing traditional grocery items from numerous channels. This is changing the landscape of grocery retail. So, it’s really looking at how you manage the deployment of the inventory and the shipping based on where that product is going.
I would also say that we’ve seen much more utilization of big data. The amount of data that’s available for us to use within our forecasting to deploy our inventory has increased, and we’re harnessing that to create unique verticals within SpartanNash. We’re using it to fine tune our forecasting to support each of our channels, not only from a regular stock-turn business, but also for promotions. (See also related viewpoint, on “Are AI and machine learning the future for demand forecasting?”)
What do you think will be the next big thing that you anticipate changing the way Spartan Nash will work and serve its customers?
I would say that it’s not the next big or new thing, but I think it’s something that’s been around for a long time, we just need to be fundamentally more sound at it. That’s the collaboration between the different channels. We need to align ourselves with our customer base more closely from a forecasting perspective, so we can make sure we have their needs correctly identified. Then more to that point, we need to align better with our supplier base, to ensure that they are producing product in the ample supply to meet the needs of the different customer bases.
In our industry, we’re seeing an all-time high, or at least over the last ten years, in number of out of stocks from the manufacturing community. This is very unusual and a lot of that has to do with what I mentioned earlier. Their portfolio of SKUs is so much broader now, but the capacity to run the items, since they run them on the same production lines, can’t keep up. If they miss or they guess wrong on a flavor and/or a product type, or they get out of sync on runs, we see periods of out of stocks as long as weeks … and in the past, it would just be days. We’re going to have to figure how to better collaborate and provide the manufacturing community with better forecasts to allow them to produce more appropriately for what the consumer demand is going to be.
Why did you agree to speak at the Xcelerate Retail Forum 2017?
I’ve always found it interesting to speak with other people within the supply chain profession that are outside of the businesses that I am in. I also think it’s also good to share my story and my journey because it starts a dialogue and a conversation with other people. It was great to see that my presentation at Xcelerate raised some questions and provided some insights to other folks. It was good to see a conversation develop. It’s really important to bounce ideas off one another and I think conferences like Xcelerate are great think tanks in this way. They get people out of their daily reporting and meetings and things like that, and allows them to be more forward in thought and not stuck in their normal pattern of the day-to-day whirlwind of their jobs.
For those who didn’t attend Xcelerate, please mention a few main themes of your presentation.
We have a very diverse portfolio of customers, everywhere from the United States Department of Defence to corporate retail. It’s really a discussion about how we leverage the information that we have to support each one of those unique channels because they’re all a little bit different. Now you’re sitting on the edge of your seat, you can’t wait for it can you?