Ordering for food and beverage can be quite complex, depending on the source. The first challenge is deciding what strategy to use for ordering—and this should be considered at the item/store level. Should the item be ordered to maximize turn or to maximize economics?
An item that is ordered to maximize turn has the benefit of lowering inventory investment at the expense of handling and delivery cost. While this is a common strategy for multi-day delivery stores, it may not be cost effective for small and fragile items such as small items like toothpicks, fragile items and broken case items. Some items make more sense to order in a case pack or larger multiple to reduce handling charges. For those items, determining an economic order quantity that might exceed a turn goal is more cost effective.
When ordering to maximize economic investment and reduce handling costs, consideration must be allowed for space and shelf life. It may make more sense to order a lot of Styrofoam cups, but there may not be space for the product. Milk might be more economical to order in larger lot sizes than turn based, but that increases the amount of spoilage and reduces customer perception that a merchant carries the freshest product.
Balancing economics with turn is a strong starting point to reducing costs while increasing profits on the current product mix for any food and beverage merchant such as grocers and convenience companies.
But there is more complexity that merchants have to consider. Some categories require a certain minimum be met before any further can be ordered. Some items (whether it is for economic/turn or planogram limits) have certain min/max constraints. When creating the order, all of these considerations have to be optimally balanced.
These considerations are very time consuming for store managers, not to mention distracting from a common goal of being customer facing. When looking for an order creation tool to help in the stores, consider a solution that provides the key benefits designed for food and beverage merchants:
- Turn and/or economics ordering
- Accounting for shelf life optimization
- Balancing the min/max concerns of vendors
- A tool that works by exception to minimize manual intervention needs
- Provides an interface that is usable in the aisle
- Designed for grocers and convenience chains
Grocers and convenience merchants can’t rely on the same order generation tools that are in place for fashion industries. These markets need a tool designed for their needs, rather than adapted as a work around.
Find out how Redner’s optimized their inventory with Retalix demand driven replenishment solution, click here.
For more information about inventory management and demand-based replenishment, contact Alex Achour at firstname.lastname@example.org.