When we talk about the present and future of the grocery store business, supply chain management plays a significant role in the success and failure of the retail business. Successful grocery retailers follow and implement efficient and lean SC strategies. While dealing with complex operations and processes, they need to follow multiple strategies. Today, we’ll discuss grocery store supply chain management; its benefits, challenges, and tips on how to improve it.
Key statistical facts and figures about grocery supply chain management are as follows;
- Approximately 70% of US customers said that they changed their grocery shopping habits
- 51% of the people are finding the sale items more than usual
- 38% are purchasing store brand items rather than recognized brand
- 60% of the customers are spending one-third of their grocery budget money on fresh food items
What is Grocery Supply Chain Management?
Grocery supply chain management is the process of delivering raw supplies, grocery items, fruits, and vegetables from manufacturing facilities and farms to grocery retailers. The design of traditional grocery SCM and logistics is for the regional sale where people from the street could walk in and shop for routine grocery items.
However, grocery stores make decisions about supply chain, replenishment, promotion, and pricing based on the assumption. They employ demand forecasting tools to predict the demand for a list of items to store and maintain inventory. Grocers don’t have a forecasting tool at the SKU (stock-keeping unit) level, but they would take them from a limited distance.
Nowadays, grocery stores are managing more than 200,000 SKUs and integrating them with the 3rd party service providers to satisfy the customers’ demands at the last minute.
Benefits of Grocery SCM
Some of the main benefits of grocery supply chain management are as follows;
- Tracking tools help you high visibility and transparency to the food logistics and cold chain shipping
- Cost control
- Managing operational challenges and issues
- High efficiency
- Making sure to comply with rules and regulations
- High productivity
Challenges to Grocery SCM
Some of the key challenges to the grocery SCM are as follows;
- Food spoilage and wastage are a great fear of the retailer
- Incapability to track humidity, temperature, and location of the shipment
- Approximately 18 billion dollars worth of food become spoiled annually in the US
How to Improve Grocery SCM
In order to meet consumer demands, it is significant to remain competitive and establish healthy relationships with the supply chain. Some of the main tips on how to improve grocery supply chain management are as follows;
It is the process of finding the opportunity and making sure that the top-level management is on the same page with the need for complicated business transformation. That’s why it is significant that you should have a well-developed SCM system that would offer you financial impact in terms of high profitability and margin.
It is significant to collect feedback from various delivery systems including the 3rd party delivery service providers. It requires you to gather data from both sources like online and offline data. You can make demand predictions based on historical data and predict the weather from the in-house data, and you can demand forecasting tell you the following;
- Safety stock
Launching the AI (artificial intelligence) system and software would help you to bridge the SC gap with the help of demand forecasting and predictive analytical measurement. The AI tools help you in the following ways;
- Increasing online orders
- Predicting the change in foot traffic
- Shopping Preferences and trends
The last-minute delivery service is a great source for predicting better substitutions and retrieving order items. Therefore, it is significant to take the following steps;
- Starting slow and taking small steps
- Testing and experimenting with the software in the specific category
- Analyzing its performance
- Implementing it at a bigger scale after getting proven results
It means renouncing the old system and obsolete technology and allocating capital funds and resources for the cloud-based technology and system. It allows you to bridge the gap between all the desperate and pervaded systems, and track and manage the inventory in real-time. The investment in the technology would help you in the following ways;
- Decreasing food waste
- Minimizing stockouts
- Better inventory allocation
When it comes to implementing the technology quickly and effectively, then it requires you to optimize the management processes and change readiness. After the end of the day, people need to buy food from the grocery stores and they’re there. The difference is how grocery retailers would interact and communicate with the end consumers.
Technological tools and applications have the capability to manage and resolve grocer SCM issues and challenges. It would help the company in the following ways;
- Decreasing the food wastage
- High profitability
- Limited risk
Conclusion: Grocery Supply Chain Management
After an in-depth study of the grocery supply chain management; we have realized grocery SCM technology is highly significant for growth and productivity. If you are learning about the grocer SCM, then you should keep in mind the abovementioned benefits, challenges, and improvement tips.
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