The grocery industry shares a long history with the logistics and distribution industry – and for good reason. Keeping stores properly stocked with fresh food, packaged products and household goods – many of which travel long distances and are subject to temperature restrictions, handling requirements and expiration dates – has always been a challenge.
As any grocer knows, unexpected hiccups in the supply chain – such as weather delays, transportation disruptions, product availability issues, demand surges created by marketing campaigns or the social media effect, product recalls and a host of other market disturbances – are a recipe for damaged, spoiled, expired or unappetizing merchandise and sad, empty shelves.
There goes customer satisfaction, not to mention profitability…
What’s more, with Amazon recently turning its cart down the grocery aisle, companies operating in the space are being pressed to accelerate process transformation to rapidly improve inventory turns and eliminate unnecessary costs to improve enterprise profitability and the overall shopping experience. While the online retail giant’s $13.7 billion bid to acquire Whole Foods is far from being a done deal, observers believe the move exemplifies Amazon’s desire to not only enter the grocery marketplace, but to also expand its distribution footprint. I expand on these topics in a recently recorded webcast. You can click here to listen.
To prevent or at least blunt the effect of many of these potential problems, consider these smarter logistics practices to help reduce risks and increase efficiencies:
- Implement comprehensive demand planning. Thoughtful, thorough demand planning involves qualitative and quantitative input from across the supply chain team. Integrated, cross-functional collaboration and deep data analysis incorporates the experience and intuition of merchants and buyers.
- Pair flexible strategies with tight controls. Optimizing grocery logistics is a complex balancing act. Flexible transportation strategies – including continuously evaluating carriers, modes, routes and costs – are key to maintaining peak efficiency. In short, economize, but don’t compromise. No speed or savings advantages are worth risking your customers’ health and safety or your brand’s good reputation.
- Sweat the small stuff. Don’t assume what you’re doing today will work tomorrow. Stores close, markets change, new products are introduced, labor practices evolve and technologies advance. If you’re not improving continuously, you’re falling behind.
- Extend delivery past the door. Collaborating with marketing and merchandising is a vital part of successful grocery fulfillment. Awareness of in-store strategies such as pricing, promotions, planograms, shipment schedules and delivery methods drives service efficiencies and solidifies retail partnerships.
When you think about it, most of these good logistics practices apply in any arena. Mulling over your options can often produce important insights, regardless of which items are on the shelves. Data analysis, network design and a continuous improvement mindset help companies understand what winning looks like in a marketplace fueled by burgeoning e-commerce demands.
In addition to deep industry expertise in cost and service level optimization, Transportation Insight provides innovative tools and valuable resources to support your logistics operations. We streamline your day-to-day business, but we also constantly examine your data and network, searching for ways to continuously improve your supply chain’s efficiency.