Your Solution Expert
How To Manage Your Grocery Retail Supply Chain
Mary loved to go to her favorite grocery store to buy fresh produce. Still, because of the fast-paced development of omnichannel retail
and the increasing use of mobile shopping
, now she prefers to order her ingredients from the comfort of her mobile device. This puts Joe, the grocery shop owner, in a difficult position: either lose Mary as a client or adopt e-commerce for his grocery store. But the transition for Joe might not be that simple. Here's why:
Joe sells low-value but fragile products (there is high demand for organic, sustainable, and freshly baked goods) that need proper handling during delivery, which might be costly. Making profits from online ordering and fulfillment will be challenging.
Customers favor grocery stores that offer cost control and low-cost private label products, meaning Joe has no option but to offer discounts to have a competitive advantage.
The food service industry is another upcoming competitor for Joe because on and off, Mary will order ready-made meals delivered to her doorstep for its convenience and absolution of time spent cooking. Should Joe open an in-store restaurant?
In a word, the retail market is currently in chaos, putting grocery store owners in tough spots in an already competitive and challenging market. Joe's saving grace is a system that streamlines and optimizes his operations to improve efficiency, reduce costs, and increase or at the very least maintain his bottom line. Innately, his supply chain management will determine whether he succeeds or fails.
Supply Chain Management For A Grocery Store Is Challenging
Grocery stores sell fresh produce, which means business owners must find solutions that get products to the store faster
. Additionally, the purchase order must match demand to reduce waste. This also means that the planning process must be agile enough to identify any slight changes in demand to offset losses.
For instance, if more customers start to order products from a more sustainable competitor, the grocery store would have an overstock likely to go bad within a short period, thus causing waste. More than that, omnichannel retailing has only increased the need for fresh and very high-quality products.
Therefore, every grocery store must optimize processes so that inventory flow throughout the supply chain matches demand. So here are some of the best tactics to use to manage your grocery store supply chain.
Forecast Your Demand
Can you forecast your demand? This is the key to reducing waste and increasing sales. Knowing your demand beforehand helps you determine the optimal resources you need, like grocery store labor.
Traditionally, grocery stores base their demand forecast on historical data collected from outbound deliveries. However, this is no longer sufficient in the era of omnichannel retailing and online grocery shopping.
Instead, you need an integrated system that considers your inventory management and store replenishment activities before determining your demand forecast. That is, forecast your demand based on your projected orders as per your stock movements and direction within the supply chain.
This requires a system that can calculate your store orders based on the number of stores, product type, and rate of demand annually. Such a tool requires a deep understanding of data processing and analytics. This is where granular forecasting
comes in.
Granular forecasting takes care of both capacity and resource management, enhancing efficiency, reducing waste, and increasing the supply chain's profitability.
Keep in mind that forecasting demand for your grocery store will have the following challenges:
New products or a new store outlet are hard to forecast.
Your decisions regarding promotional, price, and display changes might affect customer demand.
It is hard to predict external factors like weather changes affecting stock replenishing and delivery.
You can combat these challenges by implementing machine learning capabilities within your supply chain management system. This also requires employees that can offer transparency by understanding and controlling the forecasts you generate from your machine learning tools.
Take Advantage Of AI
Suppose you run the biggest grocery store in your local region. This means you manage the flow of various products daily, through in-store or online purchases. It also means that your supply must match your demand.
With AI, you can leverage the data you collect by harnessing valuable insights when making informed business decisions. All you must do is implement AI algorithms as part of your technology systems.
When implemented correctly, AI provides autonomous solutions to time-consuming and too complex structures for human capacity. For instance, it takes AI and machine learning mere seconds to compile and analyze millions of data. A good example would be using AI to analyze customer purchase behaviors in your online grocery store.
This will tell you which products you need to sell online, how fast you need to get the products to your customers, and whether you need to improve your delivery systems to enhance product delivery. In a nutshell, AI technology helps you optimize your entire grocery store operations.
Optimize And Utilize
One of the biggest challenges in the retail business is the emergence of unexpected bottlenecks in any part of the supply chain. Therefore, you must find a way to deal with these upcoming bottlenecks.
First, understand how your demand affects your capacity, inventory, and resource needs. Then determine solutions that optimize these processes by utilizing your resources. Your demand forecast is, therefore, an excellent place to start.
For instance, if you project that you need 100 cabbages every month for the next three months, you can liaise with your suppliers beforehand to ensure the goods are delivered on time and at suitable intervals.
Additionally, you can plan for your storage, shipping, and delivery needs before the arrival of the cabbages. You also manage to strategically plan your operations so that you have no overstock or understock of cabbages at any one point in your grocery store.
As a result, your entire operations remain completely optimized and utilized. This requires end-to-end visibility into your grocery store processes. Besides, visibility within your full operations gives you the cross-functional alignment you need to handle unexpected bottlenecks efficiently.
It also provides a space to proactively execute your supply chain management strategies that deter the consequences of unexpected bottlenecks. In essence, AI as a solution to optimization and utilization:
Enhances the speed of making corrective decisions in unexpected changes like demand increase.
Ensures your inventory is always balanced and in accord with your fulfillment needs.
Optimizes your space usage and stock replenishment by ensuring your workflow is continually updated.
Remember, AI is nothing without human expertise. Even China's testing of the first autonomous store on wheels
determined that AI can be clumsy and ineffective at times without human intervention. Better luck in the future.
Where Erply Can Help
Erply grocery store is a POS solution that helps you organize your complex inventory by size, ingredient, type, and flavor. The system is also an integration platform that allows you to use other platforms that enhance optimization and resource utilization. For instance, Erply offers integrations with eCommerce platforms
like Shopify and WooCommerce that help you take your grocery store online. You also get an application that enhances your transactions' speed by ensuring customers find your online interphase easy to use. In short, team up with Erply, and your grocery store supply management strategies will win. Try the 60-day free trial
today.