In this article, we will talk about attractive in-store shelves, safety buffers, promotions and lost sales.
Visually attractive and beautiful store shelves are no longer considered as something extra, instead they have become a necessity and a vital part of any retail business. There are plenty of systems which offer smart and beautiful retail merchandise solutions. Hot spot area of your store is a battlefield. Suppliers literally fight with each other to put their products in a visually attractive areas with the best in-store shelves, offering bonuses, favourable terms and extras. As a result, visual appearance of the in-store shelf affects sales indicators and must be necessarily factored into reorder calculations.
Let’s have a look at a member of supply chain, for example, a regional or a main warehouse. Here the visual attraction of shelves has no importance. What we will need is an additional safety stock which will become a first-aid in case of emergencies: supply delay or a sudden demand surge.
One of the indicators in ABM Inventory system is called a Safety Buffer (SB). It shows the number of safety stock and the number of items to be put on the shelf to keep it eye-catching and attractive to customers. Safety Buffer number is being automatically added to each order.
The system allows to set up to 5 different SB Values, because the same product can be displayed in different store areas, for example, on the shelf, in the freezer, and on the pallet. Notably, each display will have its name, depending on the type and place. SB indicator is colour-labelled ad can be visible on inventory movement charts.
Image 1. Store Safety Buffer
Each Safety Buffer has its type. For example, you can set the exact number of goods for in-store shelf, or you can simply indicate the number of days or the needed reorder interval, and “ask” the ABM Inventory to calculate the safety stock you need until the next reorder. The system can analyze data in one store or make a total of all sales across supply chain.
Image 2. Main Warehouse Safety Buffer
If you are planning a promotion, or you want to place your goods on the store shelves for a limited period of time, you can choose a “Periods” function. It will automatically set the Safety Buffer level for you and delete it after the promotion/period is over.
Image 3. Promotional Product Safety Buffer
Safety Buffer contributes to the order quantity increase, which can be risky as extra stock freezes money. That’s why SB should be accurately controlled and monitored. ABM Inventory system has several levels of Safety Buffer control. For example, the sales of each SKU across locations are recorded and the system calculates the number of days needed to sell the Safety Buffer. This is called “Safety Buffer in days of sales”:
Image 4. Safety Buffer in days of sales
Let’s look at the Analytics module. Here we can see the cost of money tied up in safety stock (in SB). We can have the total sum for the whole retail chain and we can filter the indicators for each store/supplier/manager. Let’s look at the bar graph: Safety Buffer area is marked in grey, inventory within SB - in green and the excess goods beyond SB - in blue.
Image 5. Safety Buffer Total
If a retailer needs to have excess goods, in a quantity that exceeds the Safety Buffer level, the system can label this inventory within SB as a “lost sale”. This inventory can be viewed directly on a dashboard or in “Analytics” module, “Lost Sales” part.
Image 6. Lost Sales (black area)