In Resolving Out-Of-Stock Challenges.
In today’s uncertain retail landscape, retailers are bombarded with endless challenges to acclimatize to consumers’ ever-evolving needs and expectations. From online purchasing to mobile payments to social interactions, retailers experiment with each new technique to enhance customers’ shopping experience. Yet the one they’re still struggling with is the out-of-stock (OOS) problem.
With an average rate of nearly 8%, out-of-stock is one of the biggest challenges in the retail industry. Besides creating a poor customer experience, it smashes your brand’s reputation, pushes your customers to shift to another provider, and causes a $1 trillion loss in global sales. Insufficient store practices, such as replenishment, store ordering, and forecasting, are some of the prime reasons.
But thanks to modern technologies, we’ve AI-powered on-shelf availability (OSA) solutions in our arsenal. In this article, you’ll learn how AI-enabled on-shelf availability solution enables you to overcome out-of-stock challenges and create an unparalleled customer experience and sales growth. But before that, we’ll understand what an on-shelf availability solution is.
What is on-shelf availability?
On-shelf availability is a key performance indicator that estimates the number of products available for sale at a given place and time. It’s one critical element that helps retailers to build customer trust in terms of reliability, product availability, and speedy delivery.
Ensuring high on-shelf availability isn’t a piece of cake. Along with the supply chain hindrance, multiple factors impact the execution of this solution. For example:
- Stock is available in the wrong place or backroom.
- Availability of stocks in damaged and unsaleable condition.
- Stock stuck in transit or at the warehouse.
- Inaccessibility of stock at the distribution center or from the manufacturer’s side.
That’s where AI and machine learning (ML) comes into the picture to overcome on-shelf availability challenges and mitigate out-of-stock. Integrating AI/ML, OSA enables retailers to track trends in every SKU in real-time. This new breed technique enhances availability management and in-store execution with the power to convert real shelf images into meaningful insights. In short, AI-powered on-shelf availability maximizes the overall product performance on the shelf.
How AI-Powered On-Shelf Availability Solutions Overcome OOS Challenges
Gone are the days when tracking inventory depended on random data inputs and factors such as shrinkage, regular inventory counts, point-of-sale (POS), and inventory management software. Out-of-stock modeling has dominated the floor. But due to data inaccuracy, which creates incorrect model predictions, this new technique has also become unproductive. Tredence, in collaboration with Databricks, developed AI-based on-shelf availability solutions. With this game-changing innovation, the company helps retailer as it successfully leverage data to:
- Understand suppliers’ in-house processes and their problems in generating revenue
- Predict the upcoming stockout risks and develop automated alert models
- Encourage retailers to optimize their on-shelf availability
- Identify the prime reasons behind out-of-stock events and develop solutions from the scratch
- Minimize the further chance of the occurrence of stockout scenarios
Moreover, AI-enabled on-shelf availability transforms the out-of-stock model for businesses by overcoming these challenges:
- Phantom inventory: It occurs when there are discrepancies between the goods listed within an inventory management software and those available on the shelf. Poor stock tracking systems, theft, and incorrect data entry are some of the culprits behind the occurrence of phantom inventory.
- Poor stock replenishment: Around 70-90% of the stockout is due to unproductive shelf replenishment practices. It occurs when retailers don’t have enough products to sell at the right time.
- Zero-sales events: It’s a duration when there is a complete disconnect between you and your customers. In other words, zero-sales events occur when there is no sale of a single unit of your products.
Translate Insights into Execution with Tredence On-Shelf Availability Solution
Today, we’re living in an ultra-competitive era, where fragile brand loyalties turn into the wastage of resources. Tredence AI integrated on-shelf availability solution is a rescuer here. It offers a powerful and unified platform that aggregates and merges inventory and sales data at a per-period level. Its high data-processing capabilities examine and identify series patterns and generate actionable insights and forecasts for various SKUs across locations. You can access these insights for analysis before being pushed to in-store personnel through prioritized OOS alerts for relevant action. Furthermore, as the solution is scalable, it allows large volumes of data to be processed rapidly.