CPGmatters: Kimberly-Clark Leverages POS Data to Help Food Lion Reduce Out of Stocks

Feb 05, 2009

By Jack Grant

a special arrangement, presented here for discussion is an excerpt of a
current article from the monthly e-zine, CPGmatters.

When Food Lion started
sharing POS data under its Vendor Pulse initiative in December 2006, Kimberly-Clark
jumped on the opportunity.  However, the initial enthusiasm quickly
turned into a major headache. K-C sells more than 250 products at 1,300
Food Lion stores, which meant that every day it had to handle well over
300,000 data points; the sales and stock of each product in every store,
every day.

“It very quickly
became overwhelming. We felt we were trying to drink from a fire hose,” explained
Gary Hall, a business analyst at Kimberly-Clark in the personal care category. “We
tried to build an internal solution using a standard database tool, but
it simply did not work. Not only did we struggle with scalability issues,
but we also needed to cleanse and load the data ourselves, and we discovered
it certainly was not trivial.”

Upon trying to reconcile
this data with the syndicated data, K-C identified major discrepancies,
and several reports which were run on their internal database did not provide
the expected results

In June 2008, Food Lion
selected Retail Solutions Demand Signal Management to power its Vendor
Pulse program, and Kimberly-Clark quickly signed on with Retail Solutions
by July. Retail Solutions DSM is a fully managed service which resolves
the issue of data cleansing, harmonization, loading and storage for the
suppliers participating to the Vendor Pulse program, while providing business-focused
reports that enable every type of user to intuitively navigate the data.

Kimberly-Clark is now
looking at out-of-stocks of all its products, category by category. It
is running reports to see which products are not selling for abnormal periods
of times in stores where they are authorized. By matching this analysis
with shipment data, Kimberly-Clark then can address the distribution voids
occurring when items are not shipped to authorized stores.
On one particular item, for instance, they found 70 stores which should
have had the product in stock, but did not.

When the out-of-stock
seems to have its root cause in the store, K-C could now instruct a merchandiser
to check a list of items during their visits systematically and on a recurring

“The most important
thing though, is that the Retail Solutions tool is pervasive,” said
Greg Pike, who leads customer development for Delhaize USA, Food Lion’s
parent. “It crosses boundaries, and is used by all the functions we
leverage to serve Food Lion more effectively. I look at it at the top level,
but supply chain analyzes availability in each store and service levels
in each warehouse, marketing optimizes promotion design for each event,
sales drive better execution from every resource, merchandising determines
which planogram drives the highest sales in each
store – all of this without asking for any more resources from Food

Discussion Question:
What do you think are the particular hurdles for vendors in sharing and
capitalizing on POS data from retailers? What solutions have you seen
work to handle the data overload?

Please practice The RetailWire Golden Rule when submitting your comments.

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9 Comments on "CPGmatters: Kimberly-Clark Leverages POS Data to Help Food Lion Reduce Out of Stocks"

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Nikki Baird
Nikki Baird
13 years 3 months ago

I think there is a case to be made for demand signal repositories for manufacturers. When you’re taking in data from multiple retailers, in multiple formats, and at differing levels of granularity and frequency, a simple database just isn’t going to cut it–as the article points out.

I think the key point from the article is that K-C has a process in place for what to do when the issue they identify is an in-store one. It helps if you’re DSD or have an MSO stocking the shelves for you, because you as a manufacturer have more control over in-store execution, but I find that without that kind of stocking situation, it becomes extremely difficult to move from root cause analysis to fixing the problem–and devolves into finger-pointing between manufacturer and retailer over why the product isn’t on the shelf.

Zel Bianco
13 years 3 months ago

This is a worthy endeavor as the results speak for themselves.

Many of the more innovative suppliers have been doing this for some time now and have seen the level of involvement from the retail community increase as the more sharing of data, the more insight, the more insights, the less out of stocks, and so on. We have seen this with Dr. Pepper and Food Lion as well. Not just in this area, but in the area of combining shopper insights with POS and with syndicated to make for a more complete picture when meeting with the trade.

As many of us in the industry have said, you need to use technology and tools that help to streamline the process and eliminate the cumbersome processes that too many manufacturers still use manpower to solve, leading to data overload and frustration.

Bryan Larkin
Bryan Larkin
13 years 3 months ago

From my experience, a big issue for manufacturers is the accuracy of the information. They are sometimes sent information that is:
1. for products they don’t sell;
2. for store sales volumes larger than they have sent to the store.

Validation of inbound data for manufacturers is as important as validation of inbound data for retailers. GDSN moves product information, but doesn’t ensure accuracy. This means retailers may send the same bad data back to suppliers or retailers may cause errors in the data and then that bad data gets back to the supplier.

Relying on bad data on either end of the relationship ensures problems in meeting perfect order initiatives, increases expense offsets, and decreases scorecard performance. Whether the information is sent in a purchase order or via POS data, accuracy is key to making sure all downstream functions have the chance to be successful.

W. Frank Dell II, CMC
13 years 3 months ago
Sharing POS data is the future. It replaces the BS of Partnering, Collaboration and VMI. With POS data the supply chain can run from store to raw material. MRP and DRP systems are obsolete when POS data is made available to suppliers. Plant scheduling and distribution are driven off actual market demand. Inventory drops at distributors’ DC and suppliers’ regional DC. Service levels increase and out-of-stocks fix quickly. I have been promoting this concept for over 5 years as Demand Driven Management. By having POS data, there is simply no need to waste time on forecasting. There is more than sufficient time in the supply chain to adjust for varying demand. By using time rather than quantity, significant saving accrues to all parties. This was the foundation of BICEPS which reduced distributor inventory by 30% while increasing service level. Yes, there is a lot of data but there are also computers. Any supplier not jumping on using POS data will be left behind.
Herb Sorensen, Ph.D.
13 years 3 months ago

Since we typically deal with only a small sampling of stores at a time (for research purposes), I can confirm “all of the above.” However, our own POS data management is at the T-log level, which is nearer where loyalty card management lives. But all the problems identified here impact the loyalty card, too. Are there experts here who work both sides of the street, that is, inventory management AND loyalty card management?

Mark Baum
Mark Baum
13 years 3 months ago
The Kimberly-Clark and Food Lion relationship is an example of a collaborative CPG/retail partnership that can truly pay dividends on both sides. That said, manufacturers in general will continue to face challenges around bridging the organizational differences–getting agreement from all sides to work together on process and governance disparities. CPG companies need to agree on the data that will be critical and they must identify the opportunities to use that information on shoppers. Also, from the supplier’s perspective, it’s often hard to “bubble up” customer data across categories. For example, with a few separate sales forces going into a retailer, all of these sales teams need to work together to put on a “single face” to the manufacturer. This is a major organizational challenge that most large CPG manufacturers face in the grocery channel. On the CPG side, building a cross-functional team that focuses on analytics that helps manage and service programs like Vendor Pulse, is best practice. The cross-functional teams can be made up of folks from sales, IT, and supply chain management. This… Read more »
Johan Sauer
Johan Sauer
13 years 3 months ago
In my experience, there are three issues that need to be addressed in order to extract value from POS data. 1. Define the value proposition. Too many companies begin their POS journey from an IT/data management perspective. While this is critical to long-term success, management needs to understand the value before investing. I recommend you begin by defining the business issues to be addressed–such as reducing out-of-stocks–and the value that can result. 2. Create the end-state vision. There are a number of solutions in play, including data management, near-term demand modeling, issue detection and linking insight to action. Once the value proposition is defined, companies need to assess the portfolio of solutions required to deliver it. While the vision may evolve as new tools and capabilities emerge, you need to have an end-state in mind. As the proverb says: If you don’t know where you are going, all roads lead there. 3. Approach implementation holistically. A successful solution requires new processes, roles and decision rights. Simply deploying the technology is not enough. These processes must… Read more »
Cathy Hotka
13 years 3 months ago

This is what customer-centricity is all about. Being able to address out-of-stocks at the store level will boost sales and customer satisfaction. It isn’t easy but the effort is worth it. Congrats to both companies.

Bill Robinson
Bill Robinson
13 years 3 months ago

Grocers should be providing their vendors information and insight, not sales data. There is a big difference. Otherwise, the vendor is beset with tons of data every day that looks very much like a fire hose. How do you drink?

What is much valuable to the vendor is to aggregate information, compare it to benchmarks, and organize it into exception reports from which they can take action. They want to answer the following questions:

What is my share? Is my share trending up or down?
Is there a downward pressure on price?
Can I make a case to improve my space utilization?

Retailers in general should develop vendor portals that leverage their BI infrastructure. That will make very better partnerships and stop the fire hose drinking.


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