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On-Shelf Availability Overview

Walgreens-Mclane- RSI On-Shelf Availability Overview (MDLZ)

Khadyon Reid

on 22 August 2014

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Transcript of On-Shelf Availability Overview

On Shelf Availability
Walgreens Promotions and Loyalty Program
In and Outs
Walgreens Team
My Project
Using the RSI tool and data to analyze the On shelf availability levels of Mondelez products in Walgreens.
Industry OSA
Is product available on the shelves and ready for purchase when you are at a retailer

Mondelez International OSA levels:
We dont know
Industry average level of OSA is 91.7%
8.3% of Out Of Stocks = 4% loss in sales

Methodology used to Establish rate:

1. Qualitative: Asking shoppers questions about their shopping experience – including the availability of products

2.Physical- Inventory auditing

3.Technology- perpetual Inventory Data
Leveraging technology (RSI tool) to analyze Mondelez International OSA levels

Consumer Responses to OOS
Main Industry Causes:
1) Demand Forecasting (47%)
2) Ordering and Inventory Accuracy
3) Shelf space allocation
4) Planogram Compliance
5) Product/Item Data Accuracy (Phantom Inventory)
Industry Root Causes
75-85% of OOS stems from retail Practices
MDLZ Product Flow
MDLZ Product Flow
1) About me ...
2) Industry On Shelf Availability (OSA) research and projections
3) McLane, Walgreens, and RSI measurement reports
4) RSI OSA Metrics
7) Moving forward

Walgreens Flash Report (week 23 2014)
Walgreens flash report measures in-stock rate simply as the percentage of stores that have a product in inventory
Walgreens Product Flow
1) Biscuit and Confections

35% Percent of the time Mondelez International faces a direct loss
34% of the time Mondelez International faces an indirect loss
Walgreens Direct Product Flow
Walgreens Retail Practices
Store Replenishment
Deliveries take place once a week unless its a very high volume store
Orders are by the unit
An automated system generates orders based off of predicted demand and inventory levels
Shelf Replenishment
Shelves are replenished as bins come in from McLane
Bins contain units of product ordered from McLane and aren't company specific
*Numbers of displays are determined by Mondelez and walgreens demand planners
Observations: RSI OSA Metrics
1) The "Possible Shelf In-Stock Rate" and the "Total Possible In-Stock Rate" don't automatically adjust in when inventory for a product is 0.
The threshold of 10 units demanded must still be reached for OSA to be affected
2) The RSI tool needs better recognize and adjust for inbound/outbound products
Currently it takes the tool about a month to recognize products that are no longer in stores
Outbound products are recognized as Out-of Stocks

How are Out-of Stocks recognized?
The RSI Tool primarily recognizes Out of Stocks by utilizing 2 RSI Metrics:
Analyzed the day by day activity of the Trident Tropical Twist 3 Pack (UPC 67255)

RS Demand Volume Units
Total Possible in-stock rate (OSA metric)
Store on-hand Volume Units
Total Sales Volume Units

There were sales when inventory was reported to be above 7 units
When inventory decreased to 7 units there were no recorded sales
Reported units never went below 7, despite there still being projected demand


Trident Tropical Twist 3-pack

7 Out Of Stocks

Walgreen's #07969
June 15, 2014

Where do we go from here?
1) Utilize the RSI metrics to analyze products at a store level

2)Begin reporting OSA levels for Walgreens by focusing on core products (non-in/outs)

3) Determine root causes of Walgreens OOS and aid in increasing OSA levels for Walgreens

4) Continue to build OSA teamsite along the way
Effect on OSA
During the week of June, 15 2014 the total possible in-stock rate (RSI Metric) at Walgreens #07969 was reported to be 88.93%.

The Store in-stock rate (RSI Metric) for that week was reported to be 92.36 %.

However, the Total possible In-stock rate and the Store in-stock rate for the Trident Tropical 3-Pack gum was reported to be 100%
Phantom inventory
Store Out of Stock Indicator wasn't triggered

Retail Science Measures
Variability of RSI OSA Measures
There is a significant difference in OSA depending on which measure we choose to use.

What Measure should we use?
1) Halls
2) Displays

Walgreens Promotional Items
- Week long ads or promotions

Loyalty Program:
- customers can receive loyalty points from making purchases
- 1,000 points = $1 off
- Walgreens is reimbursed by Mondelez for discount dollars earned from Mondelez products
*Oreo Example

Weekly Calls:
1) Walgreens
2) McLane
3) Mondelez
Walgreens Value
Total last 52 week Sales: 155,000,000
Lost revenue: 6,200,000*
Industry average is 4% sales loss
1) Utilize the "Total Possible In-stock Rate" metric
Do NOT include in/outs, Discos, new items, Seasonal products
Conduct and analysis to determine whether or not 10 units should be the threshold
The RSI tool takes about a month to recognize outbound products.
In/Outs affect on OSA:
1) In/Outs are currently included in the RSI OSA measures
2) Demand/ lack of sales for in/outs is factored into a stores level of OSA despite the fact that the product may no longer be in production
3) Significantly reduce projected OSA levels
When using the RSI Metrics


Demand for OOS products should be included in the OSA calculation. Though "TPISR" does not automatically adjust for zero inventory situations the threshold of 10 can be lowered to account for these situations
Promotional items tend to have higher Out- Of- Stock levels, averaging about 20% Industry wide.
1) RS Demand Volume Units
-RSI Metric that estimates daily demand for a product by store by day
*takes into account actual POS, lost sales due to out-of-stocks, seasonality index and other factors...

2) Store Out-of Stock Indicator
- RSI Metric that indicates Out- of Stocks by observing the projected demand for a product since last scanned
-When the number of demand volume units of a product reaches 10 since last scanned, it is determined that the product is Out-of Stock
When a product reaches 10 demanded units since last scanned RSI is 99.9% sure that the product is Out-of Stock

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