Research by Blue Yonder, a leading provider of predictive applications for retail, has revealed that grocery retailers are struggling to optimise their replenishment processes, with many decisions still based entirely on ‘gut feeling’. These findings come from customer experience delivery interviews with 750 grocery managers and directors in the USA, UK, Germany and France.
In spite of a rise in accurate machine learning algorithms for automated replenishment and demand planning, 46% of surveyed directors in the UK say replenishment is still an entirely manual process. This is surprising given 85% of respondents identified automation as a key tool for making the fast decisions needed to meet customer demand. The research also identified that 31% of directors in the UK feel there are now too many decisions to be made manually, with the same number stating that gut feel is slowing them down.
Professor Michael Feindt, founder of Blue Yonder, says: “Getting replenishment right is critical to ensure the shopper can get what they want, when they want it and through the channel they want to purchase it. This is particularly difficult in the area of fresh food, where a fine balance needs to be struck between availability and waste. With increasing customer demand for immediate availability on all products, grocery retailers need the marginal gains that machine learning algorithms and automation can offer in delivering the best decisions on a daily basis for their replenishment strategies.”
The research also revealed that although UK grocery retailers recognise the need to invest in replenishment optimisation, the process is still largely manual or subject to manual override.
- 62% of directors say they have invested in replenishment optimisation in the last two years.
- 31% of directors say they will be investing further in replenishment optimisation in the next two years.
- 46% of directors said that replenishment is a manual process and a further 46% say that although the process is automated it can be overridden by managers, suggesting a reluctance to rely on automation.
Additionally, while 90% of directors say that they are delivering on product availability, nearly 25% of UK grocery directors do not feel they are delivering in terms of quality, fresh produce highlighting a disconnect in replenishment strategies. In addition, with over 4 million tons of food being wasted every year in UK supermarkets, it is clear that retailers are not striking the balance needed and are throwing away profit in the process. This comes as no surprise when the replenishment strategies are very much driven by manual processes.