Crowdsourcing shelf control app
Managing the shelf is a hard but inevitable task for any FMCG producer. According to ECR-Rus and ECR Europe researches, the average OOS (Out-Of-Shelf), for instance, in Russia is 15-18%. This means that in every moment of time one of six products could be not on the shelf of a supermarket or grocery store.
Customer satisfaction, especially for loyal ones, definitely worsens. Moreover, there is a huge risk of revenue loss. Not all customers are loyal enough to go find favourite product somewhere else or wait. More likely, their action would be buying another product, and – surprise! – that could be a competitor’s product. Manufacturer loss (decision of customer to buy another brand or to buy nothing) could sum up to more than 40% of all cases.
With these numbers multiplied, it's evident that up to 10% of sales could go to competitors.
A lot of FMCG producers are aware of this issue and make an attempt to improve their OSA (On-Shelf Availability). The first way is to address order fulfilment level (fulfilling orders from shops and retail chains at 100% level). Second, order accuracy is to be controlled – managing stock amount in every store at the level enough to fulfil consumer demand (off-take). Third and last, control of the on-shelf placing is needed – shop floor workers are not motivated for placement of a specific brand, so some items could be lost on the store warehouse, and not displayed on shelf.
But how can one control all of these ways of improving OSA? Order fulfillment service level is pretty easy to control: a “ordered-delivered” report from a ERP system could help with that. However, last two ways couldn’t be controlled by using a producer’s IT systems: only visual shelf control can help.
So, companies hire or contract merchandising teams focused on monitoring shelves and making adjustments in product placing. That is effective but not always efficient, as a lot of people need to be involved.
First attempt to solve the problem was done by us in a project with a TOP-3 Russian dairy producing company, Unimilk, in 2009.
The main idea was to introduce crowdsourcing shelf-control: with the help of Unimilk employees, their families and loyal customers, data would be gathered faster, thus allowing team of merchandisers to narrow the front line and focus on only bad-performing shops.
For the purpose of retrieving data from a “crowd”, processing and generating reports for the sales team, a call center have been established by FTO Group (of which Codenetix is a member). Up to 10,000 reports a month were processed, delivering necessary data for business decisions and actions of merchandising team.
As a result of this project and efforts made by customer sales / logistics team based on the data gathered, OSA level increased from 11% to 13%. At the same time sales volume increased by 4,7% (measured as difference of sales growth between focus and like-for-like SKUs).
However, in the era of smartphones and mobile apps, call centers are no more needed for accurate OSA measurement. In a project with the leading Danish ice-cream producer, Premier IS, Codenetix team developed a mobile app for crowdsourcing shelf-control.
As maximum user involvement is crucial for getting as much data as possible, app interface should have been done as crisp and simple as possible – and it have been developed that way. User flow from start screen to submitting the report takes just a few taps. Design, adjustable to producer' brand, offers a new level of customer engagement.
Life is done simple for analyst team as well: all master data management is done via API, connecting the app to customer ERP and retrieving data from it – retail chains, stores, products and focus lists. Convenient web-interface for data management allows analysts to check and make last-minute adjustments in just a few clicks.
Reporting is no longer needed to be manually prepared – data and graphs are presented in any cut in embedded reporting tool, and sent to a team by email in pre-configured mode.
As with Unimilk project, launch of the app on Premier IS products demonstrated substantial results and “proof of concept” for an idea of crowdsourcing OSA control. Decisive actions taken by customer team to improve OSA, based on the data gathered on the pilot start of the app, led to OSA increase by 9 percent points.