Availability, Availability, Availability
The retail cliche is very familiar, you cannot sell what is not on the shelf.
The channel consistently states it is a service based proposition to consumers and service promises are at the centre of every go-to-market strategy. In contrast, the channel has consistently, over many years, found itself offering periods of 75% availability and 10% of lines delivered through back orders. This undermines the basic trust message and service proposition to consumers on a day to day basis. This contradiction is a flaw in the supply chain approach. That even after a continuous cycle of availability crises throughout the last decade (Covid, containers, paper, and distribution closures), it means availability isn’t central to industry discussions, propositions and agreements.
The changing consumer has been addressed. Poor product availability was previously predominately an operational cost issue in B2B business supplies with consumers from catalogues more readily accepting back orders, however, now it is a sales challenge as consumers find it so easy to shop elsewhere. Simply, if “44% of consumers say they have switched or added another supermarket in the past year due to stock availability issues” (DHL, The Availability Effect) then they are taking those expectations and behaviours into business supplies.
It is worth clarifying two key metrics for availability. More commonly businesses track fill rate, the ability to fulfil the orders received. Less frequently, is the focus on the product availability rate i.e. what % of the range is in stock or ‘on the shelf’. This gives a guide to consumers ability to place an order and their likelihood to have shopped elsewhere.
Addressing the availability gap
The industry has moved from wholesaler-centric to reseller-centric, therefore, manufacturer and distributor need to address availability as the number one purpose of their relationship in the supply chain. To deliver this requires a change in expectations, new incentives and the development of new solutions.
Change expectations
History and precedent are often the basis of KPIs. It takes a step back to recognise when you need to break the expectations and reset the targets. 95% fill rate and 80% availability was the requirement when the industry was a closed shop and consumers didn’t have or want an alternative channel to shop in. That service level secured the full order and the consumer waited for the back order. However, now the breadth of range, visibility of stock and consumer buying habits mean these metrics are no longer sustainable. The modern solution has to present close to 100% on both availability and fill rate, even if that means stock moving from different locations and by different methods. A collective reset of expectations provides the jot to the system to develop the new ways of working to deliver it.
New incentives
If availability is the number one purpose in the relationship, then that should be reflected in the commercial agreement and investment. Availability rates should drive higher rebates, redirect marketing spend into operational spend to stay in stock, and reward production, operations and inventory to deliver the change. This change would create a senior and collective buy-in for new solutions, deliver a pillar of a sales growth strategy, and reduce the hidden costs throughout all the supply chain that poor availability generates.
New solutions
These new expectations on availability and a commercial agreement focus would foster new solutions in the best manufacturers and distributors. The time from production to distributor pick face would fall, the ability to adapt to spikes would increase, and flexibility within logistics would increase driven by commercial investment and commercial benefit. Mutual investment in a wide variety of potential improvements across goods presentation, flexibility in receipt and processing, accelerating delivery times, safety stock, and data sharing. It will close the gap between a manufacturer today being able to ship to a consumer within 24 hours but it taking 2 weeks to become available through distribution. Plus, it will build resilience into the supply channel to cope with inevitable future disruption
Summary
100% availability is an El Dorado to be strived for but never reached. Nevertheless, the start point is to acknowledge the important role availability plays in sales results. Then by challenging and changing our expectations, employing new incentives and developing new solutions, it will reduce the number of reseller consumers switching out of the channel. Availability, Availability, Availability should be a clarion call for action as we head towards 2027.