Path to The Perfect Order

For at least a decade, retailers have chosen to invest in warehouse, transportation, and data synchronization systems as their strategy for optimizing their Demand Chain, selecting systems for their ability to deliver the most financial benefit for the least impact on store operations. Yet, 10 years later, out of stocks remain at nearly 8%, and inventory levels have not noticeably improved for those companies. Why? – The answer lies in store ordering practices.

Analysis of these optimization projects reveals two previously unanticipated phenomena:
· Store ordering practices have a much greater impact on out of stocks and inventory optimization and need to be better controlled.
· Unless the retailer gains control of store ordering practices, all promised benefits of Demand Chain optimization are jeopardized.
Recent adopters, therefore, have re-focused their efforts toward gaining greater control of store ordering practices, specifically through Computer Generated Ordering (CGO). And success has followed them. Retailers with an automated store ordering focus routinely report 0.5-1.35% increases in per store sales, 30% average decrease in inventory, and a nearly 80% reduction in out of stocks.
And word of this success is spreading within North America. Recent studies by AMR, IDC Global Retail Insights, and Retail Systems Research indicate that CGO is the number two priority for U.S. retailers over the next two years, with nearly half of the retailers surveyed either already testing limited forms of CGO or actively exploring its use in their organization.
The key to this success lies in constructing a unique process for each company, “The Path to the Perfect Order” from among a collection of best practices. Building on the concept of incremental benefits, this approach joins computer technology with in-store procedural changes in the least disruptive way possible to achieve manageable goals with the least risk.