The industry continues to trend toward fresh, yet some grocers seem reticentto embrace the technology that would allow them to really profit.
By Jeff Stout and David Mader
The grocery industry is moving toward fresh for several reasons. First, consumers have become more discriminating shoppers. This is partly due to the ongoing trend of foodies who are better educated about food and have been early promoters of locally grown produce and farmers’ markets.
The rapid growth in organic foods has further segmented the market and often drawn away the most profitable shoppers from traditional grocers to more specialized stores. And of course, profits are the second—and probably the most important—reason grocers are going fresh.
Mark-ups are also much better on produce, meats and bakery than in any other area of the store so the longer fresh product can stay on the shelves, the better the chance to sell it. Each day these products are left sitting in a warehouse reduces the opportunity to sell them.
Research tells us the two main reasons someone shops at a particular store are the appeal of the storefront itself along with the fresh areas of the store. This information has not been lost on Winn-Dixie, which several years ago realized it was losing many of its higher-end fresh shoppers because the stores appeared old and worn, and so did the perishable products. After extensive research, Winn-Dixie redesigned its storefronts to be more open and appealing and re-designed the interiors to be brighter and nicer with a strong emphasis on large, inviting fresh departments.
So while a growing segment of the industry is moving toward fresh, many are trying to do it using stale techniques and processes. It is difficult to increase shelf life with the same manual steps of receiving product, slotting, picking and shipping—not to mention the number of touches each product is subject to before it arrives in the store. Imagine, if instead of receiving product and keeping it in the warehouse until you receive orders, you knew exactly what product was coming in when, based upon demand, and could move it from receiving to delivery in just hours, rather than days? This is just one benefit of flow distribution that is making fresh a reality in the grocery industry.
If fresh is your objective, then flow distribution is the way to get there. Flow jumpstarts your entire warehouse operation, removes unnecessary touches and smoothes out labor crunches, resulting in more efficient and cost-effective inventory control—while adding days of shelf life to fresh product. It starts with Advanced Shipping Notices (ASNs) that the industry has tended to avoid for fresh because of the perceived technology investment required to employ the benefits of ASNs.
However, grocers can request that ASNs be created by vendors and/or farmers and provided in advance of any shipment. The ASN label affixed to the product box can include lot numbers, expiration and code dates, as well as a list of specific contents. This is a game-changer. Suddenly you have total visibility of your orders. You know when they will arrive and can now plan your labor accordingly, unraveling the congestion and minimizing idle time. This evens out the crunches and reduces overtime, staffing levels and overhead.
Knowing when and where your fresh produce is at all times also allows you to better schedule receiving as well as deliveries to the stores. Such knowledge means you can better plan dock capacity, driver and equipment availability, increasing efficiency and further reducing overhead.
By employing technology that permits ASNs, you can also utilize RF (radio frequency) handheld devices that scan the ASN label and immediately record vital information. This alone reduces the potential for error and exponentially increases the speed and efficiency of receiving and tracking. You will still do validation, but as you work with ASNs you will find validation is more and more simple.
When it comes to produce, you are always fighting against the clock. Flow distribution is all about speeding fresh product into and out of the DC or warehouse. Using flow will enable you to utilize cross-docking, which plans for each shipment, so when it arrives it goes from the receiving dock to the shipping dock without stopping in the warehouse. This adds additional days of fresh, meaning more selling opportunities and a longer shelf life.
Jeff Stout is a solutions architect and David Mader is a principal solutions consultant for Manhattan Associates.