Retailers are holding far too much safety stock in their ambient supply chains, logistics bosses have claimed.
Speaking at the IGD supply chain summit in London last week, Tesco retail and logistics director David Potts said warehouses where retailers stored large quantities of ambient stock would become a thing of the past over the next decade.
While fresh foods were consolidated or cross docked at depots and immediately distributed to stores, many ambient products were booked in, racked and stored for several days, he added: “If we run fresh food in a no stock environment, why are we holding 10 days’ worth of ambient grocery stock?”
Asda was also looking to radically reduce its ambient stockholding, said supply chain director Andy Ellis: “We want to convert our ambient sheds into the same stockless environment that we have created for temperature controlled products.”
While some slow-moving, low volume lines would probably always have to be racked and stored, faster moving lines such as crisps, cereals and soft drinks should not stop moving once they left the supplier’s factory or warehouse, he claimed. “We’re working with a couple of suppliers to achieve this now, but we still need to do some work to ensure that our systems can get stockless and stocked goods on the same vehicles.”
Ultimately, Tesco was aiming to halve the amount of stock held in its store warehouses, the real bottlenecks in the retail supply chain, said Potts. Great strides had already been made towards achieving this goal through the use of hand-held computers that helped improve book stock accuracy and prevented stores from ordering stock they didn’t need, he added.
However, if orders were to become more closely aligned to demand, suppliers would have to get used to receiving them later, he warned. “I know this is tough for suppliers, but ordering later means that orders are more likely to be accurate.” To this end, Tesco had reviewed each product area to assess the optimum time to place orders, he said.