No green dots – no inventory
Wal-Mart…is turning up the pressure to keep its shelves adequately stocked by proposing to tie executive compensation to the issue — and has asked an outside auditor to alert workers which items to focus on by plastering U.S. stores with neon green dots.
Earlier this year, Bloomberg News reported that Wal-Mart had trouble keeping its stores stocked as it cut back on workers per store. That has cost sales and driven away frustrated shoppers. In April, Acosta, a Jacksonville, Florida-based consulting firm, began the green-dot program in Wal-Mart’s U.S. stores after previously conducting shelf audits without telling workers what items would be monitored…
“It’s like Tiffany’s falling down on quality,” said Wallace Hopp, associate dean of faculty and research at the Stephen M. Ross School of Business at the University of Michigan. “It’s the core of their essence. If you can’t manage inventory in retail, then you can’t manage retail…”
While Wal-Mart regularly cites OSA figures [on-shelf availability] to investors, the company has declined to say how it has calculated those rates in the past — although Acosta figures are at least part of them — or how it would do so in the future. The Acosta audits focus on about 700 important items, which makes it easier to achieve a higher percentage of in-stock merchandise than if the whole store were counted. Wal-Mart supercenters carry about 142,000 items, according to the company’s website, so a typical Acosta audit represents about one half of 1 percent of a store…
When Acosta began its Wal-Mart audits in 2011, it conducted them secretly, without telling store managers which items were being monitored or when. Each week, Acosta field auditors searched for a random list of 300 items out of 700 being monitored, according to a copy of Acosta’s rules at the time. They compiled data collected from most of the more than 4,000 Wal-Mart stores in the U.S…
Acosta’s standard secret audit was almost under way when plans changed suddenly. Tovar, the company spokesman, said Wal-Mart decided that, in this case, it would be better to have Acosta mark the items to be monitored with neon green stickers next to the prices on shelves.
“We thought by not letting the stores know, that we would get a clearer picture, but that wasn’t the case,” Tovar said. “What we learned is it’s actually better to have transparency with stores so they know the key items that particular time of year.”
What they ended up with, of course, is the green-dotted items being kept up-to-stock levels and more. And Acosta – apparently – functions like so many data mining companies by assuming absolute uniformity throughout the United States instead of allowing for regional trends and differences.
Here’s my little special note. A Wal-Mart superstore opened here about a year ago and they’ve had stocking problems from the gitgo. The silliest example being cheese. In our neck of the prairie the number #1 seller is always Monterey Jack. Cultural reasons rule. But, most stores usually carry decent provolone – which is my favorite all-round though mozzarella is a close #2.
Management thinks they should be selling lots of what Americans call “Swiss” Cheese. So, provolone would always disappear while stacks of Swiss ruled the cheese roost. I finally found someone high enough up the food chain inside the store who understood the regional and ethnic differences and he made a flying change in inventory min/max numbers that sorted out the cheese department for months. Until Acosta came back in the door.
Doing a little of our once-a-month Wal-Mart shopping today I found provolone had been allowed to run out, again – and the green dots had appeared at Swiss Cheese. So, I did what any traditional counter-culture foodie would and should do. Got one of the staff to check inventory for provolone. He found the stock and I put what I needed for the next 3 or 4 weeks into the shopping cart.
After he left, I pulled the green dot off the Swiss rack and stuck it onto the provolone hanger. Next visit should be interesting.
Aside from my counter-culture chuckles? Wal-Mart management knows damned well why their inventory fulfillment at the retail level sucks. It’s the inevitable result of laying off 20% of their employees to keep profits at a level acceptable to investors. There are not sufficient human-being-hours on the clock to do all the work required. 🙂
UPDATE: It’s been two months since I shifted that green dot from Swiss to Provolone. So, we’ve been back to the store twice. The first return visit I noticed a new green dot had been returned to prominence at the Swiss cheese – but, no one had disturbed the green dot I’d moved to Provolone. The latter was right up to stock and I bought four packages to carry me through the next month.
Today, our monthly visit found the green dot still in place where originally placed; but, since stocking Provolone also became a green dot priority, purchases had risen sufficiently that the store has doubled the quantity on display. I bought four packages for the next month. 🙂