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Why On-Shelf Availability Is Critical for Retailers

Jim Crowell, director of the Supply Chain Management Research Center at the University of Arkansas, demonstrates why on-shelf availability is a critical metric for retailers.

For retailers, the notion of "in stock" is quite different from that of "on-shelf availability," according to Crowell. The former concerns whether product is in the building. While that might seem like a valuable metric, it misses out on the complexity of retailing today. So-called super centers might be displaying product in multiple locations, including at the register and at the ends of aisles. In addition, there are a variety of retail formats - including big-box, convenience and dollar stores among them - to consider. Add in the realities of technology and e-commerce, and it becomes increasingly difficult to determine exactly what constitutes a "shelf."

"In-stock could mean an item is on the premises but is in the back room," says Crowell, adding that there exists "a great abyss" between the mere presence of product and its availability to the consumer. Studies by the Grocery Manufacturers Association and participating retailers have helped to define some of the complexities involved in making stocking determinations today.

Beyond the physical shelf, retailers are beginning to offer order and pickup services that bypass traditional store setups. Response to online orders can be as quick as two to three hours. "Folks are starting to say, 'Let's get the inventory as close to the customer as we can,'" Crowell says. In theory, consumers can pick up product at multiple locations. Such a broad network of options is expected to become more prevalent in the years ahead.

For multichannel retailers, the challenge becomes how to support both kinds of order streams. Retailers are still grappling with the question of how to manage fulfillment to physical stores as well as the growing volume of internet orders. In addition, they are experimenting with different sizes of stores - yet another complication when it comes to executing efficient inventory management.

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Keywords: supply chain, retail supply chain, e-commerce, supply chain management, inventory management, inventory control, logistics management, supply chain planning, retail supply chain

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