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10/22/2013

Kraft, Safeway Reap Benefits from Data Sharing

The results of the joint CGT and RIS News2013 Retailer / Supplier Shared Data Study are in, and early adopters on both sides are reaping compelling ROI benefits. What is unique about this research is that it surveys both retailers and using almost identical questions to ensure apples-to-apples comparisons. Now in its fourth year, the survey also helps CGT and RIS News to identify year-over-year trending patterns. This year’s results found that the progress continues to march forward, albeit a little slower than anticipated, particularly on the retail side. However, there is a lot of good news as well:
  1. More companies are standardized on a single approach/technology.
  2. Initiatives are more mature and have been in place three to five years or longer.
  3. The findings are powering projects in out-of-stock reductions as well as inventory and replenishment management strategies.
During the study’s accompanying web seminar, featuring both retailer and consumer packaged goods manufacturer perspectives, panelists divulged which data sharing initiatives are truly collaborative, and added real-world context to the research results. Whether you have been working with downstream data for a while or are new to the effort, this discussion provided valuable insights on how trading partners are leveraging insights for mutual benefit.

Kirsten Curtis, director of Demand Planning and Business Intelligence for Safeway, and Cheryl Stark, director, Customer Logistics Development at Kraft Foods, started out by sharing a case study about Kraft inventory at Safeway. Curtis revealed that out-of-stock inventory is highest on weekends naturally, using Kraft products as an example of trending availability. Stark explained that Kraft approached Safeway with an idea, resulting in a three-way partnership with Kraft, Safeway and RSi.

“What if we use RSi to predict when an item would be out of stock on the weekend and force product out to the stores to fill that hole in the shelf timing it exactly right when that hole was created,” proposed Stark. “What I want to do is just predict when that hole would be and fill that hole at the right time with that right demand.”

Within a couple weeks, the three companies created a report that predicted those out of stocks by item by store. Curtis and Stark went over the test methodology used during this process for example, segmenting stores into test stores and control stores. Curtis explained the results of a one-week test of Planters Peanuts in test stores versus control stores, conducted in March of 2013.

“We saw overall out of stocks reduced by 2.67 percent and overall sales increase by 38 percent,” she reported.

Curtis and Stark went into great detail about many other tests conducted for specific categories, including the very volatile coffee market, as well as the condiments category. As the partnership refines this process, there are some next steps Safeway and Kraft are taking to continue data sharing success. The companies hope to identify standard promotions for this process, standardize across vendors and continue to refine the algorithm and learning.

To listen to this web event in its entirety, click here.