Prioritize Core Items for Supply Chain Efficiency

None of us know when the CPG and retail industry will return to normal. We don’t yet know how much of the recent volume increase is panic loading vs increased consumption (i.e. more meals consumed at home) and how much of that behavior shift will continue once shelter-in-place restrictions are lifted. Some behaviors (like the increase in e-commerce) may never return to pre-COVID-19 levels. The one thing that is true through this crisis is that staple items have never been more important. Just look at what has happened to toilet paper, rice, soup and flour in your local store.

Given this uncertainty and the dependence of your consumers on your core items, now is the time to prioritize their supply.

Focusing on core skus eliminates line-switching downtime and reduces complexity for a manufacturing workforce already stretched thin. Distributors and retailers benefit from reduced complexity on the receiving end and by having enough key products to refill their shelves.

The shopper today wants to buy, and retailers want to stock key items, not flankers. Some retailers have already stopped ordering fringe SKUs as up to 40% of slotted items are not being ordered and shelves are being stocked with whatever is available. The prioritization of your top performers will help ensure those are your products and not your competitors.

This crisis illustrates the problem that has always been around: shelves are too full of line extensions that are not as efficient as base items. Now resets are being delayed and retailers do not have time to listen to new item pitches. In addition, innovation is expensive. A short-term freeze can increase cash flow to allow for investment in expanded distribution opportunities and cover any unexpected costs. Hopefully you have already cut trade promotions for the next few months, the topic of our previous blog post. 

Now is the time to organize and motivate your team to focus on supply chain efficiency and delivering your top skus to as many customers as possible, starting with your most important accounts, a topic we will address in our next post. 

How are you handling these tough conversations internally?  Reach out and let us know.