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Tired of being blamed for empty shelves

A Fin24 user is tired of being blamed by his customers for having empty shelves in his store. He writes:

The reason why I contacted you is because I am actually so tired of my customers blaming me for not having product on my shelf.

Really, if you see how we were fighting this season to get product, these companies (suppliers), like Clover, are just getting off to easily.

It is actually not just me having this problem. There are plenty of guys in Mossel Bay who had the same problem.

This can lead to job losses and planning. At the end of the day it all comes down to nobody taking responsibility for their actions.

You must hear what one of the stores in Hartenbos told about when she phoned Jimmy Botes of Clover.

I couldn't believe that a someone from Clover is treating his customers like this.

Jimmy Botes, executive: commercial of Clover, responds:

Clover has invested the better part of R30m in upgrading and expanding our infrastructure in the Eastern Cape and George.

A top priority for Clover is its commitment the serve the region and its people with excellent service and provide access to exceptional quality products.
 
In Port Elizabeth (PE) we have increased our warehouse and distribution facility from 1 400 pallet spaces to 2 700 pallet spaces (more than double).

The massive expansion was undertaken to enable Clover in the Eastern Cape to carry enough “buffer stock” to better supply our much-valued customers in extraordinary demand periods.

We have also implemented a new warehouse management IT system to manage our stock levels better, to ensure that we have more accurate stock data for our supply chain planners.

This will allow a better prediction and supply of stock to our customers, especially in the peak periods.

We have purchased a new distribution facility in George and are in the final stages of upgrading it.

Unfortunately, the facility was not fully operational in December, but will empower Clover to better serve our George customers in the “peak” periods.

Botes also answered a few questions related to the issue:

Would you kindly elaborate on the reason for the shortages in stock over the festive season of especially Clover products? Have the suppliers not met the demand?

We have seen a nearly 30% growth in last December’s volume for our George branch versus the previous December’s volume.

Volume growth was up by about 60% more than the previous month (November 2013).

Changes in demand are generally very difficult to predict. All suppliers try their best, but with perishable products (short shelf-life products that we have to take back from stores if not sold before “best before date”), it remains an even more difficult feat.

With the increase in sales of about 30%, it is to be expected that suppliers will be under severe pressure to supply.

Remember that the “shortage” is a combination of several factors (not only our ability to produce).

For example the “shortages” can be the result of:
 
- The delay of our delivery vehicles by other retail stores and therefore we would not be able to deliver all the customers scheduled on that round (route);

- The late arrival of stock from factories due to insufficient primary transport contractors during December;

- Storing capacity of our stock in secondary warehouses – it can be filled with stock that is for some reason not selling as fast as we anticipated, and the running short of stock that is selling better than predicted;

- Insufficient delivery vehicles to cater for the spike in volumes. We rent all the short-term refrigerated delivery vehicles available in George over the December peak;

- Complexity on the truck: We have changed the delivery system in the Eastern Cape from a “bulk pick” to a “route pick” to ease the complexity at the back of our vehicles.

Have the owners not ordered their stock timeously?

Some owners do order stock timeously whereas others do not. At times, it is not a question of a timeous order being placed, but rather, a store’s inadequate “back-up” (storage facility).

As a result of this, the store is unable to carry sufficient stock for a week or more.

However, Clover does have a high delivery frequency – if stock is short supplied, it can easily be rectified on the next delivery.

When did you first find out about the situation?
 
The increased demand of volumes started very early – from month-end in November.

Usually we see a very sharp increase in volumes only after 16 December

What measures have your company employed to alleviate the shortages?

Several measures have been employed to “buffer” the “shortages”:
 
- It is a general request every year that all long-life products be ordered into the stores well in advance.

- Orders should be adjusted upwards to “bridge” the possibility that we might not be able to supply the particular SKU (Store Keeping Unit) with our next delivery.

(Clover believes that with our high delivery frequency we can generally rectify shortages with our next delivery.)

- In the case of Danabaai and Hartenbos, the respective stores receive two deliveries per week. The shortest shelf-life on our products is 12 days.

- Extra delivery vehicles were transported in to help with the deliveries caused by the long standing times at the bigger retail outlets.

- Additional labour was sourced to help with the picking and offloading of stock at warehouses.

- Primary logistic suppliers were pressurised to transport our stock from the factories to the delivery depots – in many cases we have managed to source extra deliveries and/or trucks.

- Many of our principals scheduled extra production runs to cater for the increased demand.

How many extra vehicles/staff did Clover employ in the Southern Cape to alleviate the additional demand over the festive season?

Clover's George standard fleet is 11 trucks. George increased their fleet by an additional five refrigerated 7-tonners for the December peak.

An attempt was made to secure an additional three vehicles, however, due to lack of supply or availability Clover was unable to source these.

An additional 28 people were employed at the George branch to assist with the larger loads.

What compensation can the retailers expect, considering that they were left without stock at a time when the demand was at its peak?

Unless retailers are prepared to commit to specific volumes that they foresee during the peak period, I think it will be unfair to expect any compensation from Clover.

This is a partnership where our retail partners are not the only parties suffering a loss of sales. Clover has also suffered lost sales.

We should embrace measures jointly in future to ensure that we as partners can better handle the unexpected peaks in demand.

This would ensure supply to our valuable consumers with the products that they rightly deserve.

How is it possible that a retailer would be invoiced for Clover products (including the extra ranges) when no deliveries were made?

The Clover invoicing system is accepted by all retailers and are audited by external auditors.

In short our invoicing system works a follows:

- All stock that was ordered will appear on the invoice;

- Stock that was “short” will be clearly indicated on the invoice and will be not be charged;

- Stock that is shown to be on the truck, but not received into the store (for whatever reason, could not be found, damaged, wrong flavour etc.) will be so indicated by the receiving manager and a credit will be passed.

How is it possible that an order may leave your depot in George without the necessary stock despite being invoiced for the goods?

On December 21  2013, 28 lines were short on orders invoiced to a Dana Bay OK Grocer.

As explained in the previous question, all out of stock (OOS) would show an asterix with no charge.

If we know the stock was loaded, but could not be found it at time of delivery (for whatever reason) this will be indicated on the invoice by the receiving manger of the store.

A credit for this stock will be passed during the recon process once the truck arrives back at the depot.

I have spoken to some of the guys who have made deliveries to Dana Bay, and they claimed that no store's deliveries could be pre-packed on a pallet to ease the deliveries.

Frankly, conditions within the delivery truck were shocking with boxes lying all over the floor.

I got the impression that even if the stock was in the truck, there was no way to trace it.

The picking method in PE was changed away from a “bulk pick” to a “route pick” to make it easier to find products on the truck.

The OK stores in question are ordering small volumes and a limited range of Clover and principal products.

Our larger customers are indeed picked (pre-packed) per customer on a pallet and delivered to store.

We have a couple of thousand customers - it is not possible to do this for all stores, as a result of space on the truck.

- Fin24

Disclaimer: All articles and letters published on MyFin24 have been independently written by members of the Fin24 community. The views of users published on Fin24 are therefore their own and do not necessarily represent those of Fin24.


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