Henry Ho and Rick West from Field Agent join Mike to discuss the role that retail audits play in understanding OSA.

How can you use crowd sourcing teams to provide in store audits that allow you to measure OSA and alert retail coverage teams to fix OSA issues? Henry and Rick provide some practical examples where in store audits teams play a valuable role.

Donnie Williams 0:04

Welcome to Season Two of the SCMRC Lead podcast featuring epic supply chain lessons from our industry partners. My name is Donnie Williams and I am the Executive Director of the Supply Chain Management Research Center in the Walton College at the University of Arkansas. Season Two of the podcast will be hosted by Mike Graen. Mike is the director of the retail supply chain initiative, and this is a strategic partnership within the SCMRC. The goal of this initiative is to surface the challenges and opportunities of on shelf availability or OSA, focusing on the concepts tools and technologies driving retail OSA. Season Two will feature a dynamic guest list of retailers, CPG suppliers, solution providers and industry leaders to drive collaborative efforts and advance learning within the industry. Thank you for joining and enjoy the podcast.

Mike Graen 1:01

Rick West 2:29

Thanks for having us.

Henry Ho 2:30

It's good to be here Mike

Mike Graen 2:31

Absolutely it is so good to see you guys again, we have worked together for a long, long time. We got a lot of stories that we can tell most of them, we probably can't tell on the podcast, but we're not going to do that. Here's the here's the fun thing before we get started into the topic at hand, which is what is the role that store audits play on on shelf availability. Here's what I like to ask. We're all customers at the end of the day. I went in a few weeks ago to buy a printer cartridge for my printer and found out that Walmart had all these printer cartridges but they didn't have the black one I needed. It's a very frustrating experience. I ended up going to Best Buy and finally finally purchasing it. And if they didn't have it, I probably go to Amazon. So I was frustrated. They I called, they told me they had it when I got there, they didn't have it. And it just it just created a really bad customer experience for me. Do you guys have any stories similar to that where you anticipate you needed something? You went to get it and they didn't have it and kind of how'd that make you feel? Because at the end of the day, I think we are all customers as well as industry experts in this area.

Rick West 3:44

For me, my wife and I just had one, two weekends ago, we were going to Branson we're gonna spend some time and so we're stopping by a neighborhood market just to pick up the final few things before we went into our kind of our week long away went into the protein area of the store. And Mike other than a package of sausage, and literally one package of chicken it was gone now, this was tied to the Friday Saturday snow plus. And so and you know what this like as a person faith and someone's trying to to give back we looked at it and said, I can't take that last package of chicken. I mean, we're gonna be those people. That's like, look, I've got the last package of chicken, but I looked at Kim and I was like, wow, this is really bad.

Mike Graen 4:34

Yeah.

Rick West 4:34

I mean, because it's one I mean, we talk about printer cartridges and that listen that's important. But this is like sustenance. Now we could have gotten frozen chicken and other things. But it just hit us like this is really down to the basic commodity basic things for people to live and Walmart's one of the best in the world. I can only imagine as I get into other areas of the country and other places that if you felt it you're pretty rural and this happened, you start to feel some severe anxiety as to wow, this is a bigger problem than I thought. And so it just, it was just one of those moments in our life that we look to each other. Like, this is a big problem.

Mike Graen 5:12

Yeah. So what do you do to get down to the spam aisle and get the cute cans of that? Or how?

Rick West 5:17

Well you know, we went the frozen route.

Mike Graen 5:20

Oh, okay.

Rick West 5:21

So you know, we would go pick up some frozen chicken, we had our, you know, grandkids are gonna spend time with us. So we could go the nuggets route, but my wife would rather cut up the chicken and do her own. And so we went to nugget round, we were fine. But yeah, it was just that little emotional point is that huh, it actually impacted us. It was the first time that we truly felt it as opposed to you know what, we'll figure this out. We'll order something. We'll be fine in a few days. But this was that moment.

Mike Graen 5:46

Yeah. Yeah. Well, what's fascinating, I shared this the other day at the class. Six to eight months ago, nobody knew what word supply chain meant. You've never heard the word supply chain. Now that's all you hear every news broadcast is of supply chain. And the reason Rick, your chicken was not on the shelf? Was those boats in the harbor those boats in the harbor, we haven't unloaded yet. That's the reason for the supply chain. Right. It's comical.

Rick West 6:15

Like really.

Mike Graen 6:16

Really, exactly, but you'll see, but you'll see that well. It's all those shipping containers. They got my chicken. No, I don't think they do.

Rick West 6:22

I don't think that's where it is.

Henry Ho 6:24

This chicken and then there's, you know, hardware stuff, right. My my experience, I'll talk about my experience with Lowe's. We're doing a home improvement project and with the Lowe's after I'd done some research saying that hey, this items in the store, you know, right online, told me it was in the store. And, and I went to the store, and it wasn't in the store. And that talked about frustration upon frustration. Right?

Mike Graen 6:53

Right.

Henry Ho 6:53

Because you think you did the right thing by checking ahead. And you show up to the store. It's not in the store. And so you know, what do you do? I've made a systemic change. Overall, the reason I even went to Lowe's was, that wasn't something I could get at Amazon, right. Or I didn't find it, Amazon. But I think that kind of the broader thing is, I've stopped going to the stores, in general, I buy probably 80% of non food items online. I just don't go to the stores anymore. You know, I was talking to somebody that worked here. The other day, he says, I can't remember the last time I went inside a Walmart. You know, so you're seeing consumers really starting to shift away from stores, depending on category.

Mike Graen 7:46

Yeah, absolutely. Great point. Great point. And that's a great segue into kind of the next question, because we're going to spend some time talking about your company, Field Agent and the role that you guys play on store audits to understand on shelf availability. But you also spend a lot of time with customers, end customers and you do research with the shoppers. Help me understand, based on the research, you guys are seeing what is the importance of shelf avail, we've just heard our two examples or three examples. But for today's customer who's shopping in a store, what role does on shelf availability play and the importance of that to them?

Rick West 8:24

I think Mike, to some degree, you are the poster child. Okay. And the poster child being is that there are we had a couple of instances where there's no toilet paper, or there's no I mean there are a few of those. But those are, those are extreme examples of these runs on things. But for the most part, what you start to hear people say is that, while I may have had loyalty, or have my favorite store, I switch so fast today, because I can't find it here, I'm gonna go somewhere else. Henry's points.

Mike Graen 8:57

When you need to switch, you don't mean switch a brand, you mean switch a retailer, right?

Rick West 9:00

I switched to retail, because if I want what I want, and I can't get what I want for the printer cartridge, or I can't get what I want for this, then I'll switch to Best Buy or somewhere else or eventually go online. And I think if I'm a retailer listening to this, you know, I'm certainly a little bit concerned like huh, people are not going to get a taste of other places. Whereas before I may have had some loyalty. And if I'm a brand, I think it's the same way. I could look at you know, Item A is what I really wanted, and it's not in stock, and I would have never tried the other brand, but I'm willing to try it today. So I think the concept of switching within when we talk to shoppers, switching retailers or switching brands, I think is at an all time high. Now I don't have a specific number quantitatively tell you what it is. But the feeling is is that while I had loyalty and I'd like to have it if I switched from Palmolive to P&G who really cares or if I go from primary brand to generic, maybe I'll do it because I need it now. And I'll just switch. I'm not going to wait two days or I'm not going to think it's going to work. Don't worry, it'll be in stock tomorrow. Well, I don't know that it will be I'm losing confidence. So switching is what we're starting to see to some degree.

So help me understand the difference the importance of the category plays, because I would imagine switching a paper towel, probably not a big deal, right? I need paper towels, if if Bounty's done in stock, I'll go pick up another private label, paper towel, whatever. But when I started talking about categories, like hair color, or dog food, or things that I'm putting into my body, or feeding my family or put in my pet, I'm imagining people become more brand loyal is there a is there a difference in the category in terms of whether you switch to go to another retailer, or switch to another brand.

Think of it in timing. So part of it, let's let's use mascara, as an example, because I was talking about this with someone the other day, is that if I'm out, and I've got to go out tonight, you'd be surprised like quick, because I have to have it, I have to have this, as opposed to I'm looking for something I'm running low, I may wait longer because well I am loyal to the brand. And I'll find other alternatives to that. So when you get into more of high consumption, quick turn pieces, and I need it now, you might need to switch into it pretty quick. And we're not talking about computers here and TV. I mean, there are things you would wait for. But much like the chicken or the print. If you needed the ink cartridge, you needed the ink cartridge, and you had to have it today and you waited that long or you went out of stock, you'd switch because you had that need needed to be met that day, two years ago, that was such a non conversation. Because within that category, I guarantee you they had it or they said listen, I'm gonna go to the backroom pull it out. I mean it was just right there today, there's a pretty good chance that Well, I don't know when I'm going to get that. And the number of times I've heard that at retail is like, we don't know. I mean, look at the the rage today, COVID test. I don't know. I mean I never thought I'd be ordering a COVID test in the US Postal Service. You got to be kidding. But you go to a Walmart or to a Harps or to a Walgreens and the signs are on the door you walk in, don't even ask us. We don't have this.

Right.

And that is pressing important today. And I may have been concerned and interested the type of test but I don't care right now. I just need something. And I think that's more of a norm. And that's what's changing I think behavior. And I don't know how quickly it's gonna get back, Mike.

That's great perspective. Great perspective. Henry, anything you want to add to that?

Yeah, I think I think this the research says switching is happening. I think Rick's point. And, you know, it hasn't really changed that much. I mean, in some ways. You know, availability has always been an important part. It's just more acute. Right? And so, I think if you look at it over time, yeah, there, you're gonna see probably movement in the data across shoppers, because it's more acute than ever. But availability has always been an issue. Right? We've been in the industry now for 40 years. That's right, Mike 40 years. And, you know, availability is important. It's always been important to shoppers.

Yep. That's great point. So let me switch a little bit. So the customer part of the research you do, I think is very helpful for a retailer and a brand owner to understand the impact of on shelf availability, and a lot of other factors as well. Help me understand the role that you guys play, and specifically, your company plays, Field Agent, when it comes to auditing shelves for either CPG brand owners to understand their current on shelf availability, or retailers, or both kind of what role do you play? And what are some of the things that you're seeing from from an industry point of view?

And Mike, I think the role we play is we provide the eyes and the ears, right to what's going on in the store. And, you know, the scale of retail and CPG these days, you know, if you got distribution in Walmart, you're in over 4000 stores, and nobody really including the retailer, really has collective eyes to understand the situation in their in their chain. And if you're a CPG company, then you don't know what's going on really across the entire country. And what we do at Field Agent is we provide people with a capability to see what's going on in the shelf on the for their category, and what shoppers think about what's going on, like things that we've just talked about. And so, you know, there's a, there's an old adage, you can't fix what you can't see, right. And what we do is we provide the visibility about what's going on. So that you have an opportunity to analyze the data and then decide a strategic direction to fixing either an acute right now kind of problem or a systemic problem.

That's powerful, that's powerful. The the idea behind that of using people to measure in store conditions, because you're right, the eyes are ultimately going to tell you if it's there or not. We use a lot of other technologies and robots and RFID technologies and algorithms, etc. But at the end of the day, I think where your stuff comes really into play very well, was those items that are critically important to the customer, but are low enough velocity, that things like algorithms ain't gonna work, right? Yeah. Because you can't, you can't use an algorithm on something that sells one or two a month, you just can't tell if it's out of stock or not. So why is the model that you guys are different different than any other the service providers, the Acosta's or the cross marks? I mean, they do the same thing. Why would somebody not use them instead of using you guys?

We're kind of the coverage cost of speed guys. If I'm if I'm a W two driven versus a crowdsourcing driven, or if I'm a more of a legacy company, I'm going to be in stores every week for the 1000 stores, but the other 2500 I'll get there every three or four weeks, or every two or three weeks. It's the old adage of you remember the movie Top Gun, and it's the end of the movie, and they're trying to get, you know, Mavericks jet, come up the ramp, he said, Hey, the catapults broken, we're gonna get repair it in 10 minutes, he said 10 minutes, this thing's over in two, he said, fix the catapult. Well, that's, that's where we come in is like, Hey, don't worry, I'll get to that in two or three weeks. And you're like, Are you kidding me? Based on the he said the keyword velocity based on the velocity and importance of my item, if I don't understand and fix that today, and we have eyes and plus, we can actually help people fix if I can't see and fix it today. It's already over. And you look at the magnitude of that. So we understand that there will always be a role for that legacy system to handle the big machine to go drive that. There will always also be an opportunity for us to come alongside especially the low velocity guys high high price, low velocity guys, to say by the time your algorithm figures this out, you're done. Because a retailer is not going to let us keep that big square open, where there's no inventory, they're going to move facings are going to change, all that is going to change and the algorithms important for the 80% of those products. But those other 10 20%, by the time the algorithm figures it out, you're three, four weeks in of nothing on the shelf. And we all know, you're huge, huge trouble. So that's number one. The second thing is, especially for the folks listening to this and you know, if you think about the supply chain guys coming in, not everyone can afford to spend millions of dollars a year for coverage. So for the other 90,000 brands that are out there that don't have a contract with a big brick and mortar. What are you going to do, you're going to continue to hope you're going to continue to Well, I really hope that someone's paying attention. So we come alongside in near real time to give great coverage cost and speed to virtually every supplier that can be in a retailer today. And that's where they can kind of breathe easy, because they don't have to sign a million dollar contract and make that happen. And that's our sweet spot.

Excellent. Excellent. Hey, I'm gonna let Ben ask a question here. But I've got a question Ben for you first. Were you even born when the movie Top Gun was done just just kind of thrown out there because we use that Top Gun analogy and we're all laughing like Well, of course we know what that is. But were you even born?

No, I don't think I was let me just google here.

It would have been in the 80s 84-85

Yeah, absolutely not

Way to know your audience request, Rick West. Way to go buddy.

A lot of yearrs.

I love it. Well,

that's a great movie and you should go see it.

Exactly.

I mean it's always been one of those movies it you got to see it but I haven't seen it yet. Most of the references pass over my head.

Well wait for wait for Top Gun 2 to come out. It's coming out sometime anyway. But Ben, you're sitting here listening to this as a supply chain student and and we spent some time earlier in the week kind of presenting some of the ideas behind the importance of on shelf availability. I'm gonna open it up to you see if you have any questions for either Rick or Henry.

Well, I do have some questions. I was wondering the way that you know, supply chain has been advancing, do you ever see availability becoming a non-issue? Like availability being so on target that most consumers never have to even consider it?

Ben I think that's, that's a great question. And I think some some people in the technology world will think that they can solve that. I think the answer for me is no. You know, availability will always be an issue for a variety of reasons. But just the nature of of keeping working capital down, right, and inventories down just in time, all those all those dynamics will always create outages, you know, when when supply, you know, demand and supply change on on you. And so, but can I get better? Yes. So that would be my answer.

Yeah, you know, this, if you've had any, you know, physics courses, you know, this that, the little law about a equal equal opposite reaction kind of thing commits were Henry's kind of implying, when you're living in the world that we live in pre COVID, specifically, when everything was a well oiled machine, it was just everything was like clockwork, your safety stock continues to go down, you're less concerned, you're less concerned, you're less concerned. And when you have a little tweak, and the Tweak happens, and the poster child for this was toilet paper bath tissue, there are finite machines that are running 24/7. And then the the actual true consumption of toilet paper and paper towels didn't change. But when you have a blip, and the blip happens, and it starts going back on that safety stock, they're like, Whoa, I can't go and spend $20-30 million this week, and go build a line and get it up in a week. That's that's a multi year capital conversation and oh, by the way, two months from now, consumption is gonna level out again, why would I do that? You find that with bicycle components, Shimano is telling us, Hey, I'm not gonna go build a new plant, because you guys in America said you wanted to go buy a bunch of bikes over COVID. And you drove my supply chain crazy. So those competing aspect of things are always going to be kind of kind of tough. And it's going to be ebbing and flowing. So I think Mike started off the conversation by saying, If you ignored supply chain in the past, you got to understand not only do they need to see that the table is that you're gonna go back, look at all those emails, remember all those meetings when they kept saying, be careful, because we're getting so close to the edge, that any abnormality is going to put a wrench in the system. They're like, yeah, we're fine. We're saving money, we're tight, we'll, we'll be good. And those conservative guys like, well, we probably went a little bit too far. Now, pendulum swing, right. That's what happens, Ben. So I think you're gonna see it swing not to mass about it in stock or safety stock. But you're gonna see a little bit more conservatism kicked back a little bit, especially for those items that are quick turn long lead time, you're gonna see a little bit of conservatism kick in.

Yeah. The other thing, Ben, I think, history. We mentioned earlier in the podcast that, hey, if you look at historically, availability and supply chain issues have been around forever, right? And over 40 years, you can argue that despite the investment of millions of dollars every year and billions of dollars through through 40 years, the supply chain system has actually gotten worse. Probably not better. Right. And so that that would be a great deep research when you do your PhD. You know, why, after spending billions and billions of dollars, over decades, the supply chain hasn't gotten better. Now, it's gonna require some bold initiatives and new vision to solve for getting it better. And I think that's the opportunity before us why you can't keep doing the same old thing and expect different results. And, and for decades, people have been doing the same old thing.

That's really interesting that you mentioned that the supply chain has gotten worse, because I've never heard that from one of my teachers. Could you can you go into a little bit more depth on what you mean by that?

Well, we have all these great computer systems managing inventory, right? And, and, you know, look, look where we are, I mean, again, COVID, you can say COVID a blip right in over a two year period over 40. But even pre COVID out of stocks were going crazy, right? And part of it is consumer behavior has changed. And when you go into a Walmart, and you see what the shelves look like in the morning, well, what's happening in the industry these days is the picking for these online orders take place early in the morning. And so the demand or the the supply chain is being pushed to an early part of the day used to be at the end of the day your sales are decimated. Now, many shells are picked over by, by 9, 10 o'clock in the morning. And it looks even worse at the end of the day after shoppers come in and shop the brick and mortar way. Right. And so there's a lot of changes that's creating pressure into the supply chain. But it hasn't gotten better,

Yeah so Ben from a history standpoint you know, Mike can speak to this because he was one of the pioneers in this is that there are a few step changes that have happened over the years. One would be the one Mike was involved in Henry was the that vendor managed inventory of really taking control all the way back through the system. And those are step changes. But what you find is, is that in general supply chain, still fairly simple, you make it, pack it, ship it right, I mean, it is relatively straightforward. And so then you can go back and look at lead times where it comes in. So it's basically the same thing. So there will be a step change that will happen again. And I'm not sure what that next one will be. That will make folks think Huh, this is really going to make a major change and how things play out. And I think it's going to be primarily driven with that lead time sourcing. I mean we've gotten so far with sourcing that if you're sourcing from China, you can't make a decision today. Well, will you see more sourcing come back into the US? Maybe, maybe. Will you see variety go down some so where you've got less SKU proliferation. So I can make three items. I've got a friend of mine that's in the analgesics category. He said guys I've got 24 sizes and items. But I'm in stock right now on three because the other 21 are like because it was just different price points. And so it forces that so you'll see those kinds of things change because the system is fairly consistent over time. And so maybe that's the big change we see over the next couple of years is just variety get a little bit tidier, like, okay, I can now handle that versus making it broad. But here's my great, great paper for you when you do your PhD.

That's right. That's right.

Thank you.

So so let me let me transition to a couple of things here. The first is I think most importantly, is give me some practical, real life examples of the work that Field Agent does to help CPG understand the store audit because, because to Ben your point, we're always going to be out of stock. We would love to have an environment where out of stocks go away. That's not reality, if you think all of us are waiting to retire, when we figure that out, that isn't going to happen it's absolutely not going to happen. But the Field Agent plays an important role, and I do I do want you guys to talk about it and promote your business a little bit because I believe you play a incredibly important role, especially for those lower velocity items to help retailers. Give us an example of what kind of output would that look like in terms of I need to understand if my I'll make it up Procter and Gamble Oil of Olay product is in all the Walmart stores, what do you do what give us some practical things that you guys do to collect that data and then provide that data back to your paying customer, which would be in this case P&G?

Well, I think a little bit is we can also give a little bit of a why outside of an algorithm. So let's use the Olay as an example. So you go out and we do check, we physically check, you know, 2500 stores. And we look at those stores then the question, well, it's not there. Well, the algorithm kind of hinted I had a problem. Well, then I can tell you was the price tag up? Maybe, maybe not. I've asked the store associate and it is in the backroom. No, or Yes, I mean, so. So part of what we can do is give a little bit of the why. As to how something's happening, or no, it's there's three items on the shelf you like so that fan amendment Tory thing is real Mike. Huh. I mean, so So part of it is the why that's an aspect to it. And that's that core item, but I'll also look at the the promotional side of it as well. It's an out of stock, but it's not it's that payout incentive display in. And if that display doesn't get out within one or two days and four or five weeks are going to be another display in and I've missed one or two weeks of selling. In theory that's a that's an out of stock of sorts, because I still have the one facing on the shelf, but I've got a display ready to come out. And if I don't get that out there, it feels the same way. It's like wait a minute. So why isn't my display selling? Well, because it's kind of out of stock, it's not on the shelf. And those are the things that we start to see that requires more near real time whys, so I can figure out what I need to do to solve it. And that's kind of where we come into play.

You know I think Rick, Rick hit on this near real time concept, right? And, and, with, with Field Agent, and kind of where we're going is, we want to create a marketplace where people can come in and ask that question about what's going on with my product, in store, go in and launch an audit, right, within minutes of hitting a website. And so there's no more I have to call my rep, who then has to call their team, and you know, maybe a week or two later, go out and get that information, we are creating a way a platform in which people can ask the question and get an answer back overnight, or within, yeah, or within a few hours, even, depending on the situation, right. And the model that we've created allows for that. The second point I would say is the thing that differentiates a field agent is the quality of the data that you get back. Right? We take great pride in saying, Hey, we only give you good data, you know, the quality and the speed combined, you know, together says you can act on this data, you know, and it's store level, kind of, it's not an aggregate kind of number, right? So we get down to the store level with quality data with speed. And now if you're ready to act on it, which we're working with clients to do that and say, if we give you that data, can you act on it and send arms and legs into the store next morning, for example, and get that problem taken care of? Right? That's never been available. And that's those are the systems and processes we're looking to create. Then for the future, where Hey, identify the problem, fix it right away.

And that is our new news is that like, we're finally at a point where we've got the right partnerships in place so that we can also do the fix. So we can check quickly, the marketplace is there. This is what's going on and actually create a fix as well. And we're going to see, as this thing continues to progress, they're going to talk about the other 90,000. Again, if if I'm a big player, I've got all kinds of bodies there. When I call them they'll do anything I want them to do the other 90 100,000 people that are out there, they can have the same power of a Unilever P&G is a craft, they go to a marketplace. And within hours, next day, they've got amazing data and a fix coming their way. And that simply wasn't available a year or so ago. It just wasn't. And so that's revolutionary for our clients to be able to that get that kind of access.

That's, that's game changing. Guys, it tells me that I was out of stock at an Oil of Olay three weeks ago. It's not real helpful. Now telling me I was out of stock, like yesterday, so I can fix it today. That's a game changer. Henry and Rick, thank you guys so much for your time, I really, really do appreciate it. And I think you're an important tool in the retailer and supplier tool bag to figure out what's really going on the shelf. Because there are so many issues, Ben, to your question, do you think it'll ever go away? It's never gonna go away. From my perspective, it'll never go to a point where it's a no longer an issue. It's always going to be an issue. And I think, you know, people like Henry and Rick have thought through this enough to create solutions to get that product back on the shelf. So guys, thank you very much for your time. I really do appreciate it and we look forward to to continuing the journey with you.

Thanks, Mike. Thanks, Ben. We'll see you.

Thank you for taking the time for this epic discussion. And a special thanks to Mike Graen for leading the retail supply chain initiative. On behalf of the Walton SCMRC, we are delighted to lead with you as we learn, engage, address and develop all things supply chain to lead the world of commerce from Northwest Arkansas. Have a great day.

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