Finding Root Causes of Replenishment Issues

Learn about: 

• The Out of Stock – Root Cause App in Retail Link

• How to use the dashboard to track replenishment issues

• What to do once you’ve gathered the information 

• • *Out of Stock – Root Cause Dashboard Results

Store instock metrics are the defining moment of a supply plan. Setting aside anomalous events like weather and other force majeure circumstances, a successful supply plan should always result in inventory availability at stores when the consumer plans to purchase. 

But what happens when something goes wrong? What if your company does everything “right,” and you still find your instock metrics below acceptable levels? In these circumstances, it’s necessary to follow a formal root cause analysis to determine what, specifically, is leading to the deficiencies. 

A root cause analysis aims to determine what the name suggests: the source leading to any unexpected or undesirable result. You can use this analysis for virtually any investigation. Thankfully, Retail Link contains several tools and methodologies designed to address these deficiencies specifically.

Out of Stock – Root Cause Dashboard

Before introducing this tool, Walmart forced suppliers to download and examine significant volumes of item-level and store-level data to determine the root cause for instock deficiencies. The Out of Stock – Root Cause Dashboard provides the supplier with top-level guidance on the various factors that can cause instock defects. With this initial guidance, suppliers can concentrate on the specific causes that they can control.

Let’s examine the Out of Stock – Root Cause Dashboard in Retail Link.

Populating the Out of Stock – Root Cause Dashboard

To access the Out Of Stock – Root Cause Dashboard, find the Out of Stock – Root Cause Dashboard Application icon in your Apps menu on Retail Link. You can do this by searching for “out of stock” in the Apps search bar at the top.

How to access the Out of Stock – Root Cause Dashboard

When the dashboard loads, no data will appear. You must apply specific filters to see the relevant data. The dashboard allows suppliers to investigate out-of-stock data at various levels, such as item, 9-digit vendor number, and location. 

To populate the dashboard, click on the icon with the three horizontal lines in the upper left corner. You can apply any of the item filters displayed below. Alternatively, you can search instock root cause by location. Click Apply to see the relevant out-of-stock data. 

Item filters:

• Business unit (BU)
• Supplier business unit (SBU)
• Department
• 9 Digit Vendor number
• Category
• Fineline
• Consumer ID (CID)
• Item Number

Apply filters to view relevant out-of-stock data.

Dashboard results

The chart below shows the current instock performance and a separate column for each of the root causes that makes up the difference between the current instock and 100%, known as a waterfall chart. 

You can hover over any of the columns to further break down the root cause associated with that bucket. Click on any column to see the lower-level analyses illustrated on a graph. The definitions of all the buckets viewable in the waterfall are listed below.

Out of Stock – Root Cause Dashboard Results

Note: You might not see all of the columns listed below. The waterfall chart only displays columns that have data assigned to that bucket. Retail Link denotes the accountability for each bucket as either Walmart, Supplier, or Walmart/Supplier.

• Instock – Indicates your current Instock performance for the filter you selected. The difference between this number and 100% is your total out-of-stock. Retail Link breaks down the out-of-stock deficiencies in the subsequent columns.
• Modular – Indicates how much the out-of-stock is due to modular factors. Several factors can impact your instock numbers. Examples of modular impacts are:
  • End of Life (Walmart) – The product is transitioning off of modulars. Since an item is dropping from the modular, Walmart will eventually stop buying the item. This transition will lead to instock deficiencies until the item formally leaves the modular.
  • Validity (Walmart/Supplier) – Item setup issues or replenishment settings are impacting availability. You should verify that replenishment settings align with Walmart’s guidance. Collaborate with your Replenishment Manager for any issues in this bucket.
  • DC DRP (Walmart) – This is a “do not replenish” flag at the DC level. DCs will not order items with this status. If you did not expect this flag, collaborate with your Replenishment Manager for resolution or clarification.
  • Store DRP (Walmart) – This is a “do not replenish” flag at the store level. Similar to DC DRP, stores will not order items with this status. If you did not expect this flag, collaborate with your Replenishment Manager for resolution or clarification.
  • DC CWO-DC (Walmart) – The “Cancel When Out” indicator blocks flow from the DC to the store. Items in this status will not receive orders once the DCs are out of stock. If you did not expect this flag, collaborate with your Replenishment Manager for resolution or clarification.
  • CID Instock (Walmart/Supplier) – The product is out of stock, but another item in the CID is in stock. If one supplier cannot fulfill orders, certain products can replace the out-of-stock item on the shelves. 
  • Prime Change (Walmart) – The prime product changed within the lead time. This change occurs when there is more than one variation of an item. An example would be items that you might fulfill domestically for part of the year and via direct import channels for the remainder of the year. If the prime item changes while orders are in transit, you might see out-of-stock data assigned to this bucket.
  • Low Store Count (Walmart/Supplier) – Less than a 15-store count is in the servicing DC. Low store count is a problematic root cause to troubleshoot. Since DCs can only order entire vendor packs, large pack sizes can prevent low-volume DCs from ordering even though some stores need the product. A potential solution to this issue could be a change in the vendor pack quantity, allowing DCs to order smaller amounts.
  • New DFU (Walmart) –A new item store became effective within lead time. If new stores become effective during the transit of open orders, there might be temporary instock issues until the replenishment system has a chance to place orders for the new stores.
  • Recent Mod (Walmart) – The modular recently went through a change. While Walmart typically communicates this change to suppliers prior, it isn’t uncommon for unexpected changes to occur. An example would be an expansion of modular linear feet, resulting in more facings for your product. In this instance, your item could experience sharp declines in instock until the replenishment system has a chance to place orders for the additional facings.
• Forecast – Indicates how much out-of-stock is due to forecast factors.
  • Forecast (Walmart/Supplier) – Walmart or the supplier under-forecasted the item, there was an unexpected sales spike, or there is insufficient safety stock. You should monitor your sales forecasts weekly and communicate any discrepancies or concerns with the Replenishment Manager for resolution.
  • Low SS (Walmart/Supplier) – The items sold more than forecasted because the sales of more than one unit occurred for low volume items that hold one unit or fewer of safety stock. This safety stock is a problematic root cause to resolve. Large, bulky goods have less space for safety stock. If only one item can fit on the sales floor at a time, any unanticipated sales can force out of stock issues. 
• Supplier – Indicates how much out-of-stock is due solely to supplier factors. Several of the reasons listed above have accountability assigned to both Walmart and the supplier. However, the formal accountability for these reasons lies with the supplier.
  • In Full (Supplier) – Walmart did not receive the order in full (according to the original order quantity for system-generated orders). You should align with both the Corporate POS Forecast and the Supply Plan weekly. Communicate any discrepancies or concerns with the Replenishment Manager for resolution.
    • Monitor the OTIF Scorecard for more detailed information.
  • On Time (Supplier) – Walmart did not receive the order on time (according to the original MABD for system-generated orders). Walmart strives to maintain just enough inventory to avoid out-of-stock situations. To achieve this, it relies on its suppliers to have the product available and delivered within the acceptable delivery window.
    • Monitor the OTIF Scorecard for more detailed information.
  • Return to DC (Supplier) – The product returned from the store to DC due to defect or damage. You should ensure that you ship cases in containers that are sufficient to prevent damage during transit.
  • Recall (Supplier) – There is a recall for the product.
• Logistics – Indicates how much out-of-stock is due to Walmart supply chain factors. These issues are primarily in Walmart’s accountability bucket, though you should work with your Replenishment Manager to address any concerns and potential solutions.
  • Collect On Time (Walmart/Supplier) – Walmart’s supply chain delivered the order after the MABD. While this is in Walmart’s accountability bucket, incorrect lead time settings could be preventing inventory from arriving within the delivery window. You should conduct a Lead Time Audit to ensure that lead times are correct.
  • Import Collect On Time (Walmart/Supplier) – Walmart’s supply chain delivered the import order after the MABD. Suppliers are only responsible for delivering direct import orders to the port. Incorrect lead times or force majeure events can lead to orders arriving outside of the established delivery window.
• Store Ops –Indicates how much out-of-stock is due to store operations factors.
  • OH Adjustments (Walmart) – A store associate or the phantom inventory management system created a negative phantom inventory adjustment. On-hand adjustments can lead to sudden drops in instock until the replenishment system has a chance to place new orders.
  • Store Markdowns (Walmart) – Store markdowns generated unexpected DC demand. While you can anticipate some markdowns, stores have wide latitude to control their individual markdown events. Sudden markdowns can result in either higher than forecasted sales or a sharp decrease in inventory.
  • Manual Orders (Walmart) – Store manual orders exhausted the DC inventory. Unforecasted events like this can cause sudden drops in instock levels until the replenishment system has a chance to place new orders.

What’s next?

While the Out of Stock – Root Cause Dashboard does provide insight into specific causes, the exact root cause might require additional research and understanding. Use the following tools to drill down further into specific root causes. 

• OTIF Scorecard – Since much of the supplier-owned accountability centers around on-time and in-full delivery of purchase orders, the OTIF Scorecard is a great place to gain additional insight into specific areas of potential improvement.
• Decision Support Systems (DSS) – Building a store-level query can show suppliers exactly where the deficiencies occur. This insight can help resolve the instock deficiencies on a more granular level rather than making changes at the DC level.

To resolve any out-of-stock scenarios, it is likely that you will need to enlist the assistance of your Replenishment Manager. Once you have done your root cause analysis, resolve what you can internally, and reach out to your RM with recommendations and the supporting research to help resolve any issues which require their intervention.

As a supplier, the easiest and quickest way to improve instock deficiencies is by concentrating on the actions that are within your control. Suppliers must focus on OTIF performance before engaging the Replenishment Manager for intervention. If, after resolving those actions within your control, out-of-stock issues still exist, you can then enlist your RM’s support.

Predict and avoid out-of-stocks

With SupplyPike’s Retail Intelligence app, you can predict and avoid out-of-stocks with ease. View reports like a traited versus valid map of stores, including which ones have no stock.

Retail Intelligence – Walmart Traited vs. Valid map

View on-shelf availability and track phantom inventory

Retail Intelligence – On-Shelf Availability

All reports are downloadable and easy to present. Take them to your Replenishment Manager and find your root causes. Get started today for free!**