Whole Foods experiencing growing pains with new ordering system
Thursday, February 01, 2018
Loyal Whole Foods customers are not happy. Their recent trips to the grocery store have been disappointing as they have been met with low inventory and empty shelves, giving the vibrant stores a rather dull feel.
Speculations about the store increased. Everything from its profits to acquisition by Amazon was questioned and analyzed all over again. A recent report from Business Insider shed some real light on the problem at last. They talked to Whole Foods employees about the empty aisles and the food shortages the stores seem to be facing.
It seems advanced technology is at the root of this problem. According to Whole Foods employees, order-to-shelf (OTS), a newly implemented inventory management system, is to blame.
The technology that is being heralded as the next big thing in supply chain innovation is facing major growing pains. This compact and controlled system is designed to shrink the need for backroom inventory.
OTS seeks to make the ordering process precise, saving hundreds of man-hours for jobs like restocking the shelves. In theory, it can streamline the whole supply chain and logistics systems, right from product purchases, to storage and shelving, display and sales.
The system is designed to help big chains like Whole Foods cut down on their logistics costs, manage inventory better, clear out their storage and reduce waste. To do this, the stores must implement the strict procedures that OTS is known for.
Whole Foods is not the only retailer to opt for OTS. More companies are beginning to see the value in this system where they can bypass storage and carry products directly from delivery trucks to the store shelves. This will free up their time to focus on customer service.
Yet it is customer service that seems to be suffering at Whole Foods. Other retailers are beginning to face the same issue. Storewide stocking issues are leading to angry customers and lost sales. Employees at the stores face the brunt of their ire, and this is crushing their morale.
Employees acknowledge that the application of OTS has led to significant reduction of back stock and wastage. But this also means that many items will be out of stock for a considerable duration. The system is meant to stock shelves with enough products and no extras, but what it has done is leave entire aisles to be empty at times.
Even the prepared-food section — which Whole Foods is known for — is suffering. The stock is not being refreshed in time, and the food looks stale.
Some analysts have speculated that Amazon's acquisition had caused a spike in shopper traffic. This has unfortunately collided with the OTS implementation, leading to the crisis. What started as a cost-saving technique and more central control over SCM seems to have backfired.
Embarrassed Whole Foods employees are hoping that Amazon will find a solution to the problem soon. Amazon is known for its ruthless business strategy and won't be happy with the losses that OTS has caused as some loyal customers are already turning elsewhere.
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