Bare Shelves at Walmart? $1.14 Billion in Strawberry Losses! What’s the Connection?

A story in Kevin Coupe’s Morning News Beat references Bloomberg as saying that: at a February 1, 2013 internal Walmart meeting, US CEO Bill Simon said that keeping shelves stocked has become a big problem, is “getting worse,” and is a “self-inflicted wound” that is the company’s “biggest risk.”

Where are my groceries?

Where are my groceries?

According to the piece, Walmart “has been trying to improve its restocking efforts since at least 2011, hiring consultants to walk the aisles and track whether hundreds of items are available. It even reassigned store greeters to replenish merchandise. The restocking challenge emerged as Wal-Mart was returning more merchandise to shelves after a previous effort to de-clutter its stores. Walmart’s inability to keep its shelves stocked coincides with slowing sales growth.”

While Bloomberg reports that Simon’s comments are taken from official minutes of the meeting, company spokesman David Tovar said they were “personal notes from one participant in the meeting and are not official company minutes,” and said that “there are a number of significant misinterpretations and misleading statements that do not accurately reflect the comments by Bill Simon or any other participant in the meeting.”

Tovar said that Walmart is happy with its in-stock positions.

Mr. Coupe then opines: No disrespect to Walmart, but I believe Tovar about as far as I can throw a supercenter. I’ve gotten a number of emails from folks in recent months suggesting that out-of-stocks has become a growing problem for Walmart, one that it has a hard time dealing with.

Coincidently, FreshPlaza recently reported that Walmart is donating $3 million to the University of Arkansas’ Center for Agricultural and Rural Sustainability to create and manage a national competitive grants program, awarding money for projects that will, among other things, expand where strawberries can be grown, enabling shorter trips for the berries between farm and consumer.

The story mentions that: “Strawberries are a highly perishable fruit with a short shelf life in the supply chain,” said Curt Rom, a horticulture professor for the Division of Agriculture, and part of the center’s leadership team. “Strawberries travel an average distance up to or exceeding 3,000 miles from farm to market.” Though prized for their delicate taste and texture, those same qualities can be the berries’ weakness – especially when hauled thousands of miles. It’s estimated that between the time the berries are picked to the time they reach the consumer, losses can reach 36 percent, with an annual value of $1.14 billion, Rom said.

Wow! $1.14 billion in losses – 36% of what’s harvested – between harvest and the consumer? Yikes, that’s a lot of berries! That’s a lot of money! Other academic and industry research shows that half of this loss is due to improper temperature management. One potential consequence of this loss: out-of-stocks.  If you’re a retailer and you’re expecting pallets of strawberries to replenish your shelves and discover upon delivery that they’ve spoiled, you may end up with an empty shelf and an unhappy customer who will turn to another retailer to buy their strawberries.

To be clear, I’m not suggesting that any Walmart out-of-stocks are specifically strawberries but the connection between the two stories is meant to drive home a point about the complexities and challenges associated with managing the supply chain to keep inventory in stock. If it is difficult to do for non-perishable items, imagine how much more challenging it is to ensure your high value produce, meat, seafood, poultry and dairy can be.

Kevin Payne
Senior Director of Marketing

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Monetizing the Risks of Food Safety and Traceability

Before you eat that...

Before you eat that…

Yum! Brands, owners of KFC, Taco Bell and Pizza Hut is suffering a significant brand hit due to issues associated with chicken suppliers in China who delivered product to local KFC restaurants that was apparently tainted with too much antibiotics. According to Yum! Brands, it has terminated its relationship with the supplier (Liuhe Group) and will work with others to phase out smaller suppliers and put a more stringent emphasis on food safety. The damage, however, was done…to the bottom line.

We’ve talked frequently with prospective customers, journalists and analysts about the potential costs of a food safety/recall issue on a major global brand.  This story that appeared on the Bloomberg website on February 25 documents some of those costs:

  • Sales at locations in China open at least 12 months fell 6% in the fourth quarter, the first quarterly drop in three years.
  • Comparable store sales in China may decline 25% in the first quarter.
  • Yum stock on the New York Stock Exchange fell after the news from  $66.32 to $64.35 before rebounding slightly.
  • The stock value has dropped 2.5% this year while the S&P Restaurants index gained 4.2%.

It’s hard to say what the long term impact will be for KFC in China and the Yum! Brands family of companies worldwide but the point is clear: Sure, this happened in China but the news is now global. Would you think twice about going into a KFC in California or New York? I admit, I would wonder. If you’re a global, national or even regional brand, you simply must think about this because it could happen to you.

This is yet another example of the critical importance of being able to monitor and manage the cold supply chain. In this case, the product was apparently adulterated with antibiotics. What if it had been salmonella? Listeria?  There are simply too many suppliers, too many linkages from production to retail to rely on antiquated monitoring systems and an incomplete view of your supply chain. You need the data to protect yourself, your reputation and your customers.  Electronic data records captured by tracking the product from the supplier through every leg of the supply chain provides not only information about the supplier but also about proper handling that helps ensure food safety.

It will be interested to see what the long term impacts are…not only on Yum but for the other major global brands who, hopefully, look at this news and take measures to ensure that the next story isn’t about them.

PS: On February 27, World Poultry announced that KFC has cut more than 1,000 farms from its supplier network in China in a measure to ensure food safety following the recent tainted chicken scandal.

Kevin Payne
Senior Director of Marketing

 

Consumers Are Willing to Pay More for Fresh, Sustainable Packaging But…

Packaging is only one component of ensuring freshness and quality

Packaging is only one component of ensuring freshness and quality

Consumers are interested in fresher, higher quality produce. According to an article in Progressive Grocer: consumers are likely to pay more for value-added features that relate to freshness and sustainability, according to a global study conducted by Ipsos InnoQuest. When asked which potential packaging features would motivate them to spend more, consumers indicated they would be inclined to pay more for packaging that:

  • Keeps food fresh longer (55 percent)
  • Is environmentally friendly (55 percent)
  • Is re-usable (42 percent)
  • Is easier to use (39 percent)

In the article, Lauren Demar, Global CEO of Ipsos Innoquest says: Packaging plays a key role in consumer packaged goods innovation, whether marketers are introducing new products or trying to invigorate existing brands. As a key driver in the consumer’s decision to buy, packaging features can often be leveraged to charge a premium. Demar then goes on to suggest that, because consumers place a higher value on packaging that preserves freshness and provides environmental benefits, marketers may have the opportunity “to win over consumers and increase revenues through innovative package designs that deliver sustainability of freshness as well as sustainability of the planet.”

Improving packaging is important but it is only one factor in ensuring that perishable foods are kept fresh. Simply having a super package with lining materials that reduce ethylene (for example) doesn’t do anything to reduce or eliminate issues related to temperature mishandling that can dramatically impact freshness, quality and food safety. While it’s great to see that consumers say that they are willing to spend a bit more for the benefits above, it’s not reasonable for the consumer to understand all of the elements that go into delivering fresh, high quality food.  That’s up to the industry to manage and the consumers look to retailers and brand owners to deliver on this promise.  Learn more about the impact of temperature on quality here.

Kevin Payne
Senior Director of Marketing

Using RFID Tags to Improve IT Asset Management

Keeping track of high value or difficult to locate assets represents a huge challenge to a variety of industries and Information Technology is not immune.  Locating servers, laptops, blades, storage, etc. can be time consuming and costly.  Our guest blogger, Jackie Luo, CEO of Intelleflex partner E-ISG Asset Intelligence provides perspectives on how RFID can help.  Take it away Jackie….

Managing Your IT Assets Can Be Made Simpler with RFID

Managing Your IT Assets Can Be Made Simpler with RFID

 

RFID-enabling data centers are on the way to becoming a $1 billion business. A new survey released by Frost & Sullivan says that the RFID data center market was worth $96.3 million last year, and will grow to $953 million in 2017. The declining cost and increasing performance of RFID tags are coming at the time when IT hardware asset tracking is facing significant challenges from all fronts. That’s why this represents a perfect opportunity for the RFID technology to expand its scale.

There are several forces that challenge the task of accurately tracking IT hardware assets in an enterprise:

  • The shortened lifecycle of computing devices due to more frequent upgrades. The shortened lifecycle applies to not only the individual computing devices such as laptops and mobile phones, but also servers and other hardware equipment in data centers.
  • The security risks posed by unrecognized devices accessing the network. These could be devices brought by individual departments that haven’t made it into the asset registry. They could be devices that have been brought to work by employees (Bring Your Own Devices).
  • The regulatory requirements for IT departments to maintain accurate count of machines that have access to corporate data such as Sarbanes Oxley. There are more requirements for specific industries like financial services, government and government contractors, and healthcare.

To overcome the challenge of maintaining an accurate count of IT hardware inventory, IT departments need to find a cost effective way to conduct more frequent inventory audits. For the IT department, inventory audits have always been a big hassle, if not a disruptive task. They need to send out emails asking people to report their devices. They need to send out people to secured data rooms to monitor the manual inventory audit, which usually takes weeks to complete because IT departments are always short staffed. The servers and blades in data rooms are hard to tag because of their shapes. The serial numbers are hardly visible.

RFID tags and readers can now solve this problem cost effectively. There are passive RFID tags, such as Battery Assisted Passive tags (BAP), which cost less than active tags but have longer reading range. Their performance is more reliable around metal objects like racks and servers. With these battery assisted passive RFID tags, one can use an RFID reader to finish inventorying a data room in a couple of hours instead of a few weeks. More importantly, the process is not disruptive to a normal work day, so IT departments can perform an audit more frequently. IT departments can also tag the individual devices with these types of RFID tags. Similarly, they can also try to perform spot inventory auditing more frequently. They may not capture all the individual devices, but they will add more interim location data of these devices to the asset history.

There is still a lot of myth associated with RFID. Fortunately, most of the assumptions about the cost and performance of RFID tags are inaccurate. For IT departments, it’s time to evaluate RFID-based solutions and consider taking advantages of the technology. For more information, you can download a recently published white paper Why has the development in RFID technology made asset management more urgent?

Jackie Luo – CEO
E-ISG Asset Intelligence

Jackie Luo, CEO, E-ISG Asset Intelligence

Jackie Luo, CEO, E-ISG Asset Intelligence

 

 

 

 

E-ISG Asset Intelligence provides IT asset management solutions that track the lifecycle information of IT hardware and software. Their solutions have integrated the Intelleflex Cloud based ZEST® Data Services, and can therefore connect to RFID readers out of box. You can reach Jackie at jackie.luo@e-isg.com

US Ambassador Visits Intelleflex at Fruit Logistica

It was a special day at the Intelleflex stand at Fruit Logistica as Philip Murphy, the US Ambassador to Germany came by to greet the team.

Kevin Payne, US Ambassador Philip Murphy, Erik Cotman and Stephen Dunphy

Kevin Payne, US Ambassador Philip Murphy, Erik Cotman and Stephen Dunphy

The Ambassador was touring the US Pavilion at the show. Tens of thousands of people are at the show which concludes on Friday.

Kevin Payne

Senior Director of Marketing

Fruit Logistica Impresses

Fruit Logistica, the largest fruit and produce show in the world, is underway in Berlin and it doesn’t disappoint.  Spanning some 19 halls and hosting tens of thousands of visitors, it’s almost a spectacle that compares to something like the Mobile World Congress, CeBit or Comdex in its prime except, instead of computers and cellphones, it’s acres of apples, lettuce, grapes, berries and every other conceivable type of fruit and vegetable.

If you're in Berlin, visit us in Hall 23 at stand A-03.

If you’re in Berlin, visit us in Hall 23 at stand A-03.

I’m amazed at the expanse of people that we met with yesterday from those local to Germany and as far away as Vietnam, Australia and Peru.  Many of them were interested in new approaches to improving quality and delivered freshness using wireless temperature monitoring which we explained in English, German, Dutch, Gaelic, French and bits and pieces of other languages.

It’s quite an experience.  If you’re in the neighborhood, visit us in Hall 23 – The USA Pavilion – stand A-03.

Kevin Payne
Senior Director of Marketing

 

Recalls, Grocers, FSMA and the Guilty Parties

Earlier this week, several publications including The USA Today and The Wall Street Journal reported on findings from the Centers for Disease Control relating to food safety which detailed that leafy greens such as lettuce, spinach and kale accounted are the guiltiest parties a caused the most food-borne illnesses nationwide from 1998 through 2008. Dairy products accounted for the most hospitalizations. The most deaths were linked to poultry. The study looked at 4,887 outbreaks that caused 128,269 illnesses, hospitalizations and deaths when the food that caused them was known or suspected.

Sure, shopping for lettuce can be fun, but is it safe?

Sure, shopping for lettuce can be fun,
but is it safe?

According to Patricia Griffin a food-borne disease expert at the CDC who was the senior author of the report the “The study isn’t meant to be a “risk of illness per serving” list for consumers. The statistics are meant to help regulators and the food industry target efforts to improve the safety of food.” She adds that “The vast majority of meals are safe, so don’t let the numbers for leafy greens keep you from eating vegetables.”

What does this have to do with retail grocers and the pending Food Safety Modernization Act (FSMA) regulations?

Well, most of us purchase these products at our favorite grocery store. Simply put, we trust that our local grocer has taken good care to ensure that the food he or she is selling to us has been properly washed, dried, packaged, handled and stored and that it is safe to eat and of good quality. We, as consumers, have no way of ensuring this ourselves. This trust relationship is critical.  It’s why we chose a grocery store.

But retail grocers, according to Deloitte, executed an average of 117 recalls PER YEAR!

In addition to complying with the 2005 Bioterrorism Act which relates to recalls, grocers need to understand the potential impacts of the FSMA as well. On January 24, I blogged about a white paper from Food Safety expert Dr. John Ryan about what grocers should be doing today with regards to the FSMA.  You can find his article here.  I subsequently came across this excellent, brief Retail Impact of the FSMA summary by Leavitt Partners. It’s well worth the five minutes or less it takes to read.

I asked Jennifer McEntire, Senior Director, Food and Import Safety, how she would summarize what retailers should be thinking about the FSMA at this point.  She said, “From a practical standpoint, knowing who is in your supply chain, in this case, looking forward toward retail, and having confidence that they are following the rules is paramount.”As consumers, we want to maintain that trust relationship with our food providers. There are new tools and methodologies available to the industry to help further the cause of food safety and quality.  And, while the FSMA may not be primarily directed to retailers, as Jennifer points out, from a practical standpoint it’s essential for grocers to have complete confidence in their suppliers and confirm that they’re following the rules.As grocers are the captains of the cold chain, let’s encourage them to lead the way in addressing and implementing the rules.Kevin Payne
Senior Director of Marketing