Nutella has been selling like hotcakes amid the COVID-19 pandemic.
“We have been selling more than we can possibly make,” said Glenn Lawse, v.p. supply chain at Ferrero USA.
But navigating supply levels and distribution for spikes associated with sudden increased demand can be tricky. And for that, Ferrero has turned to Alloy, which offers cloud solutions for supply chain and sales teams.
Alloy recently hosted Lawse for a webinar called “How global confectioner Ferrero takes a bite out of supply chain issues.”
During the presentation, Lawse detailed some of the supply chain issues the company has recently faced and how it has used Alloy’s up-to-date data across the entire supply chain to navigate them — including a sudden increase demand for one of the company’s signature products, Nutella.
“When we could provide more information, it really helps so we can see even a better view and dig down deep to see: they're all ordering, but who really is sitting on the supply and who has zero or major in-stock problems at the retail level,” he explained.
Without systems like Alloy, Lawse said companies can end up relying on outdated data gathering methods.
“The best you could do is hope that you have one or two people who are just fabulous at Excel and have nothing else to do all day but to stitch all this information together to try and make sense of it,” he said. “Not only translating from one retailer’s language to yours — think about it in terms of Walmart has its own SKU numbers, Target has its own SKU numbers — you have to translate those into the internal ones so that your planners know what they're looking at. But not only that, you have to do that same translation for multiple partners and try to understand across them, it's a very difficult task.”
However, a system like the one Alloy provides can streamline all that, bringing together multiple data sources and giving an full overview of the supply chain.
“[It shows] what's actually happening real-time in terms of key account forecast, visibility, in-stock levels, down to the store level, so that we can see and be able to help not only have supply chain conversations, but sales conversations,” Lawse said. “It's not purely a matter of saving inventory. There's also a top line conversation you can drive with this. Having that single source of truth, one place to go to be able to see all of this information, was really key for us.”
Specifically, Alloy is able to convey real-time data from brick-and-mortar retailers, eCommerce channels, direct to consumer, distributors and 3PLs.
Lawse said that while the pandemic has put a bright spotlight on supply chain issues, none of these problems are new.
“The reality is, even outside of the pandemic, what we were looking to have Alloy help us solve is the fact that we don't always get information fast enough or have visibility fast enough to see to make the right decisions,” Lawse said.
Between marketing, sales and finance each offering bits and pieces of information, trying to make the best supply chain decisions can be extremely difficult.
“So typically you end up firefighting. You're trying to pull inventory. You've got inventory, it’s in the wrong place. You've got inventory, it’s the wrong code. The plans that you designed to sell one set of products turns out to have demand on another set of products,” Lawse said.
The data from Alloy also has helped Ferrero better manage food waste.
“We're a food product. Ferrero Rocher, as you remember, the small pralines that are shaped like a golf ball size, they do not improve with time. They are not wine,” he told the audience. “The reality is, it's very important for us to move through those kinds of things very fast because we want the customer to have the best experience with it.”
However, it can be difficult to triangulate between what consumption is telling you, and what sales are telling you.
And of course, this comes into play with seasonal products, which don’t usually have a ton of demand the day after the holiday is over, Lawse said.
“It's ideal to be able to make sure you're monitoring that in and out,” he explained. “Alloy is helping us there. Again, watching our POS visibility. Watching not only after the event has happened, but perhaps on the way into the event, saying, where is it? Do I maybe have to talk to retailer about taking some action to improve movement on the product beforehand? Can I offer a markdown or something in the last week or two because I don't see that it's moving well enough? For us, this has been really important for us to be able to achieve this.”
And in the end, it's about putting the information to good use.
“It's been critical to have the Alloy information to help connect those dots,” Lawse said. “Not only provide real-time inventory and turn information, but also to connect the dots about where it is that I'm likely to have spoils. And can I do something? Can I work with that retailer earlier to move the product faster? Maybe with sacrificing some amount of profit, of course, but at the same time, saving from having to destroy something at the end of it. Very important for us.
The entire presentation is available on the Alloy website.