In times of economic instability in Brazil, changes in consumption habits are common, such as people eating out less. This can be one of the reasons for the increase in product shortages at stores. In January 2016, the Out-of-Stock (OOS) Key Performance Indicator (KPI) increased more than 35 percent over the previous month and reached 13.08 percent — the highest level since October 2014, according to a study conducted by NeoGrid using the big data of their worldwide network connecting business partners in the supply chain.
“People tend to eat more at home and end up looking for more items in stores, which can cause higher out-of-stock levels”, explains Robson Munhoz, Retailer Relationship and Sales Director at NeoGrid.
The change in consumption habits is not the only reason for product shortages at stores. Manufacturers also are more pessimistic than retailers, as shown in the survey conducted by the Brazilian National Confederation of Industries (CNI), which indicates a slowdown by 38 percent of manufacturing capacity at the beginning of 2015. “Retailers are selling according to forecasts, but they have noticed that manufacturers are having problems delivering some items, especially non-food items, such as hygiene, beauty, cleaning products, among others”, said Munhoz.
According to NeoGrid data, the OOS levels in the non-food segment (health, beauty, cleaning) reached 13.74 percent, while for food and beverage items the level was 12.20 percent.
Moreover, in December, stores filled up the shelves, because they expected the holiday season would be an opportunity to increase sales. The consumption of these items reduced stock coverage (number of inventory days that can cover consumer demand). “It’s an effect of the post-holidays season. The product mix becomes unbalanced, so out-of-stock levels tend to increase.”
The data was calculated by the NeoGrid Supply Chain Benchmark solution, which builds on the On-Shelf Availability (OSA) concept — an approach that gathers certified information from more than 10,000 retail stores in Brazil and measures daily product availability on the stores’ shelves, estimated daily product sales per store, the causes of shortages of these items and how to solve them.