Warehouse layout - Stock Management for Fast Moving Consumer Goods

Traditionally, the typical stock policy for FMCG has been “stack ‘em high, sell ‘em cheap”.  Therefore not a great deal of care is needed in managing stock levels, simply keep the shelves full, and by correctly positioning the price, these items will continue to move, and continue to generate relatively low rates of return.  When this works well the low profit margin is offset by the number of sales, combined with a low ordering cost, to generate sufficient profit.

However, as customers hold back their spending given the uncertain financial climate, does this strategy still apply?

Certainly a greater focus on the amount of stock held is necessary, and to a degree, the extended ranges and additional choice that many retailers offer is now more likely than ever to become a noose around their neck.  The big issue here is that consumers are now used to, and demand, the levels of choice to which they have become accustomed. The downside to the retailer is that they have never had so many different items to closely manage.  Tight stock control over a large range requires additional attention in order to avoid an over or under stock situation.  Added to this situation is the current unpredictability of the market.  New rules are required in order to generate accurate forecasts, and it is probably true to say that not many retailers can whole-heartedly predict what their customers are going to do next.

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