Dozens of retail product suppliers received a 45-minute overview and brief tutorial Thursday morning (Aug 22) on Wal-Mart’s new merchandise efficiency tool dubbed SPARC 2.0, and its junior, SPARC Lite.
The program was part of the WalStreet Breakfast Series offered by the Bentonville-Bella Vista Chamber of Commerce.
SPARC – the Supplier Portal Allowing Retail Coverage initiative – is being broadly rolled out by Wal-Mart during the next six weeks at roughly 150 stores a day in an effort to raise on-the-shelf availability of products sold by the retailer. Mike Graen, director of strategy and innovation for Wal-Mart, spoke candidly to a room full of suppliers who agreed that one of the most frustrating issues they face is products out-of-stock.
Earlier this spring Wal-Mart came under heightened scrutiny for its out-of-stock items across its expansive retail empire. Duncan Mac Naughton, chief merchandising officer at Wal-Mart, said improving on-shelf-availability was a multi-billion dollar opportunity. That said, Wal-Mart has reported it’s on-shelf availability is around 94%, and the company continues to push toward the industry standard of 99%.
In June, Walmart U.S. CEO Bill Simon said the retailer’s bottom performing stores have visible out-of-stock issues. In a system with more than 4,000 stores, the bottom 10% is still a lot stores that need work. Graen said for nearly a year the company has worked directly with a group of product suppliers and service providers to come up with a better solution with the help of technology.
Wal-Mart employed Rockfish Interactive to create a mobile application known as SPARC Lite, that allows suppliers who work inside Wal-Mart’s stores to get a real-time look at product inventory and replenishment data for specific items. SPARC Lite is a mobile application that can be downloaded for fee by suppliers after they take a brief test.
Michael Clark, director of retail strategy at Kellogg, was one of the suppliers in the working group who has been testing SPARC Lite for several months. He said the application is easy to use and provides real time data, some 24 to 48 hours ahead what can be seen on Retail Link.
With SPARC Lite a supplier can look at any store that has its products and get a reading on the items on-hand, in inventory, those ordered, etc. For those products out-of-stock, but in the back-room, the supplier can create a “pick list” and would work with a store associate to get those items out on the floor.
SPARC 2.0, which is aggressively being rolled out from now through end of September, gives the supplier using the application the ability to print labels for missing products and “pick lists” to get the shelves restocked as soon as possible. Before this program was available suppliers were tethered as they had to locate a telzon and a store associate to get data they now can access on their iPhone or Android phones. Telzons are the devices used in the store to track inventory by Wal-Mart employees.
Graen said one catch to 2.0 is that a buyer or replenishment manager has to recommend access for the supplier. He said 2.0 is reserved for those suppliers who are working out in the stores.
John Owen, executive vice president of Crossmark, was also in on the testing of SPARC 2.0 as his firm works directly with retail suppliers on replenishment issues. Owen said SPARC 2.0 is designed to give suppliers better visibility into a retailer’s backroom — which is the nerve center that controls how accurately and efficiently shelves are restocked. He told The City Wire in April that suppliers who tested SPARC 2.0 were pleased with the results.
“I think it will make a big difference, as more suppliers get the training and began using the program,” he said.
The rewards are high for all the stakeholders if replenishment levels rise just 1% on a book of $274 billion in annual U.S. sales.
Critics have said Wal-Mart’s tighter labor pool is a contributing factor to the weaker on-shelf-availability results in recent years. Others have said SPARC 2.0 is a way for Wal-Mart to shift more responsibility to its suppliers.
Graen told the group that SPARC 2.0 in no way reduces work hours for stockers, who are busy enough just ensuring displays are properly set up, changing out modulars and plugging modulars when necessary. He said nobody wins when a product is out of stock, and it’s to the advantage of all to keep shelves full.
Graen said SPARC comes down to “trust” in that Wal-Mart is giving its suppliers more access to real time inventory data so that when working with store employees the out-of-stock issues can be cleared up faster or prevented altogether.
Clark said that this was one of the few times in his career that he has seen multiple suppliers working together with Wal-Mart on a particular project. He said it’s been refreshing to work with competitors and other suppliers that he wouldn’t normally have much interaction with on an issue that affects them all — reducing out-of-stock items and increasing on-the-shelf availability across all of Wal-Mart’s 4,000-plus stores.
Latest posts by Kim Souza (see all)
- J.B. Hunt Shareholders Meet, Approve Directors And Dividend - April 23, 2015
- Corruption Allegation Costs Wal-Mart $612 Million Since 2013 - April 22, 2015
- First CEO Of Sam’s Club Shares Lessons Learned From Sam Walton - April 22, 2015