The Supply Side: New York-based supply chain startup Bops helps with inventory flow

According to industry data, the retail industry has an estimated $380 billion annually from overstocks, out-of-stocks and other inventory challenges that result in lost sales or deep discounts for suppliers and retailers.

That perennial problem is the focus of New York-based Bops. The retail supply chain intelligence firm works with consumer packaged goods (CPG) suppliers and retailers to improve inventory flow. Co-founder and CEO Jorge Risquez said he spent a decade with Deloitte Consulting as a supply chain manager, digitizing supply chain processes for companies like Tyson Foods and Cargill.

Risquez saw a gap in services and sought to be the solution provider. Partnering with a software engineer, Domingo Noriega, the duo took part in an entrepreneurial accelerator in New York from January to May 2022. They raised capital through investors and launched

Bops, a supply chain intelligence platform powered by data applications that provide end-to-end visibility and continuous insights that allow for better inventory flow.

“Our technology helps consumer brands avoid lost sales, markdowns and inventory waste at the shelf. Inventory flow is not synchronized with consumer demand,” Risquez said.

He said promotions, seasonality, online trends, economic conditions and weather changes can impact consumer demand. Retailers will forecast consumer demand; likewise, brand manufacturers will do the same. However, if retailers forecasted 12 more sales and the brand manufacturer planned for 30 more units sold, consumers may only buy four more items.

Risquez said the Bops technology platform sits between the retailer and supplier to allow for more collaborative demand forecasts, which creates optimal inventory flow. Hence, the right products are on the shelf where customers can buy them.

He said Bops takes retailer data from Walmart Luminate, formerly Retail Link, and bridges it with CPG manufacturer supplier data. The platform synchronizes supplier data systems with what happens at each retailer location down to the store item level. The technology platform will synchronize supplier data, store inventory counts and sales data with consumer trends data.

“There is never going to be 100% forecast accuracy, but the closer retailers and suppliers collaborate through Bops intelligence, the better the inventory flow will be in avoiding out-of-stocks and excess inventory,” he said.

He said the Bops platform could sense item inventory problems at the store level and in the distribution centers and then feed those signals into the supplier systems or the customer supply chain teams at the brands so they have improved replenishment.

Risquez said there is a need for better supply chain collaboration and inventory flow, particularly for CPG manufacturers. He said consumer demand is constantly shifting and changing, and retailer expectations have never been higher with retailer requirements like on-time-in-full and on-shelf reliability and pressure on margins because of external factors like inflation.

“While there is no algorithm to get a supplier to 100% forecast accuracy, they should recalibrate the forecast and point-of-sales data of every item at each store and the website sales data daily. They already have access to that data. Consumer data also needs to be filtered and applied, and then all that data needs to be propagated through inventory requirements at retail trading partner distribution centers and your distribution centers,” he said.

But with replenishment and retail supply chain teams bombarded with data, more data can overload the ability to process it all.

“Usually, when you find out there is a problem with inventory stock-out of overstock, it’s already too late. Our system connects a supplier’s inventory across its supply chain from the retailer to the distributor and the manufacturer,” he said.

Risquez said the Bops technology platform has helped companies like Pepsi and cosmetics firm Coty improve their inventory flow and reduce out-of-stock and markdowns from excess products. He said one of Pepsi’s largest bottlers was experiencing missed sales and disrupting their retail distribution channels because they could not react quicker to sudden spikes in retail demand. After using the Bops system, the supplier reported 5% revenue growth, a reduction between 10% and 12% of inventory costs and increased productivity by 30%, according to Risquez.

DeAnna Boren, director of the supply chain for Coty’s Walmart account, said that before working with Bops, the supplier took a slower, more reactive approach to catching overstocks and avoiding markdowns. She said the Bops platform provides essential data analysis, allowing the supplier to work better with its retail customers.

Todd Harbour, a 27-year veteran at Coty and the company’s supply chain director in North America, said the Bops reports are in his email box daily with actionable recommendations to avoid possible stock issues in certain stores, which was a multiple-step, multiple-person task before Bops. He said Coty sought to improve overstocks, resulting in costly markdowns twice a year. Because specific items are phased out each cycle, he said Bops helps provide data to minimize the markdowns through better planning with retailers.

Boren said phantom inventory is also a problem in cosmetics. The stores show inventory, but sales have yet to show up in weeks. The Bops platform allows Coty to see that and get it managed.

Risquez said Coty must manage 3,000 products in 4,500 Walmart stores and about 12 million distribution points. The data can be daunting at that level. That is where Bops can help. He said Harbour and Boren now have the actionable data to take to their replenishment managers at Walmart each week to ensure out-of-stocks are avoided.

Risquez said Bops works with companies of all sizes and has two different compensation models depending on size and scale.

He said the company has grown to 20 employees who work remotely and revenue growth of 350% year-over-year since its origins in late 2022.