Several years ago, I was invited into the distribution network of a major UK grocery retailer. The business was wrestling with a familiar challenge. Store managers were reporting stock variances, availability was under pressure and senior leadership wanted answers. Products were showing as having reached stores but could not always be found, while losses were steadily increasing and frustration was growing across both retail and supply chain teams.
The prevailing view was that the problem sat in stores. That was where the variances were being discovered, where the stock adjustments were being made and where the commercial impact was most obvious. The logic seemed straightforward enough: if the issue was being found in stores, then stores must be causing it.
The reality turned out to be very different.
After spending time in the operation, reviewing stock movements and introducing independent checks across the supply chain, it became clear that there wasn’t a major failure lurking beneath the surface. There was no rogue employee, no catastrophic systems issue and no dramatic breakdown in process. Instead, there was something much more ordinary: a level of picking inaccuracy that had gradually become accepted as part of the day-to-day operation.
Reviewing stock
Like many large retailers, millions of cases were moving through the network every week. Everyone understood that occasional mistakes would happen. A case picked incorrectly here and there was viewed as operational noise rather than an indicator of something more significant. The problem was not that errors existed. The problem was that nobody knew how many there were, where they were occurring or what they were costing the business.
Once independent measurement was introduced, the picture changed remarkably quickly.
Patterns began to emerge almost immediately. Certain product categories generated disproportionately high levels of inaccuracy. Some locations consistently underperformed compared with others. More significantly, many of the discrepancies appearing in stores were actually originating several days earlier in the supply chain. What we discovered in that retailer was something we have since seen repeatedly across the grocery sector.
Around 64% of stock variances identified in stores are not actually caused in stores at all. They are the consequence of something that has happened elsewhere in the supply chain, whether that is supplier dispatch accuracy, warehouse picking, stock handling, loading processes or transport execution.
The shelf gap is where the problem becomes visible. It is rarely where the problem begins.
That single finding changed the conversation. Store managers stopped being treated as the source of every issue. Distribution teams gained greater visibility of their own performance. Most importantly, the business finally had factual evidence showing where value was being lost and why. The improvements that followed were significant, but perhaps not for the reasons people might expect.
There was no major technology transformation. No expensive restructuring programme. No wholesale redesign of the network. What changed was visibility.
Once people could see what was happening, they could act on it.
Within six months, accuracy levels had improved by between 20% and 30%. Teams that had previously spent their time debating the existence of problems were now focused on eliminating root causes. Resources could be directed at the areas creating the greatest losses and supplier discussions became more fact-based.
Decision-making improved because it was grounded in evidence rather than assumption. The financial return was equally striking. Once the cost of inaccurate stock movement, avoidable store claims, unnecessary investigations, rework, waste and lost availability was quantified, the return on investment exceeded five times the cost of the intervention. What had started as an exercise in understanding stock variances became a lesson in how much value can quietly leak from a supply chain when nobody has independent visibility.
Uncovering what has been there all along
Looking back, what strikes me most about that retailer is how ordinary the issue appeared when we first encountered it, and the result – where 16 million customers had improved availability compared with before the work took place.
That experience has shaped much of my thinking over the past three decades.
The grocery industry rightly spends a great deal of time discussing resilience, technology, artificial intelligence and supply chain innovation. All of those things matter. Yet some of the largest opportunities I have seen have come not from introducing something new, but from uncovering something that had been there all along. A recurring discrepancy that everyone had learned to live with. A process that “mostly worked”. A known weakness that never quite reached the top of the priority list.
The most successful retailers I have worked with are not the ones that never experience problems. Every complex supply chain experiences problems. They are the organisations that remain curious enough to investigate them properly, disciplined enough to measure them independently and determined enough to fix them before they become accepted as normal.
After 30 years in grocery assurance, that is probably the most valuable lesson I can offer. Major failures rarely arrive unannounced. More often, they begin as small operational weaknesses that have been sitting in plain sight for years, quietly accumulating cost, complexity and risk while everyone learns to live with them.
The businesses that outperform their competitors are usually the ones that refuse to.
Faisal Ashfaq is director at RAS Supply Chain Integrity
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