November 2012 | Case Studies | I.T. Toolkit

Inventory Tracking: Crunching the Numbers

Tags: Logistics I.T.

Dipping into new technology allowed Golden Flake to more accurately forecast customer demand and optimize production schedules.

With store replenishment lagging behind sales growth, potato chip maker Golden Flake deployed a mobile inventory-tracking solution to satisfy its craving for stock visibility.

Food shoppers can be fickle. Demand is immediate, but bad impressions last a lifetime. Brand awareness and affinity are intrinsically tied to inventory availability at the store shelf—in effect, how well manufacturers and retailers can sense demand shifts, push those signals to distribution facilities, and trigger replenishment. When buyers get what they want, when they want, they come back for more.

Golden Flake Snack Foods—a Birmingham, Ala.-based manufacturer and distributor founded in 1923—recognized that as its business grew, it couldn't replenish inventory fast enough to ensure store shelves were fully stocked with its potato chips, pork skins, tortilla chips, cookies, and other products. Between 2009 and 2010, its sales more than doubled, in spite of the U.S. economic recession.

The company distributes its snack foods through retailers in 12 southern states, and sells direct to consumers in bulk quantities from its Web site. Golden Flake relies on a team of 600 sales representatives to visit customer stores, remove out-of-date product, issue credit checks when necessary, and restock shelves with inventory from their trucks.

Until recently, sales associates placed product orders by mailing forms to the company's headquarters. Processing the forms often took up to two weeks. As reps fulfilled orders, they had no way of knowing if there was sufficient inventory to cover demand. If they accidentally sold more merchandise than they had on the truck, they had to void the order and file it again, contributing to a tedious and time-consuming process.

Golden Flake invested in mobile inventory tracking devices to make the process more efficient—but that, too, failed, because bandwidth was so limited that only 10 reps could place orders at the same time. More problematic, the technology had limited effectiveness in maintaining accurate inventory counts, so Golden Flake still had to rely on its paper-based system as a backup.

Making a Connection

Golden Flake turned to telecommunications services provider AT&T, with whom it had an established relationship through its suite of voice and data services. The company learned that a small upgrade in the technology it was using—paired with AT&T's mobile broadband network—would allow its 600 sales reps to upload all their data in real time.

"Golden Flake was looking for a more efficient way to handle order placement, improve inventory management, and decrease the time required to deliver products to grocery shelves," says Walt Rivenbark, executive sales director, Advanced Mobility Solutions, AT&T Business Solutions. "It wanted to make key supply chain decisions in real time."

Golden Flake made the switch, equipping its sales force with Intermec CN3e handheld computers as part of a mobility solution that runs on the AT&T wireless network. The mobile solution allows Golden Flake's sales force to place orders in real time, eliminating the replenishment lag that existed before. Now they have an accurate count of available inventory in their trucks, and spend less time processing orders and more time engaging retail customers. Sales reps are also able to record cash or checks when they receive customer payments, expediting the cash-to-cash cycle.

More importantly, the snack food company has been able to engineer a better way to capture inventory data at the point of demand, sharing that information with customers, and increasing efficiencies and economies upstream in the supply chain.

Facilitating Demand-Driven Processes

While the consumer-facing benefit of having product consistently available is clear, access to real-time data has created a positive domino effect elsewhere within Golden Flake's supply chain, contributing to a number of competitive advantages.

"Placing orders in real time makes it easier to schedule deliveries that will accurately meet customer demand," says Patty Townsend, chief financial officer, Golden Flake Snack Foods. "This means we can order just the right amount of potatoes and other necessary ingredients, which enables us to keep fresh products on the shelves and in consumers' hands."

Golden Flake uses more than 100 million pounds of potatoes a year, sourcing product from as far afield as the Dakotas and Florida. Because starting production as soon as potatoes arrive results in the best-tasting chips, finding efficiencies in this process can really pay dividends in flavor—and take a bite out of production expenses.

Better demand visibility at the store shelf has similarly enabled the company to optimize its delivery schedules, which is critical given rising fuel costs.

Out in the field, customer service has also improved. Golden Flake can respond to order inquiries immediately, whereas in the past reps would have to search paper records, then fax or mail the customer a copy of the order. With better inventory visibility and responsiveness, stores have more confidence in their ability to replenish stock.

"Our sales reps never sell more product than we have in stock," explains Townsend. "They also track the freshness of products in stores. This enables us to ensure customers are purchasing just the right amount of product for their needs. Our efficiency becomes our customers' efficiency."

Raising the Bar on the Go

For smaller food manufacturers such as Golden Flake, enterprise-wide technology deployments can be a challenging proposition. "Our network person also orders the potatoes," Townsend notes. "We all wear many hats at this company."

AT&T's mobile solution provided a simple fix to a growing problem. But the benefits of having a better means to capture and communicate inventory demand, then align it with upstream manufacturing and sourcing processes, has profoundly impacted Golden Flake's ability to efficiently meet customer expectations.

"Many businesses view mobility solutions as tools that can help increase efficiency and productivity," says AT&T's Rivenbark. "We see mobility differently. It's a critical asset for driving new revenue generation and competitive advantage.

"Our solutions allow customers to connect supply and demand almost instantly," he adds.

AT&T's mobility solution has provided Golden Flake with economies and efficiencies far beyond what the company originally expected.

"This type of efficiency in the field has improved overall customer service, simplified the payroll process, saved $200,000 a year in paper costs, and allowed us to deploy a $6-million enterprise resource planning system to enhance our wireless inventory solution," says Townsend.