Walmart and other Retailers are Canceling Billions of Dollars in Orders

Walmart and other retailers are canceling billions of dollars in orders

Sep 14, 2022, by Tom Ryan in Retailwire

Walmart, Target, Macy’s and Kohl’s are among retailers that have recently said they are canceling some orders to better balance inventory levels, a replay of a strategy used at the start of the pandemic.

Other steps retailers are using to clear inventories as spending has slowed on some non-discretionary categories are employing markdowns and packing away products for the following year. The elevated inventory levels also reflect intentional over-buying to mitigate shortages and the easing of supply chain constraints.

One risk of canceling orders is straining or damaging relationships with trading partners. After the pandemic arrived, many retailers were called out for not honoring their contracts to pay in full for goods that were in production as well as for requests for postponements, discounts or delays in payment. Several issued statements assuring their commitments, with Levi’s and Gap offering low-cost financing to factories to weather payment delays.

The other risk is not having enough inventory to meet demand. Many retailers and brands indicated they missed sales opportunities during the 2020 holiday season due to overly-lean inventories as demand recovered more quickly than expected.

Second-quarter analyst calls found retailers aware of potential inventory shortfall risks from overly aggressive actions.

Christina Hennington, Target’s EVP and chief growth officer, said steps being taken by the discounter’s buying team include “rigorously reforecasting expectations for the balance of the year and beyond and determining where to reduce future receipts and orders. In some cases, it meant working with vendor partners to reduce our fall receipts in light of our updated expectations. It also meant quickly building compelling promotional plans to drive unit velocity for product we already owned, all with a focus on providing great value and generating excitement for our guests.”

John David Rainey, Walmart’s EVP and CFO, said it had cleared most summer inventory, was reducing exposure in electronics, home and sporting goods, and canceled “billions of dollars in orders” to realign inventories. He said, “Our actions in Q3 will allow us to make significant progress toward rationalizing absolute levels and mix, which will enable our stores to be well positioned ahead of the holiday season.”  ... '

Robotic Library Inventory

Inventory taking and misplaced items.

Robot Takes Stock of Books at Akita Public Library

The Asahi Shimbun (Japan)

Tsutomu Yamatani, April 12, 2022

The loan and return procedures at the Omonogawa Library in Yokote, Akita Prefecture, Japan, have been fully automated as part of a trial in which a robot was used to locate books by reading data stored in integrated circuit (IC) tags on each volume. The test involved applying IC tags to 20,000 books; a converted dish delivery robot read the data stored in the IC tags to take inventory in "several tens of minutes," a task that library staff would have needed an entire day to complete. The robot achieved a 99.5% accuracy rate in reading data from the IC tags.  ...' 

Intel Works with Johnson Controls and Sensormatic for Digital Transformations in Retail.

We talked with Intel on their Movidius vision sensor systems for related applications. This appears to be a considerable advance and direction. 

“By leveraging Intel processors and accelerator cards based on Intel’s purpose-built Movidius™ vision processing units (VPUs), and OpenVINO™ toolkit to accelerate vision at the edge, Sensormatic Solutions enables retailers to make sense of granular data, creating growth opportunities and driving positive business outcomes.”  ... ' 

Sensormatic Solutions by Johnson Controls Collaborates With Intel to Digitally Transform Retail and Improve Shopper Experiences      

Johnson Controls’ innovation partnership with Intel now includes powering Sensormatic IQ

Sensormatic IQ, the new intelligent operation platform for retail, leverages Intel’s AI technology at the edge to deliver real-time insights across the enterprise

The collaboration enables customers to make informed business decisions that drive positive outcomes

NEUHAUSEN, Switzerland--(BUSINESS WIRE)--Johnson Controls, the global leader for smart, healthy and sustainable buildings, today announced that Sensormatic Solutions, its leading global retail solutions portfolio, continues to collaborate with Intel Corporation to deliver innovative solutions to retailers.

A key partner in powering Sensormatic IQ, the new intelligent operating platform for retail, Intel is helping Sensormatic Solutions deliver improved shopper experiences and retail outcomes for its customers. Through deep knowledge of the retail industry plus joint investments and developments in scalable, artificial intelligence (AI) and computer vision-based solutions, Sensormatic Solutions and Intel are helping retailers gain real-time insights into inventory, shoppers, associates and the retail environment. ... 

“As the retail landscape evolves, our technology evolves with it,” said Bjoern Petersen, President, Sensormatic Solutions. “Intel’s AI solutions for the edge paired with our Sensormatic IQ platform is helping to power the digital transformation of the retail industry. Through this partnership and shared commitment to innovation and engineering, we are pleased to deliver solutions to address our retail customers’ biggest challenges and confidently move into the future. ... ' 

Neural Network Has Learned to Identify Tree Species

 Relates to my forestry work, could have been used to update inventories of species.

Neural Network Has Learned to Identify Tree Species

By Skolkovo Institute of Science and Technology (Russia), February 9, 2021

An algorithm developed at Russia's Skolkovo Institute of Science and Technology can identify the species of trees captured in satellite images.

Scientists at Russia's Skolkovo Institute of Science and Technology (Skoltech) have developed an algorithm that can identify tree species in satellite images.

The scientists applied a neural network to automate the identification of dominant tree species in high- and medium-resolution images.

A hierarchical classification model and additional information further augmented predictions, while enhancing the algorithm's stability to enable its practical usage.

Skoltech's Svetlana Illarionova said, "Commercial forest taxation providers and their end-users, including timber procurers and processors, as well as the forest industry entities, can use the new technology for quantitative and qualitative assessment of wood resources in leased areas. Also, our solution enables quick evaluations of underdeveloped forest areas in terms of investment appeal."

From Skolkovo Institute of Science and Technology (Russia)

Robots and ReStocking

Despite the recent news that Wal-Mart was backing out of this for now, here is a link to get an eBook from Braincorp that discusses the robotics approach ... 

How Robots Solve Retail’s Restocking Challenge

An Introduction to Autonomous Inventory Delivery

Get the Free eBook  (At link) 

In the face of increased consumer demand, maintaining adequate stock levels has proven to be a major ongoing challenge for retailers, particularly those in grocery. Moving inventory and goods from the stockroom out to the store shelves is a laborious and time-consuming process that puts additional strain on workers and can impact sales if not carried out in a timely manner. So how can retailers better manage this process in today's complex environment?

Download this new guide, "How Robots Solve Retail’s Restocking Challenge" today to learn how a new type of robotic application - autonomous inventory delivery - can help improve operational efficiency and increase productivity while easing the burden on employees.  ... " 

Novel Inventory Tagging System using Molecular Bits

 Interesting use of molecular tagging.   Could this be used beyond retail inventory? What is the speed and accuracy of reading the tags?  Note use of machine learning integration.

Porcupine Molecular Tagging Scheme Offers Sharp Contrast to Conventional Inventory Control Systems

University of Washington Paul G. Allen School of Computer Science & Engineering Allen School News

An end-to-end molecular tagging system created by researchers at the University of Washington (UW) and Microsoft can be programmed and read within seconds using a portable nanopore device. The Porcupine system can substitute dehydrated strands of synthetic DNA called molbits (molecular bits) for bulky plastic or printed barcodes, eliminating the need for specialized laboratories and equipment. Porcupine enables the binary 0s and 1s of a digital tag to signal the presence or absence of each of 96 molbits; users read a tag's data by rehydrating and running it through Oxford Nanopore Technologies' MinION device. UW's Luis Seze said, “Porcupine is one more exciting example of a hybrid molecular-electronic system, combining molecular engineering, new sensing technology, and machine learning to enable new applications.”

Walmart Abandons Robotic Inventory

Does not mean it could not go back to it, but for now robots won't take store inventory.   There are now lots of people to hire in this space.   An area we spent a whole decade researching. 

Walmart abandons plan to have robots check store inventories

The retail giant found the humans could do just as good a job.

By Steve Dent, @stevetdent   in Engadget

Predictive Maintenance Driving 3D Printing

A long term interest and application area.  You could do a good job of prediction, but had to have a complex array of replacement parts in inventory.   Here, for the right kind of of application, the inventory could be minimized.  Could the parts even be produced to address certain kinds of predictive degradation by altering manufacturing design? 

Army 3D Printing Study Shows Promise for Predictive Maintenance
U.S. Army Research Laboratory
May 19, 2020

A study by researchers at the U.S. Army's Combat Capabilities Development Command (CCDC) Army Research Laboratory (ARL), the National Institute of Standards and Technology, CCDC Aviation and Missile Center, and Johns Hopkins University detailed a method for monitoring the performance of three-dimensionally (3D)-printed parts. The technique uses sensors to detect and track the wear and tear of 3D-printed maraging steel (known to possess superior strength and toughness without losing ductility), to help forecast degradation or malfunctions that warrant replacement. ARL's Todd C. Henry said the study was as much about understanding the specific performance of a 3D-printed material as it was about understanding the ability to monitor and detect the performance and degradation of 3D-printed materials.

Oracle White Paper on Financial and Inventory for Retail

Interesting comparison, Noting the author.

Oracle White paper
Unifying Financials and Inventory for Retail

Why Retail Brands are Moving from QuickBooks to NetSuite

As innovation evolves faster than ever, heightened customer expectations and increased competition mean retail brands can no longer rely on the business models or business management systems of the past.

This white paper dives into why retail companies like yours are moving to the cloud and the signs that an add-on inventory solution might be limiting your business.   ... "

AI and MRO Inventory Data

Another problem we often tangled with in the enterprise:


Maintenance Repair Operations

Artificial Intelligence wades through murky MRO Inventory Data to drive down costs with better business decisions

Webinar from Verusen and Accenture Details How AI and Predictive Analytics Clarify Data Across Multiple Systems to Right-Size Plant Inventories

ATLANTA, Jan. 30, 2020 /PRNewswire/ -- The ability of artificial intelligence (AI) to improve visibility of ERP inventory data, as well as the implementation timeline for using AI on a daily basis, were among the top interests of participants during a recent webinar, "Taking Stock of AI Technology for Inventory Management."

The webinar featured expert advice from CEO Paul Noble of Verusen, an innovator in materials inventory and data management technology, and Erik Green, practice lead, Materials & Equipment, at Accenture, a leading global professional services company.

"Reducing MRO inventory is one way for asset-intensive manufacturing industries to quickly drive value, but siloed data in ERP and other systems result in redundant parts—and understocking—that infrequent manual cleansing can't address to support dynamic business decisions," said Noble. "It's important for organizations to know that AI is a very real option today that can wade through data from multiple systems to present real-time suggestions for in-house teams—and then learn from those decisions."

The webinar demonstrated how AI replaces disconnected data silos with a digitized network footprint of all goods, services and logistics throughout the supply chain so inventory decisions are visible to teams across an organization. It covered how AI's machine-learning capability continually updates and interprets market trends to drive accurate predictive inventory analyses for indirect MRO, direct goods and even finished products, instead of relying on subjective decisions.  ... "

Intel's LIDAR for Inventory Logistics

We spent time experimenting with a means to determining accurate inventory and location accuracy positions in warehouses and on store shelves.    Here a relatively new approach in the space.  Originally noted in AppleNews. 

Intel’s latest RealSense lidar camera is designed for inventory logistics
Brian Heater@bheater in TechCrunch

Intel today introduced the latest addition to its RealSense line. The L515 is roughly the size of a tennis ball, targeted specifically for warehouse logistics — a hugely important and increasingly automated aspect of global trade.

Other potential applications for the new camera include retail, healthcare, 3D scanning and robotics. The little hockey puck is capable of scanning a scene and creating a point cloud with millions of depth points a second, per Intel — a fairly impressive spec, given its size.  .... "

Turning Inventory into Profits

Via McKinsey.    Depending on the industry, demand for parts and costs involved.

Turn Slow-Moving Inventory into Fast Profits

For industrial-services organizations, slow-moving inventory can be a drag on financial performance. Why not transform it into a profit booster?

By Paolo Baldesi, Florent Kervazo, and Hugues Lavandier via McKinsey

For many industrial companies, aftermarket services are where the money is made. To perform well, they require access to the right spare parts at the right time to meet customers’ service expectations. The result? Service organizations inevitably invest a lot of capital in inventory. But if they aren’t careful, ballooning inventory can put significant strain on cash resources and drive down return on invested capital (ROIC).

In our experience of working with the aftermarket arms of industrial OEMs, a large part of the challenge comes from the 10 to 40 percent of inventory made up of slow-moving items. These are parts that are rarely sold, but which the organization must hold in stock to meet contractual obligations or capture commercial opportunities when they arise.

Slow-moving inventory is a particularly pernicious challenge for industrial players. Complex, highly-customized products with long operating lives mean that SKUs tend to proliferate over time, as companies attempt to stock components for every version of every item of equipment they produce. And because customers operate equipment in different ways, demand for slow moving parts can be highly volatile, encouraging companies to take a “better safe than sorry” approach when it comes to setting inventory targets. .... " 

 

Inventory Robotics at Giant Eagle

Note in particular the frequency of state and availability of merchandise.

Giant Eagle unveils plans for inventory robots

Giant Eagle has joined with Simbe Robotics to add the company's robot, Tally, to select stores in Pennsylvania and Ohio under a pilot program. Tally is an autonomous robot that regularly checks shelves for inventory and sends data reports to employees.  .... 

Giant Eagle Piloting In-Store Robots  in Progressive Grocer

 ... Giant Eagle has unveiled a pilot program with Simbe Robotics to deploy Tally, Simbe’s autonomous shelf-auditing and inventory analytics solution, at the grocer’s Giant Eagle and Market District stores in Pittsburgh and Cleveland, and Akron, Ohio. Tally ensures that products are on shelves when and where customers expect them to be, while enabling store associates to focus on customers instead of inventory.

In the pilot, Tally sends detailed data reports to store teams every 30 minutes that capture, report, and analyze the state and availability of merchandise. The reports help the teams address controllable out-of-stock and pricing situations while optimizing each store’s product layout. The solution requires no infrastructure changes to the store and operates safely during normal store hours alongside shoppers and employees.

Employing Tally’s cloud-powered software platform and API, Giant Eagle aims to streamline store performance, maximize customer satisfaction, boost sales and lower operational expenditures. ... " 

Inventory Optimization with Neural Nets

   Areas I have spent much time in, examining this overview.

5 Easy Steps to Finally Achieve Inventory Optimization   By Alex Bekker 

So you’ve put your best foot forward to optimize your inventory, but it’s still anything but perfect? To ensure continued success and boost your bottom line, check out these five easy action points below.

1. Opt for the right approach.

When deciding on optimal inventory levels, companies want to steer clear of risky assumptions and avoid relying on “gut feelings” and personal experience. This is why best practices in inventory management tend to rely on data science. However, even if your optimization initiatives do involve data science, this doesn’t guarantee that you are using the most efficient, objective approach.

To illustrate this, let’s consider three different inventory optimization techniques:

Approach #1 — You use advanced data science methods to calculate demand, but then you add an unoptimized hunch-based safety buffer to the predicted value to form inventory. This doesn’t sound like a scientific approach to inventory optimization, does it?
Approach #2 — You calculate demand probability distribution and apply a formula that weighs holding costs against shortage costs. Although this is pure data science, it’s again based on expectations, as we don’t really know the nature of demand probability distribution and can only assume what it may be.
Approach #3 — You use a deep neural network (DNN) that considers multiple demand-influencing factors. The network’s complex architecture and its “intelligence” are designed with your specific situation in mind. Also, the network is tailored to directly predict an optimal inventory level, without producing demand forecasts in between.
While each of these three approaches has something to do with data science, the differences between them are striking. The third approach is the only one that can guarantee a higher degree of objectivity. ... "

P&G Responds to Changing Customer Preferences

Intriguing directions, especially regarding customization.  How does a big company react to customer preferences,  when it can no longer direct them?

Q&A | How P&G Responds to Changing Customer Preferences   in SupplychainBrain

Phil Ruotolo, associate director of merchandising solutions customization with Procter & Gamble, details the consumer-products giant's strategy for adjusting to ever-shifting consumer preferences.

Q: How is P&G responding to changing customer preferences?

Ruotolo: Several years ago, we embarked on an innovative supply-chain solution. We created what we call mixing centers. It was the first time we had brought a portfolio of different P&G products into one location. The next question was, how do we think about merchandising in a more unique way? So we went to a 14-day order lead time. Previously, there was typically a four- to six-week window, and most of it was on a forecast. What inevitably happens is that you're building inventory of something that a customer might want to order.

In this new model, we differentiate the finished product in our customization locations, and then do all of the forecasting for our materials. Now we're able to react very quickly to what a customer might want, and can fulfill that within 14 days.

Q: So this is execution, not planning?

Ruotolo: Correct. It's taking all your favorite P&G products, and bringing them all together into one facing. As a consumer, you’re drawn to that display. We want to drive trials with consumers as they come across our products. Hopefully, they’ll make multiple purchases.   ..... " 

Bullwhips and Chasing Inventory for Value

One again, the Bullwhip effect.  which we often brought up for its influence in inventory in CPG.  Here new work on studies with data from. Chinese Groceries.

A Counterintuitive Way to Keep Shelves Stocked and Prices Down

New research suggests how to improve supply-chain efficiency and avoid “inventory runs.” Based on the research of Robert L. Bray, Yuliang Yao, Yongrui Duan and Jiazhen Huo

Ask your local liquor store how much of a certain beer they sell, and you will likely get similar answers from week to week.

“They might sell twelve six-packs one week, then eleven, then twelve, then thirteen,” says Robert Bray, an associate professor of operations at Kellogg.

But ask the brewer who makes that beer how much they ship weekly, and the story gets more complicated. It would be normal for a brewer to be responding to orders to ship 500 cases of beer for three weeks straight and then zero the next week, Bray says. “The brewer is going to see really volatile changes.”

This phenomenon, which happens in all kinds of industries, is what experts call the “bullwhip effect.” As demand moves up the supply chain, from consumers to stores to suppliers, it becomes more and more unpredictable—just as a tiny flick of the hand morphs into a wild, forceful smack as it travels down the length of a bullwhip.

But the bullwhip effect is not merely a concern for retail managers and suppliers. When suppliers and distributors are unable to predict demand, the supply chain becomes less efficient.

“And who’s ultimately going to pay for that? The consumer,” says Bray, since those inefficiencies are passed on to shoppers in the form of higher prices and sometimes product shortages.

But what causes the bullwhip effect—and can at least some of the price hikes and shortages be alleviated?

A new study by Bray, along with Lehigh University’s Yuliang Yao and Tongji University’s Yongrui Duan and Jiazhen Huo, tested one theory behind the effect.

Analyzing data from a major Chinese grocery chain, the team found the first-ever hard evidence of what they call “inventory runs.” When retailers see that a supplier is on the verge of running out of an item, they order excessive amounts of that item in hopes of keeping their shelves well stocked—in the same way that customers of a failing bank mount a “bank run” to get their money out before the bank becomes insolvent.  .... " 

Related paper.   See also papers by Robert L. Bray

Inventory Problem Using Machine Learning

As a long time supply chain optimizer and design hack, this intrigued me.  And the pattern by product type interested me too.

Machine learning: A solution to backorder problem and inventory optimisation   Posted by PS Dhillon in DSC

For any business, the worst scenario is getting out of product inventory when customers are ready to buy your product. Keeping a stock of every item in the store is another burden to carry for every business. This trade off has been even more problematic in current times, when manufacturing firms are flooding with SKUs (Stock Keeping Unit) ranging from product sizes, flavours, styles etc. To cater personalised demand companies are customising products by adding various features to it & this is making life even more complex for all parts of businesses involved in the whole supply chain.

To understand this problem, lets take an example of a toothpaste. There are more than 6–7 popular brands such as Colgate, Pepsodent, Close up, Dabur, Himalaya, Meswak etc with each having 4–5 toothpaste different sizes ranging from 50gm to 300 gm & 4–5 different variants such as Sensitive, Germi-check, Gumcare, Whitening etc. ...

Computer Vision Analyzes the Store Shelf

We looked at this same problem in a number of ways, but not automated the way this suggests.  Note it has yet to be connected to existing cameras or robotics.

Trax raises $125 million to bring computer vision insights to retailers’ shelves
By Paul Sawers @PSAWERS  in Venturebeat

Trax, a computer vision platform that gives retailers insights into what’s happening on their store shelves, has raised $125 million in a series E round of funding led by Chinese investment firm Boyu Capital. Somewhat oddly, U.K.-based media publisher DC Thomson also participated in the investment round.

Founded in 2010, Singapore-based Trax helps digitize store aisles through image-capturing technology that serves up data and analytics on consumer packaged goods (CPG) on shelves. It may save employees from manually auditing stock for inventory and product promotions, for example. It can also help retailers make product placement decisions by providing a snapshot of what goods are where, and whether they could be shifted to a better position.

The Trax platform ultimately recreates physical store shelves in digital form to guide product and marketing decisions, and big-name clients such as Coca-Cola and Nestle are already using the platform.

While Trax’s technology currently requires capturing images manually via mobile devices, the company said it’s currently working on several pilot projects to provide continuous shelf-tracking via connected cameras that are mounted on coolers or robots and capture images at pre-set intervals. .... " 

AHold Partnership for AI Research

A major retailer makes an interesting play.   To better compete with the likes of Wal-mart and Amazon I am sure.  Some intriguing details.

Ahold Delhaize joins partnership for AI research

Ahold Delahize is launching a partnership with a Dutch research group to study how artificial intelligence can create better recommendations for shoppers. Another focus for the company's partnership with the Innovation Center for Artificial Intelligence will be better management of the movement of inventories.  .... " 

IKEA and Accenture Show a Tech Advanced Store

Again, IKEA looks quite advanced. 

IKEA asks, will virtual inventory be key to the new urban showroom?  by Matthew Stern in Retailwire.

The completely unique experience of shopping at an IKEA store is part of the brand’s appeal. But at World Mobile Congress, the chain gave a demo of a futuristic small-concept store that is far different from IKEA’s familiar labyrinth — and from other store concepts out there as well.

In partnership with Accenture, IKEA demoed a tech-enhanced store which, according to Retail Detail Europe, fits the chain’s entire expansive catalog into a small-format location. The walls are said to “double as screens filled with product information” and visitors can use an RFID-enabled version of the iconic IKEA pencil to make product selections, check out and specify if they will pick up the physical product or have it shipped.

A tweet by French tech journalist Simon Chodorge features a video of the demo. In it, the journalist can be seen tapping an RFID-enabled version of an IKEA pencil on active pads on tables near touch screens, which appear to be adding items to a shopping cart. The journalist then visits a central touch screen to check out ...... "