MIT SCM Symposium 2024

Our sponsor (a multinational CPG company) faces the challenge of measuring On-Shelf Availability (OSA) for nanostores due a lack of inventory visibility at a store level. Nanostores, in emerging countries, are the channel that sells more than half of CPG products, performing a key role for these companies. Our sponsor company supplies 2.4 million nanostores in India, this approximately represents 20% of their sales in this country. OSA measures the quantity of products available for the customer to purchase at a specific moment. It is a key indicator to quantify product visibility for retailers, helping companies to identify stock-out events, and, most importantly, devise strategies to increase sales. The sponsor company provided us with distributor-level data, supplemented by a two-month field study currently underway. Our model's scope centers on one of India's largest regions, Mumbai, analyzing four nanostores sales channels, along with the top 20 selling SKUs within the region. Our methodology begins by shaping the demand for each key SKU using a stochastic distribution. We're considering either Poisson distribution, given the low quantities ordered, or Triangle distribution, due to the quantity of available data. We use the stochastic demand distribution in combination with the latest order point in time to find a probability of a stockout event from occurring. The model intends to create the ability to estimate OSA in situations where traditional methods fail due to the magnitude of stores and a lack of technological tracking systems.