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How to improve the demand forecasting of the prepared foods department of a supermarket company?

In a supermarket company, the supply chain is one of the essential processes because having the product in the correct quantity at the right time in all their stores will generate a competitive advantage over other companies.

The supermarket company ABC has many stores in Canada, having as target high-income customers, so the standards of each store are higher than their competitors such as Real Canadian, T&T and Walmart.

During the last few years, ABC has been having issues with the prepared foods department, which has 22 in total people as headcount (18 operators and 4 supervisors). They are distributed to cover the three shifts the store has per day. There are three sub-departments, hot bar, chef case and fresh pack. Each one could be sold in two presentations, packaged or self-serve buffet-like. Likewise, every meal prepared and packaged by the operators in the store only has an average of five days of useful life and must be thrown away a day before its expiration.

Among the issues in the department, five affect the performance of the store and category.

The lack of production planning: the preparation of every meal is not based on sales, demand, days of the week, weekends, or seasonal campaigns. Instead, it is based on the raw materials the department has in stock that day or if there is any stockout of a specific meal.

Food waste: Not having any planning process for the production of meals and supply of raw material take the department to have skus with stock out, others with insufficient stock to meet the customer's needs and others with overstock. The ladder is the principal cause of food waste in the department.

Stock-out of many SKUs: It is not only the lack of raw material and production planning that causes stock-out of prepared foods SKUs. It is also the lack of containers to either pack or serve the customers, and it is becoming a regular thing.

Low customer satisfaction: Having complete gondolas is one of the main goals of a store operation in a supermarket. Having stock out for the customer to see will only result in losing a vital sale but also could mean losing a customer. ABC has many customer complaints because of the lack of stock of many SKUs in the prepared foods department.

Lack of employee motivation: Having to deal daily with angry customers and receiving poor treatment can seriously affect an employee's performance and behaviour. It can lead to a loss of motivation and even a higher employee turnover.

It is safe to say that those issues mentioned above are only a consequence of the real problem that has to be resolved in the department. The demand forecasting process has to be improved or implemented to eliminate the issue the department has been having for years now.