Inventory Gaps in Myanmar

Inventory gaps are common in Myanmar.  Recently, we visited Ocean in Hlaing Thayar and discovered an entire aisle (well, 30% of it was devoted to UHT milk) was covered up with non milk products to hide the fact that there was no milk.  Actually, I managed to find the last 2 containers of milk (Tetra packed, from Thailand).  And there was plenty of local milk in the fridge section.  Walco makes a nice milk locally.

Walco Dairy Products

Walco Dairy Products

Other shortages commonly experienced with FMCG in Myanmar (to the chagrin of many newby expats here) include cereal, cheese, Greek Yogurt, baking ingredients, Doritos and Cheetos, and most functional foods.  Consumer Durables are also not immune and it is often faster cheaper to fly to Bangkok to replace or repair electronics.  Car parts are easy to find and inexpensive (provided they are Japanese).  Fashion is another industry with serious shortages and price infkations (at least on brand name quality fashion).

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One way to better predict inventory shortages is using the inventory turnover ratio:

Cost of Goods Sold (monthly) ÷ Average Inventory (monthly) = Inventory Turnover Ratio

According to “Marketing By The Numbers: How to Measure and Improve ROI of Any Campaign,” by Harden and Heyman (2011),  “A turnover ratio of 12 would indicate 1 month’s worth of inventory on hand (page 58). Therefore an ITR of 6 is two months inventory and 24 would be only about 2 weeks.

We can use this number in planning a campaign.  Before implementing a campaign, the ITR will tell us if we have enough inventory to supply the projected (hoped for) surge in demand.  Without knowing this, we risk disappointing our customers and a serious market campaign backlash.  It happened to ToysRUs in 1998 and resulted in a highly publicised fraud campaign.

The benefit of the ITR for calculating ROI on your marketing campaign will be to show that if you have an inventory gap, the cost to lower the ITR to meet projected demanded (including rush orders on inventory, OT and other costs of goods sold, etc.) Will impact your ROI.

In the case of Myanmar, this is usually not the issue.  The main cause for inventory gaps at the local grocer usually have to do with the purchasing department, currency fluctuations (currently the USD is 1560 MMK), shipping and logistics (most manufactured goods and fmcg are imported), and infrastructure.

City Mart and Ocean are the largest supermarket chain in Myanmar and popular with expats.