Brief
AgroHub is the first vertically integrated retail company in Georgia to offer organic groceries – both domestic and imported. The notion of production facilities came from the original mission of the company – to ensure access to food of the highest quality. That's why AgroHub took over the control of production and its offerings to customers at every level – from the purchase of raw materials to sales planning. This, in turn, has created efficiency challenges that LEAFIO has helped solve.
AgroHub was founded in 2016, and today it is a well-established company :
- Supermarkets operate in Georgia's largest cities;
- In-house production of beef, pork, and poultry products;
- Secondary processing of food products was launched: canned goods production, production of ready-to-cook meals, cold and hot dishes, confectionery and bakery, dairy products (including more than 100 kinds of cheeses), and ice cream;
- Wine cellars are stocked with 14 different types of Georgian wines;
- 200+ convenience goods and 1500 FCMG goods are imported directly;
- 10,000+ products in the assortment
By the time the optimization implementation had started, AgroHub had already used an ERP system with deep analytics on inventory, cost, operational processes, and finance, and had established full production and trade cycle management.
The challenges
Inventory management challenges were revealed during AgroHub's active scaling phase and were primarily connected to inaccurate orders since the ordering process was decentralized and manual. This led to:
- Occasional surpluses in certain categories resulted in waste and financial losses.
- Other categories and SKUs were understocked, and led to OOS and lost sales.
- The company management decided to implement a replenishment automation solution.
Project objectives:
- Increase the efficiency of operational processes, and speed up communication between production, sales, and warehouses regarding assortment planning, production, and trade volumes;
- Automate and optimize routine tasks in inventory management based on sales dynamics and ordering for just-in-time deliveries for each store individually;
- Reduce current overstock in the warehouses and stores;
- Solving the problem of out-of-stock popular products and seasonal items during periods of high demand.
Why did AGROHUB select LEAFIO as a vendor?
AgroHub considered multiple inventory optimization vendors, and the majority of them did not fit the requirements:
Some of them did not have smart algorithms for auto-ordering, and the problem for the buyers would not be solved. Some solutions consisted of a number of disparate modules, which led to the understanding that it was unlikely to simplify already complex production and sales processes due to the growing number of control points.
Individual solutions proved to be prohibitively expensive and too functionally complex to implement, while AgroHub was looking for the optimal balance between the cost of the solution and the clarity and speed of its implementation in the business.
During the search, the company management sought the advice of several of their partners in Georgia who had already used LEAFIO Inventory Optimization and noted the following.
The thoughtfulness of the solution, which combines the functionality, aesthetics and ergonomics of software inventory management in a single cloud environment. The latter fact was also noted as a separate convenience, because it allows an unlimited number of users to access the platform tools not only in the workplace, but from anywhere in the world where there is internet access, directly from the browser, without any additional programs and settings.
Competitive pricing policy for the subscription and implementation, the quality of the training, the level of professionalism and customer focus of the support staff, who constantly meet and exceed expectations, were also important factors that tipped the scales in LEAFIO's favor. The first store that was launched as a pilot further scaled to the entire chain after receiving positive results.
Project outcomes:
Like-for-like analysis of the first three months, in comparison to the same period last year, revealed:
- Average inventory levels decreased by 12%, with a concurrent 18% increase in turnover;
- The average inventory surplus decreased by 39%;
- The rate of lost sales decreased by 37%;
- The average inventory turnover rate decreased by 6 days or 11%.
These figures were achieved primarily by reducing errors and supply chain disruptions due to the conversion of orders to automatic mode. More accurate than manual, optimized for the current dynamics of demand auto-ordering of goods – in our case, these are:
- less “dead stock”: less loss due to spoilage and damage of goods;
- less overloading of warehouses and lower fixed costs;
- increase of turnover and total sales volume by constantly having enough goods which are in good demand in the current period, and quick optimization of the assortment depending on the sales dynamics of the key groups monitored in the system, reports Teimuraz Giorgobiani, Executive Commercial Manager of AgroHub.
"For me, retail automation is first and foremost about less chance of error in tracking sales and order planning. And LEAFIO Inventory Optimization proves this convincingly in our business practice,” he adds.
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