“The Bee” Supermarkets is a European retail chain consisting of 38 stores and distribution centers with 15,000 SKUs specializing in food products as well as an in-house production.
The business faced new challenges due to the 2020 pandemic. To survive it becomes not enough just to use marketing tools and communicate that your brand is better than competitors, but it has to be proven by the level of service, assortment, and flexibility. Retailers are now choosing a strategy to deal with internal issues. Many resources can be wasted due to the internal business process bottlenecks. Because of that, “Bee market” initiated the inventory management system establishment, as it’s one of the most important processes for the retailer.
Challenge: Sales Increase
Prior to the Leafio Inventory Optimization Solution introduction, inventory management used to be done manually causing a mess in purchasing:
- Overstocks;
- Empty shelves as a result of incorrect order quantity;
- The inability to handle a large number of parameters caused mistakes due to the human factor.
“Bee market” management had a clear vision that inventory management can be more efficient if it’s automated. So that’s the reason the company decided to look for a solution, that can handle all these tasks:
- To reduce manual work and decrease human resources involved in that by automating the replenishment function.
- Generate orders, based on actual demand, seasonality, and promotions.
- Have a clear algorithm for managing perishable goods, that specifics of short shelf life and frequent deliveries.
- Establish stable cooperation with suppliers, and avoid surpluses caused by purchases.
The Leafio Inventory Optimization Solution's implementation goals were to reduce overstocks, increase sales and create an inventory management process that will allow releasing of resources and scale. It’s more than just a tool, system influences the key factors of retailer profitability:
- reduces overstocks releasing capital invested in inventory;
- improves inventory turnover;
- improves service level that helps eliminate lost sales
Automatization and high-quality analytics - are powerful tools in the competitive market.
Process: Inventory Management System Implementation Stages
The Leafio Inventory Optimization Solution implementation stages:
- analysis of current inventory management business processes;
- data exchange of client’s ERP with Leafio;
- education sessions for the employees;
- analytics module setup;
- client’s transfer to Leafio Customer Success department.
LEAFIO Project Manager was managing and supporting the process throughout all the stages. It’s not just a regular consulting, but a complete immersion into the project, using a proven methodology and a personal approach to each client. The Leafio experts accompanied users personally when creating the first orders and analyzed KPIs using reports.
Result: Economic effect of Leafio implementation
The retailer has completely redefined its inventory management. The majority of manual work was automated, so human factors and mistakes were eliminated. The current purchasing process is centralized, and as a result more accurate and organized and HQ has a possibility to see and control inventory dynamics across the whole retail chain, not each store separately. It allows for making the right strategic decisions.
The accurately calculated order quantity
The retailer employees had some concerns about the probable lack of ordered goods generated by the system during the implementation stage, but after some time they made sure that the order was calculated accurately. The system's target stock levels are determined for each SKU at each location; it never orders the wrong quantity, constantly monitoring the demand dynamics. The fresh category is managed by a different algorithm that allows to make on-time purchases, as well as minimize waste.
High-quality analytics and a new approach to working with suppliers
The company has received a new analytics tool of actual data for top management, operational staff, and category managers with 20+ reports. For example, one of them is useful in optimizing cooperation with the suppliers, because it allows them to evaluate sales and purchases, inventory turnover, and stock balances for selected goods, and all in all to analyze the supplier’s reliability.
Many managers believe it’s better to order more than less. It allows to ensure availability but may cause overstocks that negatively reflect the retailer’s profitability. prone to order more as it eliminates lost sales, however, it negatively affects the retail chain's profitability due to overstocks. The Leafio Inventory Optimization system determines a balance without buying more goods if it is not profitable for the retail chain.
