“The Bee” Supermarkets is a Ukrainian retail chain consisting of 38 stores and distribution centers with an assortment of 15,000 SKUs specializing in groceries as well as in-house production.
The business faced new challenges due to the Covid pandemic. To survive it, it’s not enough to just use marketing tools and communicate that your brand is better than competitors. You have to prove your level of service, assortment, and flexibility. Retailers are now choosing a strategy to deal with internal issues. Many resources can be wasted due to internal business process bottlenecks. Because of that, Bee Market initiated an inventory management system, as this is one of the most important processes for a retailer.
Challenge: Sales Increase
Prior to the introduction of the Leafio Inventory Optimization Solution, inventory management used to be done manually causing disordered purchasing:
- Overstocks;
- Empty shelves as a result of incorrect order quantity;
- Inability to handle a large number of parameters caused mistakes due to human error.
Bee Market management had a clear vision that inventory management can be more efficient if it’s automated. So the the company decided to look for a solution that could handle all these tasks:
- 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, the 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 would allow the use of resources and scale. It’s more than just a tool; the system influences the key factors of retailer profitability:
- reduces overstocks and releases capital invested in inventory;
- improves inventory turnover;
- improves service level that helps eliminate lost sales.
Automatization and high-quality analytics are powerful tools for improving competitiveness in the market.
Process: Inventory Management 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;
- clients are referred to the Leafio Customer Success department for long-term support.
A Leafio Project Manager managed and supported the process through every stage. It’s not just typical consulting, but a complete immersion into the project, using a proven methodology and a personal approach with 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 has been automated, so mistakes from the human factor were eliminated. The current purchasing process is centralized. As a result, a more accurate and organized HQ can see and control inventory dynamics across the whole retail chain, not just each store separately. It allows the right strategic decisions to be made.
Accurately calculated order quantity
The retailer’s employees had some concerns about the probable lack of ordered goods during the implementation of the system, but after some time they made sure that the orders were 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 makes on-time purchases while minimizing 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 to analyze the supplier’s reliability overall.
Many managers believe it’s better to order more than less. This ensures availability, but may cause overstocks that negatively impact the retailer’s profitability.The Leafio Inventory OptimizationSystem determines a balance in ordering that ensures profitability for the retail chain.
