Berezka is a grocery retail company with 80 stores in Bulgaria, Romania, and Cyprus that carry 1400 SKUs on average. The company also has three distribution centers and three manufacturing sites.
The project objective for Berezka was to automate order generation, reduce overstocks and increase sales by eliminating lost sales and improving turnover.
Challenge
The first Berezka grocery store opened in 2009 in Varna, Bulgaria. Originally, the company was a family business, and the founders could not have foreseen it would soon be present in all major cities in Bulgaria and Romania.
Prior to the introduction of LEAFIO Inventory Optimization, the company had no IT solutions for order management automation – all the processes were manual and decentralized.
In all retail chain stores, stocks were administered by managers who worked as sellers as well. The orders were manually made in Excel, causing numerous errors: missed orders, reorders, under orders. Whenever managers generated orders, stores faced poor service quality.
Therefore, Berezka's management aimed to eliminate the human factor in the order generation process and focus on their sales, merchandising and mini-audits. The company initiated the automation of the order generation process as the business started scaling and expanding. The company set the following goals:
- redesign the inventory management system;
- automate the order generation process;
- reduce inventory and increase sales by eliminating lost sales;
- improve turnover.
Management was almost about to abandon their goals, as it was quite a challenge to introduce order automation into a decentralized system. Firstly, they considered developing an in-house IT solution, but it turned out to be quite expensive and time-consuming. Out of several companies on the market, they eventually chose the LEAFIO AI team for its professionalism, flexibility and product favorability. Let’s take a deeper dive.
Process
The LEAFIO AI team and the client team have launched the following processes:
- Integration of LEAFIO Inventory Optimization with current ERP system
- Soft launch of LEAFIO AI on a limited number of stores and SKU’s
- Training employees to work with the system to effectively control and manage inventory.
- Scaling of LEAFIO AI for a defined range of locations and SKU’s and automation of all the main assortment orders
- directors' working process with the inventory management was redesigned and concentrated on customers, merchandising and mini-audits;
- only 2 people were allocated to manage the entire inventory system in the central office rather than having at least one employee in each store.
Outcomes
Implementing LEAFIO Inventory Optimization has brought about significant improvements for Berezka. These changes have not only optimized inventory processes but also led to substantial business growth. Below are the key impacts observed:
Within the first 6 months after implementation:
- 25% Average Stock Reduction:
The automated system helped Berezka reduce excess stock, freeing up capital and storage space, which was previously tied up in overstock. - 13% Inventory Turnover Improvement:
Enhanced forecasting and order accuracy resulted in faster inventory turnover, ensuring fresher stock and reduced waste. This improvement allowed the company to better meet customer demand and maintain product availability.
Over the course of the last two years:
- 46% LFL sales increase;
- 12% overstock reduction;
- 20% inventory turnover improvement.
During the last two years, the number of Berezka stores has increased from 61 to 80, demonstrating the company's growth and the scalability of its operations.
Qualitative Results:
- Centralized Inventory Management: The entire inventory management process has been centralized and streamlined, now efficiently managed by just two employees in the central office. This centralization has significantly reduced manual errors and improved overall efficiency, allowing for better control over inventory across all stores.
- Quick Response to Bottlenecks: The system's analytical reports and insights have enabled quick identification and resolution of bottlenecks. This agility has allowed Berezka to maintain smooth operations even during peak periods, ensuring that any issues are promptly addressed.
- Simplified Scaling Process: Connecting new stores to the system has become a straightforward task. The system automatically generates orders for new stores based on existing data, ensuring they are well-stocked from day one. This seamless integration supports the company's expansion efforts.
- Freed Up Managers’ Time: By automating routine tasks, managers now have more time to focus on strategic and analytical tasks, such as merchandising and enhancing customer service. This shift has improved both employee productivity and customer satisfaction, as managers can dedicate more attention to critical areas of the business.
- Earlier Order Processing: Central warehouses now receive orders from all stores by 8:00 AM, compared to the previous cutoff time of 1:00 PM. This change has streamlined the supply chain, ensuring faster and more reliable restocking, which contributes to better inventory management and customer satisfaction.
These improvements underscore the transformative impact of LEAFIO Inventory Optimization system, driving operational efficiency and supporting Berezka's continued growth and success. The integration of advanced technology and streamlined processes has significantly improved Berezka’s inventory management capabilities and overall business performance.
