How to increase sales by 23% through centralized inventory management

Daily is a rapidly growing regional chain of convenience stores in Georgia. At project onset, the chain boasted 170 stores offering 4500 distinct SKUs, culminating in an expansion to 194 stores upon project completion. As of the end of May 2024, there were already 227 stores in operation. Additionally, the company has opened its own distribution center. Besides consumer goods, Daily offers confectionery and ready-to-eat meals. 

Daily's strategy revolves around regional expansion and catering to consumer demands with a universal product range. To realize this vision, the company opted to leverage LEAFIO AI's inventory optimization expertise.

Before the implementation of LEAFIO Inventory Optimization, part of the assortment of the Daily chain was connected to auto-ordering through the ERP system. Inventory management involved store managers and a separate department consisting of a head, two managers, and two specialists. The department itself was subordinated to the operations division.

The main challenges in inventory management that required a comprehensive solution include the following:

Store managers manually adjusted all auto-generated orders in the ERP system based on their perspectives, leading to staff overload and heightened human error. The lack of control and transparency resulted in unforeseen surpluses or shortages of goods. Inaccurate inventory data further exacerbated delays in goods receipt and inventory management.

Due to irregular inventory checks at some stores, managers could inadvertently cancel orders for essential items without being aware of stock depletion.

The network lacked regular analysis of critical inventory management indicators, further compounded by the absence of a convenient tracking and analysis tool. These indicators had to be manually calculated, leading to delayed identification of issues such as product shortages or lost sales.

Information about planned promotional activities was not received in time in the ERP. In addition, the system did not have enough functionality for effective management. The order volume of goods for promotions was calculated manually in Excel, without the ability to immediately view already planned orders. 

This made the process chaotic and often led to overstock or shortage of promotional goods and late deliveries. These problems forced the company to look for an automated solution to optimize its management processes.

Before implementing LEAFIO Inventory Optimization, Daily's representatives set several goals for the team:

1. Structure business processes.
2. Centralize inventory management.
3. Minimize the human impact on inventory management.
4. Combine data and processes into a convenient tool for analysis and control.

The implementation of LEAFIO Inventory Optimization was carried out following the standard project roadmap and was completed on time.

The proactive project team at Daily contributed to the success of the implementation. The head of the inventory management department led the project from the client's side. The chain's management decided to hire an in-house IT specialist, which helped to better control and implement the processes. The team also included representatives from the inventory management department. Specialists from the commercial and marketing departments were involved in solving certain issues.

1. Integration. At this stage, interaction between the LEAFIO and Daily teams took place daily via video conferences, phone calls, and emails. Here, the conditions and business processes were studied, and the integration with the client's ERP was performed.
2. Training and pilot launch. The second stage of implementation involved offline training of the involved specialists directly in Georgia. During the same period, the first orders were launched in the pilot category - Tobacco Products. We connected suppliers for the entire network at once.
3. Scaling. At this stage, the teams scaled up the project and connected existing distribution centers, built a process for planning promotions, and got acquainted with and learned how to work with the analytical unit as efficiently as possible. 

During the rollout, the implementation teams achieved the following results:

• Daily's managers facilitated supplier integration with LEAFIO Inventory Optimization, streamlining the majority of procedures through automation. This optimized the procurement process, diminishing the impact of human error.
  
  
• The implementation ensured assortment organization and accurately determined the required quantity of goods for each store.
  
  
• The chain successfully automated and optimized sub-sorting goods management, resulting in increased efficiency and accelerated delivery speeds.
  
  
• The system automates all calculations and initiates orders seamlessly. Chain specialists benefit from detailed analytics of the outcomes, empowering them to enhance future endeavors.
  
  
• A centralized storage and exchange of essential information via ERP has been established, ensuring seamless communication and data accessibility across the chain.
  
  
• Users now have access to a comprehensive tool that not only automates order generation but also features a user-friendly dashboard offering insights. This allows them to analyze product schedules, delve into order details, assess inventory management effectiveness, and access essential product information—all within a unified system.

"The relevance of current balances is one of the factors in the correct operation of the system for calculating orders, and therefore the key to success. To obtain up-to-date balances, we also made internal changes in operational business processes," George Turdzeladze, Executive Director at Daily.

The implementation of the LEAFIO Inventory Optimization has significantly improved the management of goods and helped the Daily chain optimize its business processes for more efficient and competitive operations.

During the project implementation, the Daily chain expanded from 170 to 227 stores.

After the implementation of LEAFIO Inventory Optimization:

• Sales increased by 23%.
• The inventory turnover rate improved by 16%: from 30 to 24 days.
• Average availability increased by 8%.
• 99.5% of orders are generated and sent by the system automatically without the need for managerial intervention

The tangible outcomes reveal a notable enhancement in goods availability across all categories, as indicated by the ABC analysis. Simultaneously, since connecting the assortment to orders, excess inventory has decreased by 17%. These achievements stem from the centralized and automated inventory management system. 

Additionally, internal organizational adjustments within the company have been instrumental in this improvement. Despite fluctuations in supply impacting goods availability, the percentage of order adjustments has consistently remained minimal.

"The implementation of the LEAFIO Inventory Optimization system showcases immense potential for enhancing business efficiency. We've witnessed substantial improvements in inventory management, sales growth, and product availability. These outcomes affirm the success of the project and underscore its critical role in Daily's ongoing development." - George Turdzeladze, Executive Director at Daily.

The positive outcomes experienced by our clients serve as inspiration for our continuous advancement. At LEAFIO AI, our mission is to revolutionize inventory management across every dimension. Reach out to our team today to discover how we can empower your business to achieve even greater efficiency.