Lotok is a retail chain that currently has 98 various points of sale: supermarkets, convenience stores, and minimarkets. Here, the visitors can make their daily purchases since the range includes basic food and non-food commodities.
Challenge: How to balance lost sales and surplus of goods
Inventory management is one of the key processes in a retailer's business. An important efficiency indicator is the continuous availability of goods. The trigger to start optimizing inventory management in the "Lotok" chain was the fact that goods did not always appear on the shelves on time. There was a noticeable imbalance in the company:
- On the one hand, the company invests in non-negotiable goods due to an incorrect order;
- On the other hand, lost sales regularly occurred.
This resulted in the search for software that would help solve these two core problems. Leafio Inventory Optimization is a system that fits both functionality and price.
“We understood that by means of this system we would have a continuous sufficient availability of products to meet the needs of sales.” – Andrew, Lotok Director
Implementing the inventory management system in the Lotok chain
The project began with the analysis of inventory management-related business processes. Then the Leafio Inventory Optimization implementation plan was created, after which the project implementation began. In order to work with the system, the Lotok company created an inventory management department of 4 people who were in charge of the entire inflow of orders in the system, except for the fresh category.
It all started with the collection and transfer of data from the accounting system of the chain, followed by user training.
During the implementation in the Lotok chain, the following positive aspects of working with the program were noted:
- Quality inventory management and reduction of surplus;
- 25% increase in product availability on the shelves;
- Relies on historical demand data rather than on forecasting;
- Good analytical unit.
Result: What indicators were affected by the Leafio Inventory Optimization system?
The system was successfully implemented. To date, all points of sales and the distribution center are connected to the software. The system helped the company solve a number of key tasks: to bring governance to centralized inventory management and to increase the product's on-shelf availability. This is what the Lotok retail chain achieved from the project:
- When switching to a centralized order system, the surplus of goods decreased. As a result, funds that used to be inefficiently spent on excess stock which failed to turn over within a certain period were made available.
- The amount of time spent on the creation and management of stock in trade was reduced. The creation of orders has reduced because they just have to be monitored.
- Managers efficiently manage inventory and product availability, which is very important for the customer. This is possible because the software does not forecast but is based on demand.
- It’s now possible to improve the turnover of goods in the chain – now it is not more than 21 days.
- The product availability rose to 95%, significantly mitigating the problem of lost sales.
- During the year, the chain opened 23 new sales locations, which were also connected to the system.
“As far as the software is concerned, I would note its flexibility and the analytical unit operational capability. It makes it possible to make certain decisions for further response to inventory management.” – Andrew, Lotok Director