Supermarkets

Novus

How to make an in-demand product available in stores without tying up extra funds in a surplus: The Novus chain case

Novus case study

Novus Supermarket chain is one of the TOP 10 retailers in its market.

Locations:

86

Total assortment:

40,000

Years on the market:

13

The Novus supermarket chain is one of the TOP 10 retailers in its market. The Novus retail chain promotes an agenda of fresh, healthy and delicious products. The chain offers more than 40,000 items of various product categories (from food and beverages to clothing and garden tools) and a wide range of its own exclusive products. There are also products imported to Ukraine specially for a sales chain. Novus stores offer a good selection of organic, environmentally friendly, and diet-friendly products. As of September 2021, Novus had 82 supermarkets.

The Novus supermarket chain has an up-to-date management system. The company is not only committed to improve current processes and constant analysis but also has a special project management department, whose task is to re-engineer those processes that can significantly affect the company's efficiency.

Due to an increase in the number of chain stores, as well as its own DC construction, inventory management became increasingly less effective and everyone understood that minor improvements could not fix the situation.

The Novus project management department was given the task of selecting and implementing a modern inventory management system, as well as optimally building all related business processes.

When searching for and choosing a solution provider, the main requirements were:

  • availability of consulting expertise in optimizing inventory management business processes;
  • willingness to quickly achieve actual results in a pilot store;
  • low initial investment in the project.

Novus ultimately opted for the Leafio Inventory Optimization system. Novus liked the functionality and interface of the system, as well as the implementation methodology and the experience of the consultants, and also the results of system implementations by other clients.

For the pilot project, two stores were selected that were as similar as possible in terms of size, assortment, customer traffic, and sales rates.

One of the stores continued working according to the old processes, but the second one was managed by the Leafio Inventory Optimization system.

The pilot project took 12 weeks and showed the following results:

  • 21% inventory reduction;
  • 48% surplus reduction;
  • 11% lost sales decrease.

The same effect of a systemic reduction in surpluses and lost sales was observed with further scaling of the system to all stores in the chain.

After successfully proving the results of the pilot project, the company's management began scaling to the entire chain, which took another 5 months.

As a result of the project implementation, the generation of orders for all stores and distribution centers was completely centralized. Prior to the project, orders for stores were generated by merchandisers in stores, and a department of 5 people in the central office dealt with orders for DCs. After the implementation of the system, the same 5 people manage the entire chain inventory, including stores. At the same time, they can devote more time to analytics and work with suppliers more than before, when all orders were reviewed and sent manually.

Due to centralization, the number of human errors and incorrect orders has been significantly reduced, as stores do not always have highly qualified staff and a higher rate of staff rotation.

Managers received a very powerful Leafio Inventory Optimization analytical module, which allows them to find the reason why there is overstock or understock, identify problematic suppliers, and find delayed orders within a few minutes.

Results in figures:

  • 10% More sales;
  • 15% Improved turnover;
  • 11% Less stock;
  • 98% SKU service level.

Thanks to internal processes streamlining and Leafio implementation, the funds tied in excess stocks were successfully released and invested in the chain’s development.

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