ToiMart is a large discount supermarket chain in Kazakhstan with a large selection of soft and alcoholic drinks, food, household cleansers, etc., at wholesale prices. Most of the assortment is taken up by drinks – from local producers to a wide range of elite alcoholic beverages from all over the world. Starting with one store in 2014, ToiMart has expanded to 41 outlets in 2022.
Before the solution was implemented
Before implementing LEAFIO Inventory Optimization, an AI-based inventory management solution, ToiMart managers were generating orders at each outlet manually through the accounting system. Depending on the outlet's format, from 1 to 3 employees were involved in order generation, which amounted to about 100 people across the entire chain. The inventory management approach in ToiMart was decentralized and lacked standards, indicators, and control points. It relied solely on the expert opinion of individual managers without a systematic approach in place. However, this process complicated order management due to conflicts of interest between various departments (commercial and operational) and the fact that order decisions were left to the discretion of the store managers. This resulted in the orders being adjusted based on the manager's logic and understanding of the process, which prevented complete automation and hindered achieving certain quantitative results. Additionally, the analysis and retrospective assessment of problematic areas remained opaque, unclear, and challenging, as it required communication with the stores to identify reasons for order adjustments, among other things.
There was no systematic approach, not only in order management but also in the category management. There was no interaction between the operations and commercial departments. The stores were stocked with no attention paid to the assortment depth and width. Accordingly, order management was reduced to ensuring the display and stocking of products that were in high demand. There were also no tools for sales reporting and control.
Therefore, one of the key objectives was to change this business process and move from decentralization to centralized management at the head office. Initially, the client did not see the need for this change and was reluctant to change the process until they could see the logic and effects of the system.
As the chain expanded, ToiMart faced goals that required new technological solutions.
They encountered two major challenges:
- The need to manage retail space, assortment, and promotional activity. It was important to start tracking and controlling metrics such as turnover and product availability in the stores.
- The need for a product allocation and auto-ordering system. It was necessary to automate the order creation and shipment, as well as to systematize delivery schedules directly to retail stores and through distribution centers.
Solution research and implementation
The LEAFIO Inventory Optimization solution was chosen to address these tasks. The key reason for the choice was the compliance of the system's technical capabilities with the specified requirements, as well as the team's deep expertise in auditing and setting up processes.
To integrate the solution, the client formed a project team, which included the heads of the Commercial Department, Head of Analytics, Head of Operations, IT Director, Business Analyst and Project Manager. In the first phase, the entire implementation process was conducted online under the guidance of an experienced LEAFIO project manager, who guided the team step by step through the necessary procedures. As a result, automatic data exchange between the client's accounting system and the LEAFIO Inventory Optimization solution was set up.
To make the solution operate as efficiently as possible, during the first phase the LEAFIO and ToiMart teams worked on improving internal processes related to assortment and order management. This also included integration between the accounting system and other programs – automatic data exchange in the required format was configured. After the first stage, the LEAFIO team trained about 100 system users from the entire chain. For a week, the employees in charge practiced their daily work with the solution, which allowed them to quickly and easily immerse themselves in the new interaction processes.
We had to rebuild the assortment management processes in administration, product lifecycle, and supply schedule management. This was the hardest part because we had to get used to the new tools and train employees from scratch. As a result, the company formed a new product flow management department that is responsible for automating orders and interacting with all departments involved in handling merchandise. This produced visible, measurable results.
After implementing LEAFIO Inventory Optimization, the inventory management process in ToiMart became fully centralized. The ToiMart team, after receiving recommendations from the LEAFIO team on personnel selection for order management, began the search. The candidate selection process allowed them to find a specialist who took on the function of order management, which enabled them to establish communication with the commercial department, strictly adhere to product range recommendations, have a center of competence for working with the LEAFIO system, move away from order adjustments, rely on the logic of the system, and achieve quantitative and qualitative inventory management results. Furthermore, this change freed up store managers' working time to focus on their immediate tasks. These changes allowed for a more systematic and standardized approach to order management, category management, and assortment optimization.
The new AI-based solution provided data-driven insights and recommendations, enabling better decision-making and improved inventory control across all outlets. With centralized inventory management, ToiMart was able to streamline operations, optimize inventory levels, and enhance overall efficiency in their supply chain.
As a result of LEAFIO Inventory Optimization implementation, the ToiMart chain succeeded in:
- Reaching a new level of inventory management: instead of 2-3 managers at each outlet (more than 100 employees throughout the chain), order management was delegated to a single highly qualified person working with the solution;
- Reducing labor costs and time required to prepare orders for suppliers;
- Automating the process of sending orders via EDI and e-mail;
- Controlling the turnover rate and other key chain indicators;
- Reducing inventory levels;
- Making the inventory management process transparent, which allowed the company management to track KPIs in a convenient and visual LEAFIO dashboard.
As for the metrics, in the first months of implementation, the inventory optimization solution allowed:
- A major part of suppliers switched to auto-ordering;
- Personnel were redeployed to other strategic and high-priority assignments;
- Product availability increased by 35%;
- The turnover period was reduced by 35%.