About the company
Divocin is an Eastern European supermarket chain that operates in the "hard discount" format. The company focuses on affordable prices, which are 15-30% lower than the market average. The stores are mostly located in the suburbs. The chain's stores offer over 1200 SKUs. The retailer cooperates with both consumers and the B2B market.
Before implementing LEAFIO Inventory Optimization
- Inventory management: through the auto-order module in the accounting system (in semi-automatic mode).
- Commercial department: department head, 8 supply managers (with responsibilities of supply manager and category manager), 1 foreign trade manager, 3 monitoring specialists, 1 manager for automated inventory management.
- Demand calculation method: linear, without taking into account the SKU's life cycle.
- Analytics: lack of quality data.
The management planned to expand the chain. Within the implementation period, 2 stores were opened, and 5 more were opened a month after the implementation. Currently, new store openings are already planned throughout the region.
Scaling up the business created the need to reduce manual modes and replace them with automatic ones. The company was looking for a solution that would reduce operational time spent on order processing by the staff involved. In addition, the company was concerned about the lack of high-quality analytics (especially visualization and informativeness of reports) necessary for making management decisions.
The implementation process
According to the Project Manager, the implementation was fast, without complications, and within the framework set out in the roadmap. This was facilitated by the professionalism of each of the links involved in the implementation, as well as a detailed and transparent description of business processes from the Divocin management.
Implementation stages: system setup, data upload and synchronization with the accounting system, team training, fine-tuning.
Personnel involved in the project: commercial director, 2 specialists of the monitoring department, and 7 category managers. At the last stages of implementation, a supply manager joined the team and was subsequently assigned the responsibilities of category managers for routine work on stock analysis and ordering.
Communications: regular stand-ups, creation of 2 separate working chats for different teams, creation of a list of technical documents and a reference knowledge base.
The network team quickly absorbed the new information on how to set up and manage the system. They were actively engaged in LEAFIO Inventory Optimization from the very first days of training, which helped to avoid difficulties in adaptation and accelerate the learning process. Finally, it was only necessary to introduce managers to the elements of specific settings and the use of the reporting module.
The motivation and active involvement of the commercial department's specialists contributed to the formation of useful comments and suggestions regarding the system's settings. The in-depth knowledge gained helps to receive feedback and suggestions for further joint development of the functionality even after implementation.
Key effects of LEAFIO Inventory Optimization implementation
As a result of the implementation, the team was able to:
- Automate the majority of routine inventory management processes.
- Obtain quality analytics data for management decision making.
- Accelerate the process of forming and processing orders.
- Cut labor costs by several fold.
"The LEAFIO Inventory Optimization system has provided more accurate demand forecasting by reducing the influence of the human factor on quantitative indicators. We also received tools and mechanisms for detailed analysis of turnover, which allowed us to reduce costs even during the period of economic instability," says the commercial director of Divocin.
The analysis of overstocks and lost sales allowed the company to avoid getting into out-of-stock with a narrow matrix of "social" list of goods (especially in the conditions of the "hard discount" business format). The dead stock analysis, in turn, allowed the company to free up funds by paying attention to products with declining demand.
A new manager responsible for inventory management using the LEAFIO system joined the team. Thanks to the changes, the 4 category managers are now able to focus on more strategic tasks, such as working with suppliers and ensuring favorable conditions for the company.
- The assortment connected to auto-order is 84.2%.
- Overstocks in connected products decreased by 15.98%, in the fresh category - by 49.09%.
- Availability of connected products increased by 10.8%.
- The turnover of connected products accelerated by 23.08% (from 45.5 to 35.0 days), in the fresh category - by 18.84% (from 6.9 to 5.6 days).
The Divocin retail chain continues to observe positive growth in performance and a qualitative effect of the LEAFIO Inventory Optimization system implementation. Inventory management automation has made it possible to more efficiently implement network expansion, streamline deliveries to existing outlets, and use the analytics data to optimize work with new stores.