“With the help of Forecast NOW!, we were able to improve the quality of inventory management in our company, making the process more systematic and automated”, said Head of the Supply Department, Poryadok Network.
Company Profile
- 25 years in the wholesale trade of home and garden goods.
- 10 years in retail trade (Supermarket chain).
- 47 supermarkets.
- 60,000 people visit the stores daily.
- Own an online store.
- Both wholesale and retail directions.
- Over 40,000 unique SKUs.
Preconditions for Implementation
Before the implementation of Forecast NOW!, the company used its development - an auto-ordering system based on ERP 1C, operating under the Theory of Constraints (TOC) methodology. The company had been using this system until the fall of 2018. Given that each store is unique with personalized settings, ensuring adequate stock was a labor-intensive process. On average, preparing an order for one store, including the processing of documents and the formation of supplies, took about 2.5 hours.
The Head of the Supply Department at the "Poryadok" network describes how the company operated previously:
With the active development of the network, the main task was to optimize order formulation and calculation. Firstly, this concerned improving the quality of calculations. It was necessary to reduce order adjustments, as this was time-consuming. Consequently, the accuracy of orders needed to be high enough. Since the human factor is always present, the system had to maximize process automation.
The preconditions for implementation were the need to:
- Increase the speed and accuracy of order formulation.
- Minimize manual adjustments.
- Improve inventory turnover.
- Increase the availability percentage and reduce the proportion of non-liquid inventory.
System Selection and Implementation
In November 2018, a decision was made about the necessity of using an automated inventory management system. A tender was conducted to select the system. After a thorough analysis, the decision was made to implement Forecast NOW!. With significant experience in inventory management at the time of selection, the company's employees found in Forecast NOW! the functionality that they had previously lacked.
“One of the priority factors that influenced the choice was the consideration of seasonality coefficients. This was important for us since a large part of the assortment in some cases has a seasonality variation coefficient of 2, 3, and even 4 relative to the average. Here, one cannot simply look retrospectively at the previous month without assessing prospects or evaluating the probability over the planning horizon. Managing without evaluating the history of past years and without calculating the seasonality coefficient is very difficult”, - said the Head of the Supply Department, "Poryadok" Network.
Additionally, as noted by the company, apart from the direct functionality of calculation and formation of reserves in Forecast NOW!, there were numerous additional features: systematic work with the assortment, analytical module, and reporting.
At the end of November 2018, the process of integrating Forecast NOW! with the accounting ERP system 1C began, followed by testing in 2 stores of the network for six months.
Following the testing, from June 2019, over 2 months, the company transitioned all remaining network stores to ordering goods through Forecast NOW! for the entire assortment.
From September to December 2019, the final iteration of the program setup was conducted across the entire network. The company configured the calculation of seasonality coefficients for all segments using auto-rules. This allowed for the maximum automation of all order calculations and a full switch to Forecast NOW! without making significant additional adjustments to the orders.
Implementation Results
- Since the implementation of Forecast NOW!, 17 supermarkets and 1 Distribution Center (DC) have been opened. The number of suppliers has doubled. The staffing level of the supply department remained unchanged.
- Currently, the company operates 47 stores and 2 DCs, all managed through Forecast NOW!. A hierarchy of warehouses is set up - some stores are linked to one DC, others to another. When forming the needs of the stores, their location and affiliation to the DC are taken into account.
- The time taken to prepare orders has been reduced by 7.5 times. On average, it now takes about 20 minutes to prepare an order for a supermarket, conduct verification, calculate balances, and arrange shipments. This was achieved through the automation of balancing and more detailed parameter settings. Before the implementation of the program, this process used to take about 2.5 hours.
- The inventory turnover in days was at a good level before implementation, but as the company grew actively, the dynamics of the indicator began to deteriorate. Using Forecast NOW! helped to stabilize the situation.
- The share of non-liquid inventory decreased by 0.5%.
- The report on the analysis of inventory efficiency allowed the company to approach the structure of store inventory in a new way. Combined with ABC analysis, new directions in inventory optimization were identified.
- Automated assortment management considering shelf storage in stores has been implemented. The program receives a matrix of products and calculates the necessary order quantity. Now, assortment management is automated based on the availability of goods on shelves and racks in the store, thus customizing the product matrix for each supermarket.
- An online store has been launched, for which demand is formed through the program as a separate sales channel.
The company also highlighted several advantages of the software product:
- Nightly balancing (between DCs and branches) and nightly calculations, which allow for ready-made orders that hardly need any adjustments (⅔ of the store is formed daily).
- The program allows for individualized management of each store, considering their specific features. The company has several store formats with varying assortments, and an individual approach to inventory management has been developed and configured for each format. Subsequently, managing different formats was automated using auto-rules.
- A tool that allows for a systematic approach to inventory management: order calculation, comprehensive situation analysis, and reporting.
- Using ABC analysis and Efficiency Analysis helps identify excess stock and distribute it across the network, bypassing the distribution center.
- Efficiency analysis assesses the inventory structure and gives a clear understanding of the turnover provided by specific groups of goods, guiding the direction of development.
- The product's independence from any other accounting system opens up good prospects for customization and use.
- Flexible settings and the ability to process large volumes of data.
Changes in the Work of the Supply Department with the Implementation of Forecast NOW!
The implementation of Forecast NOW! has freed up the supply department staff's time significantly. Before the program's implementation, 70% of the time was dedicated to working with stores - calculating needs and forming orders. 20% of the time was spent working with suppliers, and 10% on analytics.
After implementation, supplies began to be formed earlier, and the time taken to organize delivery routes and the delivery duration itself was reduced by one day.
Now, forming retail orders takes up 35% of the time. Additionally, 40% of the time is spent working with suppliers. The number of suppliers has almost doubled, and a new distribution center has been opened. The staff has more time to work with the product range, manage the assortment, participate in other projects, and develop new directions, such as working with marketplaces. Despite these increased responsibilities, the size of the staff remained the same.
"Forecast NOW! has helped us free up our employees' time to take on additional functions and expand our scope of activities." - Head of the Supply Department.
