Usually website management in the retail industry is chaotic. The business starts with one or two stores, a few years later the network has dozens of stores, branches, distribution warehouses, etc.
And the more active the company grows, the easier it is to miss the point when inventory management becomes inefficient for retail chains:
- Sales outlets open in different regions, and inventory is distributed according to the old logic: «bring it to any point from any warehouse».
- It costs more and more to move goods between warehouses and stores, but there is no time to put things in order.
- For some items there is a constant shortage, for others there is a surplus.
The bad news is that this chaos is typical of most retailers. The good news is that it is fixable.
Retail Website Management Techniques
At the time of the pre-production survey of the company, all orders were generated by merchandisers in the accounting system in semi-automatic mode, which increased labor costs and reduced the quality of orders. There was no convenient tool to analyze the reasons for missed sales and surpluses.
If management decided to optimize and automate the stock management system and introduce additional tools to monitor the inventory level.
The following objectives were set before launching the project:
- Inventory optimization.
- Order automation.
- Increase of customers' loyalty by means of high level of goods availability in the stores.
- Opening of new sales outlets by increasing profits.
What we offer for optimization of inventories. In the process of connecting 7 stores joined 2 cafes, for which orders to the supplier had to be done separately from the stores. And a bit later, thanks to the quality work of the program, it was decided to connect 12 more grocery stores of the format «around the house» with an area up to 50 m2, the connection of which had not been provided before.
Project implementation consisted of three stages:
- Preparation for the launch of the Cetera system.
- Training of work with the program, its algorithms and functionality. Connection of 7 stores.
- Learning to work with system reporting. Connection of central warehouse.
During the first stage we discussed internal business processes of the company to define the tasks of preparing the program implementation. Terms of reference for the organization of automatic data exchange between the accounting system of the company and the Cetera system were agreed upon and implemented.
Dynamic buffer management
At the second stage the assortment of 7 stores was connected — in Cetera buffers (target stock level at each storage point for each SKU) were calculated.
Safety buffer data was also updated, allowing the Cetera system to maintain the stock needed for both sales and display.
Cetera Labs Algorithms system
To manage products that have a short shelf life (perishable) in the system Cetera Labs has configured the algorithm Fresh (Fig. 2), based on statistical sales forecasting.
In the course of connecting the goods according to the algorithm, Fresh detected a problem of organizational character, namely, untimely write-off of goods and as a consequence - the untimely execution of documents. Identification of this problem enabled the company to take measures and improve processes for working with perishable goods. The following commodity groups are managed by this algorithm: Fruits and vegetables; Greens; Confectionery (cakes, pastries, bread).
Inventory management in retail is often done through a distribution center. After connecting all the stores, moved on to the third step — to connect the central warehouse. Management of the CA in the system Cetera Labs is carried out by its own algorithm — DFO (demand-oriented ordering), which calculates the demand based on the demand of the entire network, rather than the consumption of the replenishment link (Fig. 3). It should be noted that the demand of the network is estimated for the delivery period of the central warehouse, and for each store of the network this period may be different, based on the schedules of orders and deliveries from the CA to the stores.
For certain goods there was an adjusted DFO-Fresh tie-in: when perishable goods are transported through the CA (for example, vegetables).
During the project, it was found that some of the goods supplied by the Central warehouse are not stored there, i.e. supplied by the scheme of cross-docking. Cetera system easily copes with this problem and solves it as follows: the orders from each store according to need, then they are consolidated at the CA and sent to the supplier — the executed consolidated order is immediately distributed to stores according to the original orders. This takes into account order multiplicity, balances and other things, both stores and CS.
Also in the third stage, the employees of Leto were trained to work with the powerful block of analytics. Here are some examples of reports that are used in the company:
Dashboard, located on the start page of the system, which presents key indicators of website management.
