Izhtrading manages the range of goods using ABM Inventory

The ABM Cloud company at the end of October, 2017 announced implementation of an end-to-end system of inventory management of ABM Inventory in the trade Izhtrading group.

Shop of the trade Izhtrading group

Prerequisites

At the time of preproject inspection of the company all orders of shops formed managers on places that created a set of problems. Top management made the decision to pass to the centralized control system of trade inventories for ensuring efficiency of network and its development.

In the existing reality the company faced any problems, in particular:

• high percent of errors in view of a human factor;
• each manager managed and ordered the big SKU list therefore, as a rule, it did it more rare, but in bulk to distribute loading;
• data on the correct calculation of goods on the shelf were not, and SKU in matrixes was more, than places in shop therefore managers had to select what to spread and that - no;
• data on the minimum order, multiplicity of packaging, weight and amount were not supported in current status that involved errors in orders;
• assortment matrixes were not brought to a uniform format because of what the manager in each shop ordered only those goods which found necessary;
• there were many factors which distorted a remaining balance of shop (a delay with goods receipt of a delay with return of goods, theft, loss, etc.);
• the property of the person to be reinsured conducted to orders above real requirement and, respectively, to an excess remaining balance and freezing of money;
• high total labor costs and, as a result, big labor costs.

Besides, managers on places usually solve local problems, do not carry out monitoring of a situation on network in general and are not guided by the global purposes of the company. Both they, and at the management had no regulations and the convenient tool allowing to estimate the size and to analyze the reasons of excesses (overstocks) and the missed sales (outof-stocks). The above-named reasons negatively affected quality of management of trade inventories, and, as a result, efficiency of all network. With respect thereto, the issue of optimization and automation of a management system for stocks, implementations of additional instruments of control of the level of trade inventories was particularly acute for top management.

Choice of the contractor and solution

Selecting a management system for stocks, Izhtrading considered 2 types of such systems: pushing out, i.e., based on the forecast, and extending which react to real demand. In view of complexity and inaccuracy of forecasts, the decision was made for benefit of the second. A system from ABM Cloud became such solution.

According to developer company, a system the methodology of the theory of constraints and the mechanism of dynamic management of the buffer which help to provide permanent existence of goods at the minimum stocks in a system is the cornerstone.

At the heart of methodology — inventory management on the actual consumption. Such approach is more effective, than inventory management according to the forecast among which shortcomings — inaccuracy of the forecast, need to hold a safety stock and to smooth fluctuations.

Also important arguments when choosing a system were:

• SaaS (Software as a Service) model of system operation which allows not to put investments into the additional hardware (servers) and support of a system. Payment is made in the form of monthly lease payments upon use of a system.
• User training studies at all main stages of the project — both on work with a system, and in methodology of management. After project completion maintenance is performed by technical support service which provides technical and methodological advices on a permanent basis in real time.
• The fulfilled technology of implementation allows to record implementation stages, to consider the existing business processes and if necessary to develop the plan of their change. A system does not require additional programming or long labor-consuming setup.
• Visualization of problem zones and the current situation gives the chance to quickly assess a situation and to take adequate measures. The reporting provided in a system gives the chance to managers quicker and better to be guided in assortment and to manage stocks, and to the management to control a situation and to have the finger on the pulse.

Having analyzed the existing systems with similar functionality, the Izhtrading network selected the solution of ABM Cloud in a result.

Project Objectives

Before the project the purposes which should be reached were formulated:

• Centralization of orders;
• Reduction of excesses of trade inventories and optimization of the range;
• Improvement of indicators of turnover of the enterprise;
• Optimization of staff on places.

Implementation Progress

Within the project function of formation and sending supplier orders passed from managing directors of shops to purchasing department which was engaged only in orders for RTs earlier.

Process of implementation at all stages was followed by user training:

• Seminar training on inventory management methodology on TOS;
• Training in work with the program, to its algorithms and setup;
• Training in work with the reporting of a system.

Prior to the beginning of ABM Inventory system implementation in network used so-called "tough" and "soft" assortment matrix(es). But in fact the correct and observed at all stages of inventory management assortment matrix was not that led to confusion with that as where to order. Besides, in connection with hostless system of inventory management shops had an opportunity to bypass rules of the order. For this reason optimization of the range was one of project objectives. During the project the Izhtrading company refused separation of AM into 2 types and completely updated information on goods on shops. It and also centralization of a purchasing system, allowed to order the complete range of goods which is intended for it in each shop. And it, in turn, promoted growth in sales of the company.

Project Results

In TG "Izhtrading" the centralized control system of stocks of ABM Inventory under control of which there are 75% of all range is implemented. According to ABM Cloud, using a system, the customer increased the efficiency, having achieved the following results:

• Improvement of turnover for 20%;
• Optimization of a remaining balance on the shelf. Decrease in commodity excesses by 10%;
• Reduction of number of the employees occupied in the course of creation and sending orders due to centralization of purchases. Earlier inventory management was executed by employees in each shop of network, and according to the results of the project — 7 employees of the central office.
• Transparency of process of the order, including promotional range, with a possibility of identification of problem positions and the subsequent analysis of each ordered SKU.
• Minimization of errors at the order (the order out of the diagram, the lost orders, errors in quantity, other). Orders form strictly agrees to the diagrams set in a tovarnouchyotny system and in necessary quantity.