Gold apple, supermarket chain (ABM Inventory)

2018

Prerequisites of the Project

At the time of preproject inspection of Gold Apple company, all orders of network formed in a semi-automatic mode using the commodity accounting system of Dzhesteri and Excel. The company faced such problems:

• not updated assortment matrixes and suppliers;
• high percent of errors in view of a human factor;
• big labor costs on formation of orders;
• the imbalance in a commodity remaining balance on network because of which warehouses were crowded and often was necessary to do movements between shops;
• lack of data on the correct calculation of goods on the shelf;
• there were many factors distorting a remaining balance of shop (delays with goods receipt, delays with return of goods, theft, loss, etc.);
• the property of the person to be reinsured and also the aspiration to implement the purchase plan conducted to orders above real requirement and, respectively, to an excess remaining balance and freezing of money.

These problems negatively affected quality of management of trade inventories, and, as a result, efficiency of all network. In the company there were no regulations and the convenient tool allowing to estimate the size and to analyze the reasons of excesses and the missed sales. Besides, managers on places usually solve local problems and are not guided by the global purposes of the company. All this also was an incitement for TOP MANAGEMENT to implement additional instruments of control of the level of trade inventories.

ABM Inventory choice reasons

1. the Possibility of optimization of human resources and labor costs on formation of orders.
2. Visualization of problem zones and the current situation with an opportunity to quickly assess a situation and to take adequate measures.
3. Existence of the fulfilled technology of implementation with the fixed stages, consideration of the existing business processes and plan development on their change in case of need.
4. Deep learning of users, both on work with a system, and on methodology of management. Maintenance at all stages of the project and after its end with providing technical and methodological advices on a permanent basis in real time.
5. Lack of requirement of additional programming and/or long labor-consuming setup of a system.

Project Objectives

At the beginning of the project the client set 2 main objectives:

1. Automation of process of purchases of goods.
2. Increase in inventory turnover.

They were caused by the fact that to system implementation assistants to buyers spent almost all the working time on calculation of the ordered quantity and sending supplier orders, at the same time trying to implement the purchase plan. Plans were not always realistic, and their accomplishment led to overstocking of warehouses, and sometimes and to negative profit.

Project Progress

System implementation of ABM Inventory began with training in inventory management methodology in TOS. During the preproject research it was revealed that in the accounting system of the client there are no up-to-date data about the range of each shop and about suppliers who deliver goods. Big collaboration in updating of this information in order that it was possible to automate process of purchases was done. Further training in work with the program, consultation on its algorithms and settings was provided. Managers were given active support and the help in work with the implemented tool. At the initial stage of connection of goods, buffers (the target objective of a stock on each point of storage) on each SKU were calculated. Through several cycles of replenishment, a system using an algorithm of Dynamic control of buffers modified buffers according to the actual consumption of goods. During the project all main types of goods were connected to a management system for trade inventories of ABM Inventory. A system daily automatically creates and sends supplier orders depending on the approved diagrams of orders. In the course of implementation there was a need to define areas of responsibility of each manager. With respect thereto for each goods in shop the user who is responsible for this SKU-location was recorded. Also for each position the minimum representation on the shelf for the purpose of providing the beautiful merchandayzingovy calculation was registered in each storage location. Especially it is relevant in department of decorative cosmetics where for each commodity unit the cell is provided in the special equipment. Complete with a management system for stocks there is also a module of the flexible reporting. At the beginning of the 3rd stage of implementation ABM Inventory to managers and company management training in work with it was provided. This module allows to rebuild reports in real time as much as possible to increase efficiency of their use and continuously to control inventory condition and things connected with it at the different detail levels. Except standard indicators of stocks such as, the amount of stocks and sales, excesses, the missed sales, turnover - a system also estimates how many funds are frozen in the calculation of goods, how many in excesses and how many in a zone of the buffer intended directly for sales. For December, 2018 at Gold Apple company in a zone of the buffer of security (calculation) less than 2.5% of the general stocks, on the goods managed by the ABM Inventory system are concentrated. Except work directly with stocks, an integral part of a routine of buyers are negotiations with suppliers. In order that they did not spend time for collection of information from different places, in a management system for stocks the report consolidating all important data which concern the specific supplier is implemented. Except other, this report allows to control reliability of suppliers: in it it is possible to see, it is how qualitative on time and quantity the supplier executes orders (in percentage expression), and the report on orders supplementing it helps to display the picture up to separate goods on shop.

Project Results

In Gold Apple company the centralized control system of stocks of ABM Inventory under control of which there are 97% of all range is implemented. Thanks to system implementation, the company it was possible:

• Automate process of purchases that in turn allowed:
  • to reduce time for order processing;
  • to exclude a human factor as the reason of errors;
  • to automatically send supplier orders.

• Establish a feedback from shops and increase efficiency of interaction with them.
• Carry out the centralized preparation by New year and other activities of network.
• Receive fast analytics and data visualization.
• Analyze the reasons of the missed sales.
• Reduce a remaining balance of network.

From the moment of connection of all goods to the following indicators were improved:

• Stocks were reduced by 7.5%.
• Excesses decreased almost by 34%.
• It was succeeded to stop a trend of continuous growth of stocks which was observed, since September, 2016.