Eureka is Evrika (ABM Inventory)

2018

Prerequisites of the Project

In process of retail chain stores Eureka the company management made the decision to improve  process of management of trade inventories  and to increase efficiency of the operating activities. At the time of preproject inspection in the company  automation of trade  in shop regarding inventory management was decentralized:

1. Orders of network formed manually managers of the central warehouse in Excel and in the accounting system (1C) supervisors of shops.
2. These managers did not see a situation on stocks of network in general.
3. Existence of big excesses on some shops and to the missed sales on others;

ABM Inventory choice reasons

• The logic of a system is constructed on the basis of the Theory of constraints, it allows to maintain optimal inventory level, minimizing on the one hand the missed sales, and with another illiquid assets;
• A system combines quality, wide functionality at the reasonable cost.
• Step-by-step training in the program and permanent maintenance in all questions, including after implementation;
• Reporting system allows to control key indicators of the company continuously

Project Objectives

• Reduction of excesses and the missed sales to network;
• Improvement of turnover;
• Transition to the centralized control system of stocks;
• Automation of process of formation of orders and optimization of activity of purchasing department.

Project Progress

Before a project startup the company management appointed the staff of the central office who was engaged in orders of goods at external suppliers on TsS, also responsible for inventory management of shops. Diagrams of orders and deliveries according to which a system calculates when on what warehouse and the supplier it is necessary to order these or those goods were created.

During the project the minimum supplier order and multiplicity of the order for goods of the central warehouse was set and unloading of data on the client's request as the decision to conduct an assortment matrix in the ABM Inventory system was made was recustomized. Also the company began to use functionality of an output of goods from the range: having set in a goods card sign of an output from the range, a system blocks the order of goods from TsS on the external supplier, further, when in the central warehouse the goods come to an end, a system blocks the order from shops for TsS, then in process of zeroing of a remaining balance on each point of storage the goods are removed from the range. It allows to save time and to expel a human factor when tracking of the displaid goods from retail chain stores.

On the basis of history loaded into a system on the movement of goods at an initial stage of connection buffers – the target objectives of a stock – on each nomenclature position on each shop were automatically calculated. Managers reviewed the first orders and made changes. In general, through 1-2 cycles of replenishment, a system modified buffers according to the actual consumption of goods. Thus the algorithm of Dynamic control of buffers (DBM) functions.

Also in a system the regiments given about beauty and the pallet calculation of goods were specified that allows a system to support the stock necessary for sales and for the calculation. In the first week of connection of shops work with goods substitutes was organized that allowed to solve 2 problems:

1. as priority to wash away goods of one alternative family on which replacement the goods were got from network;
2. to Automate process of formation of the order of the goods united in alternative family taking into account a remaining balance of all family in order to avoid a peretarka.

For inventory management of the central warehouse the algorithm of DFO works (demand focused order;) which is based on requirement of all shops and also delivery schedules of shops and the central warehouse. A system calculates what quantity on each position needs to be ordered from the supplier to provide with goods each shop, will not arrive the following batch to TsS yet, at the same time not to leave in excess, but also not to be left without goods.

Use of functionality of the periods which allows to set conditions for automatic change of the buffer of a stock under an action or in connection with seasonal fluctuations is provided in both algorithms. According to the set coefficient, a system itself changes the buffer, and then returns its former value.

During the project the Evrika company opened 4 more shops. Connection of one more central warehouse in connection with business expansion is in the future planned. One of interesting and useful combinations for the analysis is display of sales and average inventories on commodity groups for determination of goods with the worst figures of turnover. Also in the report the chart in which data by a certain category are provided is used and are sorted from the greatest values in the upper left corner to the smallest values in the lower right corner that allows to answer visually the questions following business and to focus limited time of managers on the most priority tasks:

• What groups of goods brought the greatest/smallest sales volume?
• What groups of goods brought the greatest/smallest margin?
• On what groups of goods the greatest/smallest volumes of the missed sales are observed?
• What groups of goods have the highest/low turnover in days?
• Ratio of average inventories of groups of goods
• Ratio of average excesses of groups of goods Similar questions by:
• Menedzherov
• Skladov
• Postavshchikov

Project Results

• Transition to the centralized control system of stocks
• Automation of process of formation of orders taking into account such moments as seasonal fluctuations, existence of goods substitutes, a goods remaining balance for TsS. With respect thereto release of time which managers can use for assortment management
• Reduction of number of the internal transfers between shops caused by the wrong distribution of a remaining balance by network
• Reduction of excesses by 1.5 times
• Improvement of turnover twice
• Expansion of network from 8 to 12 shops
• An opportunity to react quickly to risks and to carry out various analytics