X5 automated demand forecasting and replenishment of a trade inventory

At the beginning of 2018 in X5 Retail Group the project on ^[1] of demand forecasting and planning of replenishment of a trade inventory in shops and on distribution centers of retail chain stores Intersection and Roundabout is completed. For this purpose in X5 basic processes in the field of logistics, marketing, commerce were changed and the new end-to-end management system for supply chains on the basis of the software of JDA is implemented. Thanks to the implemented solution forecast accuracy increased by 17% at the expense of what the actual goods availability on shelves increased by 5%. Besides, the level of a trade inventory was succeeded to lower the companies by 13%.

X5 implemented in work of retail chain stores Intersection and Roundabout the modules Demand (demand forecasting) and Fulfillment (replenishment of a trade inventory) of the JDA system of version 9.2. The JDA system became the main tool for demand forecasting and planning of deliveries for supermarkets and X5 hypermarkets.

For demand forecasting the implemented solution uses data of the company on sales, marketing and market activities for 2 years, and also market knowledge: information on the cataclysms and natural disasters, mass actions and other events affecting behavior of people and work of shops. Comparing these data, a system predicts the sales volume of each goods in each shop and plans deliveries so that in advance and in full to meet demand for these goods. A system allows to manage settings and logic of calculation — it gives the chance more flexibly to customize a system under specifics of each group of goods.

Quantity of the opportunities and functions available in an installed system of X5 — one of the world's largest. In addition to standard functionality of JDA X5 uses own completions. One of examples — rapid response of the forecast in time or after the change in price, promo, the expanded calculation, etc. As demand during such events can change considerably, a system makes the analysis of change of sales and daily adjusts the forecast without intervention of users that seriously increases accuracy without additional labor costs.

The software solution also allows to manage a trade inventory on all chain from the supplier to shop, to analyze out-of-stock situations, to automate the order and deliveries promo taking into account the actual sales and to automatically adjust orders for observance of delivery conditions of suppliers.

Implementation and start in X5 is carried out to continuous operation of the JDA 9.2 system in 24 months. Design and setup of the basic version of JDA were carried out by project team of the international consulting company Accenture and more than 100 experts from X5 business divisions.

In the course of implementation in X5 approach to work with IT resources was corrected: the institute of key users – the main carriers of knowledge of functionality, opportunities and rules of use of a system is created and also the team of highly qualified specialists in forecasting is created. Also qualified employees for the second and third support lines of users were prepared.

In the long term X5 is going to carry out more granular control of system modules of JDA for work with separate types of goods, products and shops. At the first stage specialists of X5 will in details formulate and will bring in a system parameters of shops (including the capacity of shelves in trading floors, their depth and width, the area of utility rooms) and also the characterizing RTs "will digitize" indicators.