Prerequisites for implementation of ABM Inventory
Financial losses in decentralised inventory management.
Prior to the launch of the system, each pharmacy made its own purchases.
At each location, managers manually placed orders, formed the assortment matrix and calculated the number of orders. In this complex and important process, the purchasing managers relied on their experience and vision.
Sometimes managers missed important items and did not order the required quantity of goods.
For example, there have been cases where managers want to accumulate a certain amount of goods "just in case" to re-insure themselves and reduce the risk of empty shelves.
Project Goals
01
It was necessary to minimise human involvement in the process so that the subjective decisions of managers could not affect the profitability of the entire chain.
02
The new system was to automatically calculate optimal order quantities and reduce surpluses.
03
The first option was to develop an in-house solution. However, management quickly realised that investing resources in product development was more expensive than paying for a subscription to cloud services.
Course of the project
01
Gradual connection of pharmacies to the system
Each pharmacy was gradually connected to the system by the implementation team and over time stock management became automated and centralised.
02
Formation of the project team
Aversi allocated 6 people to the project: one project manager, a department manager, procurement managers and the IT department.
03
Regular meetings with suppliers
Aversi had regular meetings with the supplier team despite the different locations and countries. A clear action plan was developed.
Results of implementation
Key effects of implementation:
11 %
increasing LFL sales
16 %
improved inventory turnover
6 %
improved availability
98 %
SKU availability
Qualitative changes
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The system also helped to optimise the approach to promotion management. An internal standard for planning promotions was adopted. Before that, everything depended on managers: when they would order goods for the promotion, in what quantities, and so on. Therefore, the launch of the promotion was often delayed. Now the event is announced two weeks in advance, and before it starts, managers put the expected sales growth into the tool.
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The approach to order placement has completely changed. This is handled by 8 people at the central office along the entire chain, which has made the process much easier and faster. Shops now place automated orders with optimal volumes to cover demand. This allows the capital to work more efficiently.
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Aversi management makes extensive use of system reports. They are available visually in the form of graphs and tables. With the help of analytics, managers track indicators along the entire chain: turnover; missed sales (the company did not have such indicators); surplus.
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Surpluses have been reduced by several million, which is a significant achievement for the business.
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The business has freed up a huge amount of time to improve customer experience instead of routine order calculations.