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Case Studies. March 2013. Massive Overstocks & Out-of-Stocks Discovered Thru Visibility and Big-Data Analysis. CHALLENGE:. PCG developed a systematic process that supports efficient analysis of over 1,600 items in over 4,000 locations that have 8-12 attributes

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case studies

Case Studies

March 2013

slide2

Massive Overstocks & Out-of-Stocks Discovered

Thru Visibility and Big-Data Analysis

CHALLENGE:

  • PCG developed a systematic process that supports efficient analysis of over 1,600 items in over 4,000 locations that have 8-12 attributes
  • Both retailer and supplier can now view the same comprehensive analysis that was previously impossible
  • WIP – moving to scan-based trading using store-level replenishment

A national retail chain with over 4,000 stores couldn’t determine where they were overstocked or out-of-stock on their popular reading and sunglasses

RESULTS:

  • PCG Identified $25 million inventory reduction opportunity from improved management of inventory and ensuring best-sellers were in-stock in all planograms providing foundation for store-level ordering
  • Sales increase estimate of $5-8M annualized from improved distribution voids and reduced out-of-stocks

Sell More – Stock Less – See Everything

slide3

Sales Up 8%

With Visibility, Store-Level Replenishment, & Big Data Analysis

CHALLENGE:

A large, national dairy lacked visibility to in-store performance and was not using actual consumer demand via point-of-sale data to create replenishment orders. They also suffered from high out-of-stocks, and high returns (dumps).

SOLUTION:

  • Park City Group analyzed big data and using the results coupled with store-level replenishment, they were able to match delivery to actual consumer demand improving overall performance

RESULTS:

  • Sales dollar trend Year over Year improved by 8%
  • Sales units trend Year over Year improved by 9.3%
  • Out of stocks have been cut by 50%
  • Returnshave been cut by almost 50%

Sell More – Stock Less – See Everything

slide4
Utilizing PCG Store Level replenishment coupled with warehouse VMI, the supplier has been successful in improving in stock positions

Returns have been greatly reduced

Program is being expanded to add items from the initial supplier as well as other suppliers also serviced by this broker

Cross Docked SLR Reduces Out-of-Stocks

Cross Docking Store Level Replenishment: Supplier

CLIENT:

  • Exclusive supplier of quality products to a club warehouse retailer using a brokerage model

SCOPE:

  • The supplier wanted to use direct consumer demand to generate warehouse level replenishment orders for a select group of items
  • Warehouse level orders needed to “pass through” the Club Depots leaving no on hand inventory at this location
  • Warehouse inventory levels to be balanced and returns reduced

RESULTS:

Sell More – Stock Less – See Everything

slide5
Gained control of ordering process and reduced returns by 40%

Reduced out-of-stocks at the distributor level by 22%

Increased sales through the distributor network by 11% in the first 12 months

Improved delivery of seasonal products to reduce returns and increase sales

Sales up 11%; Returns Down 40%; Out-of-Stocks Down 22% Vendor Managed Inventory: Through Distributors

CLIENT:

National Craft Brewer

  • Leading brewer of seasonal and year around craft beers that does not own distribution network

SCOPE:

  • Distributors ordering in random fashion resulting in high returns
  • Many highly seasonal products with short lifecycle
  • Developed “Freshest Beer Program” in improve quality to consumer
  • Need for increased control of inventory levels at 400+ national distributors

RESULTS:

Sell More – Stock Less – See Everything

slide6

Efficiently Scaled to Meet Demand and Saved Millions

DC Procurement using Demand Forecasting and ABC Analyzer

CLIENT:

“Best–in–Class” Retailer

“Collaborative data sharing can achieve these types of results. We’re looking forward to expanding this program beyond the warehouse…to Direct Store Delivered suppliers.”– Supply Chain Executive, “Best-in-Class”

CHALLENGE:

  • The current ordering system didn’t support ordering from multiple distribution centers
  • All products were being ordered without regard to how fast they were selling, or how much stocking space existed, creating inconsistent stock conditions and resulting in lost sales and overstocked slow moving items

SOLUTION:

  • “Best-in-Class” implemented PCG’s computer-aided ordering system including the ABC Analyzer feature coupled with PCG’s consulting

RESULTS:

  • Reduced inventory quantities by 1/3
  • Reduced inventory costs by $170 million across Grocery, Dairy, Frozen, GM and HBC departments (over 6 full operating years)
  • Reduced safety stock by 55% in the Grocery department

Sell More – Stock Less – See Everything

out of stocks reduced by 15 smoothed demand demand planning
Out-of-Stocks Reduced by 15%; Smoothed DemandDemand Planning

CLIENT:

S. Lichtenberg & Co. (Sheer Curtains)

“As a leading manufacturer of private label curtains & draperies we needed to be able to cope with our customers’ random demand and manage situations where demand doesn’t behave consistently. PCG’s demand planning solution enabled us to reduce stock outs and inventory at the same time. The solution has a lot of bang for the buck and their customer service is outstanding.”

– Scott Lichtenberg, President / Owner

CHALLENGE:

  • Each customer had different replenishment requirements (safety stock, forecast, etc.) and tons of information. Data from disparate sources made planning difficult.

RESULTS:

  • Reduced out of stock conditions by 15%; reduced inventory levels by 15%
  • Able to maintain better in-stock conditions on high-demand items
  • Better able to manage the different demand conditions of their widely different customer base; maintained expected customer service levels

Sell More – Stock Less – See Everything

slide8

EXAMPLE: Store-Level Replenishment In Dairy

CHALLENGE:

A large, national dairy lacked visibility to in-store performance and was not using actual consumer demand via point-of-sale data to create replenishment orders. They also suffered from high out-of-stocks, and high returns (dumps)

SOLUTION:

  • Using a scan-based trading go-to-market strategy coupled with PCG’s store-level replenishment solution, they were able more closely match delivery to actual consumer demand

RESULTS:

  • Sales dollar trend YoY improved by 8%
  • Sales units trend YoYimproved by 9.3%
  • Out of stocks have been cut by 50%
  • Returnshave been cut by almost 50%

Sell More – Stock Less – See Everything

slide9
Sales Increase 3x, Returns Decrease 50%Using Scan-based Trading & Store-level Replenishment in Dairy Case

CHALLENGE:

Direct head-to-head Comparison

A national mass market retailer doing SBT recently studied two suppliers to the dairy case. One used only scan-based trading (SBT). The other used the entire suite of Park City Group SBT solutions, including store-item level analysis and ordering. A pre/post test analysis showed incredible results.

RESULTS:

  • The supplier using Park City Group’s entire suite …
    • Increased sales three times more (8%/Supplier A to 2.5%/Supplier B)
    • Reduced waste (product returns) 50% more

…than the SBT-only supplier

Sell More – Stock Less – See Everything

sales trend up 7 returns trend down 20 using dsd visibility sbt in commercial bakery category
Sales Trend Up 7%, Returns Trend Down 20%Using DSD Visibility & SBT in Commercial Bakery Category

CHALLENGE:

Mid-Size, Mid-western Regional Retailer wanted to increase sales and reduce out-of-stocks in their commercial bakery department

SOLUTION:

Analysis showed out-of-stocks, returns in excess of industry norms, and sales opportunities by store, by SKU. Space–to-sales planograms were developed, vendors were score-carded and performance improved. The PCG process became integrated into their category strategy. Success is providing basis for expansion into another category.

RESULTS:

  • INCREASED SALES dollar trend by 6.9% even though total grocery sales were trending down
  • REDUCED RETURNS by 20%
  • Program expanded

Sell More – Stock Less – See Everything

day of week sales trends up 45 in snacks using scan based trading store item analysis in snacks
“Day of Week” Sales Trends up 45% in SnacksUsing Scan-based Trading / Store-Item Analysis in Snacks

CHALLENGE:

A large, regional retailer had huge holes on the shelf where the favorite snack chip products had sold out, but only on certain days.

SOLUTION:

Using a SKU analysis approach with scan-based data, changing the strategy to deliver and stock based on heavy consumer demand days solved the problem and increased customer satisfaction

RESULTS:

  • Sales Trends increased by 45%

Sell More – Stock Less – See Everything

shrink is nearly 70 less using park city group scan based trading
Shrink is nearly 70% Less using Park City GroupScan-based Trading

“We run significantly lower shrink when the retailer is a PCG partner, versus our other SBT retailers who do not have a relationship with PCG. With synchronization, all pricing and promotional errors are identified before the fact rather than after, virtually eliminating the tedious task of identifying and resolving these issues.” – SBT Operations Director, National Commercial Bakery

Shrink averages three times higher without PCG

Sell More – Stock Less – See Everything

slide13

Shrink Reduced by 44% in Dairy

Using Scan-based Trading, PCG Analysis & DSD Visibility

CHALLENGE:

This dairy supplier to a large, regional retailer was recording high waste

SOLUTION:

PCG analysts reviewed the stores with high shrink and identified several process issues. Returns were not being captured and reported; and some items were not scanning accurately. Both created lost revenue for the Dairy and high shrink for both retailer and supplier.

RESULTS:

  • Shrink managed down by 44% and maintained in dairy industry average range of 1-2%, by following PCG’s process guidance and using PCG’s SBT and analysis tools
  • Product returns are down by 30% by using PCG’s Visibility tools

Sell More – Stock Less – See Everything

slide14

Shrink Reduced by 44% in Dairy

Using Scan-based Trading, PCG Analysis & DSD Visibility

CHALLENGE:

This dairy supplier to a large, regional retailer was recording high waste

SOLUTION:

PCG analysts reviewed the stores with high shrink and identified several process issues. Returns were not being captured and reported; and some items were not scanning accurately. Both created lost revenue for the Dairy and high shrink for both retailer and supplier.

RESULTS:

  • Shrink managed down by 44% and maintained in dairy industry average range of 1-2%, by following PCG’s process guidance and using PCG’s SBT and analysis tools
  • Product returns are down by 30% by using PCG’s Visibility tools

Sell More – Stock Less – See Everything

slide15
Sales Up 3%, Returns Down 5% for Bread SuppliersUsing Category Analysis & Change Management in Commercial Bread Category

CHALLENGE:

Bread sales were stale. Product returns were exorbitant. Consumers were unhappy, and so was the Retailer.

SOLUTION:

PCG’s analysis conducted as part of a collaborative project with the retailer and the entire bread category showed out-of-stocks, returns in excess of industry norms, and sales opportunities by store, by SKU for each bread vendor. Space–to-sales planograms were developed and schematics were adjusted. One vendor got more space, another expanded distribution, and yet another was able to ‘right-size’ their brand mix. This collaborative approach used the same objectives, metrics for measurement and results in discussions to resolve issues that supported productive business meetings.

RESULTS:

  • INCREASED SALES by 3% even though bread sales “ROM” were down
  • REDUCED RETURNS by 5% giving the consumer fresher product
  • All bread suppliers rose to the challenge and gained sales, reduced returns and the consumers were rewarded with fresher bread
  • Business meetings became more productive

Sell More – Stock Less – See Everything