Russia's X5 Retail Group Introduces Automated Supply Chain Solution
Russian food retailer X5 Retail Group has completed a major project to automate the demand and replenishment processes at its Perekrestok and Karusel stores and distribution centres, it announced on Monday.
In a revamp of its central logistics, marketing, and commerce processes, it has implemented end-to-end supply chain management software, which has boosted forecast accuracy by 17%, the retailer said. This allows stores to increase actual availability of goods by 5% and has enabled the company to decrease inventory levels by 13%.
Positive Return On Investment
The logistics director at Perekrestok, Denis Shulga, commented on the new system, "We are extremely happy with the supply chain management system and its effects on the operations: it took us just two months instead of eight initially planned to achieve a positive return on investment."
The system, which was supplied by JDA Software, uses the company's data on sales, marketing, and market activity from the past two years in order to predict demand. It also takes in information on natural disasters, public events, and other outside influences that may have an impact on consumer behaviour and retail operations.
Analysis of such data allows the system to forecast sales volumes for each item at each outlet, tweaking supply plans accordingly to be able to fulfill demand fully and in advance. Settings and calculation processes can be tailored to different product categories, allowing for greater flexibility, the company said.
The software also provides supplier-to-store inventory management, reviews shortages, and automated creation of promotional orders and supplies, based on sales. In addition, it will automatically adjust orders to meet supply agreements.
In a statement, JDA Software said that, in the future it plans to tailor the software to individual product categories, goods, and stores. This will be achieved by the defining store parameters (such as shelf capacity, back room space, etc.) and inputting them into the system, as well as uploading distribution centre specifications in a digital format.
X5 Retail Group
X5 Retail Group boasts 12, 701 company-operated stores and holds the leading market position in both Moscow and St. Petersburg. It operates 39 distribution centres and possesses 3,038 company-owned trucks.
In the first financial quarter of 2018, X5 Retail Group reported retail sales growth of 20.2% , driven by growth in its selling space. In full-year 2017, it posted net sales of RUB 1,286,870 million, representing growth of 25.5% year on year.
©2018 European Supermarket Magazine – your source for the latest retail news. Article by Karen Henderson. Click subscribe to sign up to ESM: European Supermarket Magazine.