Increasing sales through the promotion of freshness on the shelves

Challenge

Being the spoilage cost reduction one of the main concerns of our customer’s fresh retail business, the increase of the replenishment efficiency was set as a strategic priority.

The combination of a replenishment method that lacked several key fresh-retail specificities, the stores’ manual orders that were significantly exceeding the ideal stock levels, an inaccurate forecasting process and obsolete management tools were contributing to product spoilage.

The project goal was to increase sales throw the promotion of freshness on the shelves, reducing food spoilage rates thanks to the optimization inventory management of perishable products.

Solution

The ROP methodology proposed a solution based on three main topics:

• New approach combining a more accurate forecasting method with a replenishment algorithm that embeds both the state of the art methodologies with the perishable requirements – Replenishment
• Control over every additional inventory order from stores – Order Management
• Close monitoring of KPIs and increase inventory managers’ know-how – People

Result

With the overall decrease of stock levels, there was a significant shrinkage (1,4 M€ in Fruits & Vegetables) and inventory costs reduction (0,2 M€ in Cured Meat & Cheese). In some cases, it was also possible to reduce stock-outs, due to a more accurate forecast.

The main intangible benefit was the overall replenishment process control by the stock management team, now provided with the right tools and the suitable know-how.

The methodology is currently being implemented at the whole fresh department, now with 86% of all categories fully covered by ROP.