Carrefour improves on-shelf availability by 7%
With more than 600 stores in Turkey, food retailer, Carrefour SA regularly struggled with out of stock situations. One of the biggest problems was that the retailer’s inventory management activities relied heavily on the knowledge and experience of the inventory planners, who are moreover in very short supply in Turkey. Thanks to Slim4, Carrefour SA has succeeded in standardising, centralising and automating the replenishment of its DCs and its stores. The initial results – fewer planners and higher on-shelf availability – demonstrate the potential for even more improvements.
Despite the country’s challenges, the grocery retailer Carrefour SA continues to show strong growth in Turkey. With over 600 stores ranging from hypermarkets with more than 50,000 SKUs to supermarkets, convenience stores and specialist shops. The retailer not only sells food and drink products, but also non-food items such as textiles and electronics. The stores are replenished via an extensive network of seven regional distribution centres (DCs), three DCs for fresh produce, one DC for ﬁsh and seafood, and one DC for frozen food. Due to an ongoing acquisition strategy, the number of stores is constantly rising and the retailer currently has over half a million square metres of ﬂoor space. But the rapid growth added to the pressure on Carrefour SA’s supply chain, resulting in frequent out-of-stock situations which were damaging the retailer’s customer service level.
At the same time, Carrefour SA was being forced to write oﬀ a lot of inventory because products remained unsold. However, by far the biggest problem was the lack of the right knowledge and skills to turn things around. “There is a high level of staﬀ turnover within the logistics and inventory planning teams, plus it’s very diﬃcult to ﬁnd new people. Not many Turkish universities oﬀer good degree courses related to supply chain management. We have to make do with newly graduated technical engineers and then help them to develop the relevant competencies ourselves,” says Emri Aslan, Supply Group Manager at Carrefour SA.
Carrefour SA realised that the existing store replenishment process had to be redesigned. The retailer was too reliant on Excel sheets and the knowledge inside the heads of its inventory planners. “Partly also due to the shortage of supply chain talent, we wanted to standardise the replenishment process and relive some of the preasure placed on our employees. We implemented SAP for things like warehousing and inventory management, but the ERP suite’s replenishment module didn’t oﬀer enough functionality for us. The problems with on-shelf availability in our stores meant that we had a pressing need for an advanced forecasting and replenishment tool,” continues Aslan. Carrefour SA came into contact with Slimstock through the local consultancy ﬁrm Selco.
After carefully comparing it with the SAP Forecasting & Replenishment and NCR Retalix systems, Aslan and his team decided on Slimstock’s Slim4 tool. “It might seem more logical to have chosen SAP Forecasting & Replenishment seeing as our ERP system is from SAP, but no one uses that module in Turkey. Our ERP system has been substantially customized, so there was little – if any – beneﬁt to be gained by staying with just one software supplier, so we preferred Slim4. The tool has user-friendly screens, is easy to learn and to work with, and the same version is available worldwide. Besides that, Slim4 allows us to create a process that will reduce our dependency on people.”
No more chaos
Slim4 has enabled Carrefour SA to streamline inventory management across their end-to-end supply chain. The stock levels are now managed centrally, both in the DCs and in the stores. “In the past our inventory planners used to mainly rely on their own experience when placing purchase orders with our 1,500-plus Turkish suppliers. Now, Slim4 automatically generates the purchase orders based on historical data and the forecast for the weeks ahead,” explains Aslan. “Until recently, the store replenishment orders were generated semiautomatically. In other words, the stores themselves had the option to adjust the quantities as they saw ﬁt. But that created chaos and resulted in stock surpluses or even shortages. There’s no more chaos now.”
Slim4 oﬀers particular beneﬁts when phasing products in and out. Whenever a new product is introduced, the tool generates a reliable forecast based on the sales history of similar items. If demand declines and an item needs to be phased out, Slim4 issues an alert to prevent surplus stock. Slim4 even supports Carrefour SA’s acquisition strategy. Before a new store is added to the new network, Slim4 copies the data from similar stores. As a result, the right quantities of the right items can be stocked on the shelves right from the start.
This new approach has already produced some promising initial results: Aslan’s team is now more data-driven rather than relying on assumptions or the knowledge inside the planners’ heads. This has led to a seven percent increase in on-shelf availability and signiﬁcantly improved the forecasting accuracy, which has had a positive impact on store revenue. Aslan: “Moreover, the planning process is now a lot more eﬃcient; despite to the growth. We’ve been able to cut back on eight FTEs. Futhermore, the store employees have more time to spare.”
The partnership with Slimstock has been outstanding so far. The implementation remained within budget and took only three weeks longer than originally planned. “Slimstock was extremely quick to resolve the minor problems we encountered,” says Aslan. And Carrefour SA is not ﬁnished yet; next on the list is the implementation of the Slim4 promotions module, plus the grocery retailer intends to roll out the tool to support fresh-food inventory planning too. “We’ve complete already been given the green light for that phase. Once that’s optimise, we will be able to further optimise the order volumes with our 1,500 suppliers. We expect to then see a further decrease in our stock levels and also a reduction in waste. And if we can then integrate our forecasting process with our big data and CRM activities as well, then we’ll be completely ready for the future.”