Makro increases efficiency and responsiveness through centralised stock control

Fragmented inventory management

Tony Webster has held senior supply chain positions at various retail companies during his career. When he joined Makro Netherlands two years ago, he noticed that the management of the goods flows was highly fragmented. “Each branch was responsible for managing its inventory. Consequently, every branch placed orders differently. On average, each item had to be reordered twice a week which cost local employees an enormous amount of time. Furthermore, not everyone was equally good at it, which was reflected in the availability figures. In some branches, we had availability issues. Our people had no idea exactly how much was left in stock and what was still in the pipeline. And because they were so busy, the stock on hand was not counted properly either.”

Significant efficiency gain

To future proof the supply chain, Webster decided to change the process and manage the inventory of the DCs, the hubs and the self-service locations from one central control tower. Slim4 was selected as the underlying tool for controlling and optimising inventory levels. “I had worked with Slimstock in previous positions and I knew that their software could enable significant efficiency improvements. Not only at the local branches, but also at the central purchasing department, where until then everything was planned with Excel. By centralising the store replenishment, we have expanded our central planning team. However, this is a small price to pay compared to all the local employees who were previously busy with this task. With Slim4, the planners can now manage 34 times as many items compared to before the implementation.”

Increased responsiveness

In addition to improving efficiency, the new supply chain structure delivered something even more important. “We can now respond to changes in demand much sooner,” states Kees Zwaan, Replenishment & Supply Chain Manager at Makro. “In the past, if a large order was placed at a local branch, it was passed on to the central DC with a delay. The purchasing team was then surprised by this a few days later. Now that we manage the entire supply chain with Slim4, we are far more responsive. In the event of an unexpected peak in demand, the system immediately generates an additional replenishment order for the relevant location and, if necessary, also replenishes the central stock. This minimises the risk of stockouts as we keep on top of availability.”

Mitigating the impact of Covid

Webster explains how the increased responsiveness helped the company during the Covid 19 pandemic. “Corona continues to have a huge impact on our sector. If the catering industry goes into lockdown, part of our demand will completely disappear in one go. Furthermore, as private individuals were temporarily allowed to shop with us at the beginning of the crisis, this led to quite chaotic scenes.” Thanks to Slim4, the business was able to automatically place the right orders and optimally allocate scarce stock to locations based on business rules. This ensured the business was able to respond quickly. Zwaan adds: “Of course, there are always exceptions or matters that require immediate attention, but our planners now have the time to focus on these areas. Slim4 flags tasks that should be given the highest priority at that moment.”

Smarter shelf space management

Now that Slim4 has been up and running for a while, the new planning structure is starting to pay off at all levels. Pressure on the supply chain is reduced, local employees can now fully focus on their sales tasks and in-store stock-outs are rare.

The latter is important for customer satisfaction. Zwaan explains: “We have now set up Slim4 in such a way that the physical replenishment process is also more efficient. The system takes into account the available shelf space. If deliveries can be placed directly on the shelves without having to be temporarily stored in the warehouse, this saves a whole lot of additional actions. Based on the insights that Slim4 offers, we are now exploring smarter ways to organize the available in-store shelf space. This will also help us to better utilise our warehouse space allowing us to improve efficiency further.”

Anticipating scarcity

Webster reflects on the great results he and his team have achieved at Makro thanks to the collaboration with Slimstock. He highlights the constructive attitude of the consultants and their passion to improve the inventory management process. “Since the go-live, we have continued to work with Slimstock to implement new process improvements. Optimising order sizes is one example. But we are now also reviewing how we can better anticipate personal shortages. By spreading orders as smartly as possible over the week, Slim4 will help us to balance the workload.”