How VIADA Baltija Slashes Overstock by 35% and Boosts Sales with LEAFIO AI Retail Platform

Welcome to the Lifio AI retail podcast. [music] Today we're going to discover the case of one of the largest gas station operators in [music] Baltic states, uh, Viata Balsia. Uh, we will discover how they [music] managed to improve their inventory management and merchandising processes. And uh also we will answer and discover whether it's possible to [music] reduce overstocks by 35% increase sales and [music] improve uh inventory turnover just within 6 months. And in these my beautiful colleagues will help me in finding the answer to this questions. Uh we have Helen who is our inventory optimization expert and Anna Ma who is our shelf efficiency expert. I'd like first to ask uh one of the key areas which retailers always focus on inventory management. So Helen the question is for you before deciding to implement inventory management system

uh from Leifio what particular operational and supply chain challenges uh Vata Balia faced? Yeah, sure. Uh, first of all, thank you very much for having me here. And in terms of the project, VAIA has a decentralized um forecasting, ordering, purchasing system, which means that each individual station managers handled the processes of the demand forecasting, ordering, replenishment, so everything that was connected with the inventory management processes. This of course uh led to some frequent errors, overstocking, loss sales, some gaps and issues within the inventory turnover and the a liability and of course additionally there was no standardized methodology for making this happening. So each individual manager has its uh his or her own methodology

that was uh making all the processes I mean the inventory management processes inconsistent across the retail chain. >> Uh actually those challenges that you listed Helen they're very common and it sounds that uh viabalty faced a lot of them uh and it sounds like a major inefficiency. Uh Anna, I'm curious what was about uh merchandising process uh in in Viada. >> Yeah. Hi everyone and uh thank you for having me here. So regarding the merchandising processes uh we had the similar situation as the with the inventory. So there were no dedicated people who were responsible for the merchandising process. And usually in such situations it's more about like intuitive layout on the and perception of the store manager who is actually doing the layout in the particular in the store. So in these situations there is no consistency across the whole retail chain. So different stores they

look differently as different people are responsible for that and there is no common logic and management from the central office uh in regards to the merchandising. Uh so they had uh uh different troubles with um layouts which were based on their sales and datadriven but it was more intuitive uh and perception of the each particular store manager and moreover of course since this process wasn't uh supported by any kind of tool uh they had no KPIs no clear KPIs and no analytics on how to track that how to track the performance And also uh in addition to that how to analyze like the assortment what what what actually was supposed to be in the store and what uh it would be good to consider to delete from the assortment. You've mentioned this word intuitive and I think that's u companies often rely on the intuition on the experience of the employees and even though it brings

certain benefits it also leads a number of uh potential dangers as intuition is all can be often faced can be often impacted by the mood by the previous experiences of the manager and not always can reflect the real demand of the customers. So >> exactly. So and in addition for example when there is a rotation of the human resources and new people are uh joining the team uh they didn't have the experience of the previous people. So it's totally like inconsistency in the processes. >> Uh yes and what companies from my experience as well uh what companies really find interesting is that connection. We're right now talking with both of you, with Helen, with Anna and you're representing different areas of supply chain, merchandising, inventory. But what customers really like is that uh possibility to have connected these solutions where you have on one side uh

replenishment uh demand planning and on the other side how to present the products to the customers, how to allocate the space in the store and Leia basically enables retailers to have that to build that strong link uh as one ecosystem where we have seamless data flow. uh and I understand this is an this is an important factor for the retailers and Helen I'd like to ask you in your opinion why is this factor is considered so in fact impactful by the retailers and why is it so important for them to have that strong link between the solutions >> yeah absolutely Victor so um uh of course uh each particular solution shelf efficiency and inventory optimization They are giving great they are giving great results and impacts on the business of our customers. But one of the key strengths of Leo AI platform

really comes from from the seamlessly connecting between the inventory part the inventory management and the merchandising part the shelf efficiency. So uh traditionally these two processes uh uh operate in silus. So basically the inventory management teams uh nevertheless uh we have people in the central office. So the this function is centralized or if we are talking about people on the store level uh the inventory management in general is more focused on uh uh the decisions that are influencing um uh inventory turnover on one hand uh the availability on another hand. Of course there there are a lot of uh KPIs that are uh coming from that the loss sales over stocks the cost of inventory sales and etc. But in general uh these two main focuses uh are um

operated let's say and managed by the inventory management team. >> Meanwhile uh the merchandising teams they are optimizing the shelf space. So they're more focused on the merchandising layouts on the visual uh understanding of the customers how they're percepting uh the the shelves and by integrating both of the solutions we baltia uh can ensure that the replenishment decisions the demand forecasting decisions the ordering decisions uh so the inventory management decisions in general uh are informed by current planagram data and vice versa and this is really important because definitely Definely the demand forecasting is based on sales and other factors that are influencing uh the demand and the future demand. But at the same time when it comes to the processes of the replenishment and purchasing we need to take into consideration the size

of the merchandising layout especially for small formats because the size of the layout can be really big uh for for the small formats and we need to consider that in terms of uh the fulfillment uh because uh otherwise unfortunately we can have of the low sales and low level of the availability. >> Uh absolutely and uh lithium inventory optimization in itself uh has a significant impact on the financial KPIs of the company by connecting them together with merchandising can further enhance and lead the customer to even higher efficiency and uh faster return on investment after deciding to go to step in into such project. Uh so we understand from the inventory uh perspective the why this factor is so impactful and Anna in your opinion from the merchandising perspective how does

it benefit the customers this integration Helena already briefly touched on that but I'd like to dig a little bit deeper here and in particular as we're talking about VA how did it benefit them having that uh connection between the solutions >> uh sure yeah I totally agree with my colleagues that it is critically important to connect these two processes in both in terms of the business processes and in terms of the IT solutions into like one ecosystem and that's what we do and it's a frequent case when customers come to us with request for one of the areas to cover like just one area and they go as a result they go into the uh complex project of implementing these two solutions because they're really connected and it is important And uh from the perspective of the shelf efficiency solution uh to plan what should be on the shelf because shelf is uh the way how the retailer is communicating with the customers and it in directly influences sales. But from

the other hand uh we need to make sure that what we plans to be on the shelf from the perspective of the sales or perspective of the marginality it is important to plan the inventory level. So to make sure that what we planned it will have the correct inventories and it will help us to cover the demand of the customers. So it is very very connected processes is very important to uh uh to connect them into one loop. Uh so from the side of the uh shelf efficiency uh we helped to uh highlight uh what products should be like or in what quantity in what number of facings on what shelves because we all know the rules of the golden shelves which is remain on the eye level of the customers. So we help them to highlight that and to place these products that has more sales that has more uh interest from the customer side on these highle shelves and uh from the others side to ensure that they will have the right

inventory balances for that. Uh also it really helped via to support the assortment rotation because uh when something is changes in terms of the assortment it is very quickly to do that in the system which automates that and it takes especially when it is centralized when the decision is made about removing the item or adding the item it is very quickly to change that. So we are changing that automatically triggers the business process in the inventory management and it it takes just like one day to change it in all the retail chain but before that it was very complex and very routine and tough process and uh also it is very important that inventory since like as Helen mentioned it's the convenience store so basically it's like a very small store and it has very limited uh backroom facilities it's very important to correctly plan the shelves and in terms of the capacity of the shelf in terms of the number of faces uh and uh give this

data to the inventory management for the proper ordering processes. So uh from what I understand it really uh triggers better efficiency for the company removing this uh from the standpoint of workload. The employees can be more efficient because on one side we have a better visibility. We understand uh if something needs to be changed what particular problems needs to be addressed. Uh on the other side that connection allows for better data flow. So we can also impact uh and have a better replenishment decisions and I think uh what I sometimes hear from the retailers and for most of the companies integration process in itself it's uh always a transformation and requires a lot of efforts. So deciding to go with one platform with one solution uh allows to make this transition faster, painless

and uh avoid potential issues with connecting different solutions solutions from uh multiple vendors. So this is really an important factor and uh thank you for sharing your insights uh colleagues. So essentially this integration removes inefficiencies, leads to better visibility. So we can quicker identify problem areas. We can take better decisions, strategic decisions uh related to replenishment and uh allocation of products and uh also this connection has a significant impact on the replenishment uh as if I understand it properly. So is that correct? Do I get it right? >> Yes, of course. So we need to understand that uh on one hand when we are talking about 93 people who are managing their special way on based on sometimes on gut feeling. Um it leads to some issues and

problems that are connected with the unstable methodologies uh that are created in the heads of each specific store manager. And on another hand without this connection, without the visibility uh and without the understanding of the data flow between the merchandising processes, I mean the visual merchandising and the inventory management processes. Of course, all all this leads to um a lot of problems and uh misunderstanding between these two processes and this of course leads to the decreasing of some KPIs that are uh interconnected between each other if we're talking about uh these two specific processes inside of the supply chain. So the system automatically connects these two processes and of course this speeds up the decision making uh enhances inventory management

KPIs I mean the level of inventories the cost of stock the sales and in general this connection really leads to the maximization of the revenue potential. >> Thank you Helen. I would like to add here that of course it increased like to the reduce of the manual work not only from the perspective of the ordering when stations several employees at the stations were responsible for that uh but additionally they were responsible for layout when they needed not only to arrange the space but they needed to make a decision what to place on the shelf and mainly these people these employees at the gas stations they should be focused on uh other details like they should be focused on the customer service on talking to the customers and on ensuring the higher level of the service level at the station. Uh but when they have the clear guideline uh in terms of like the planagram, they have the mobile application when they have the plan. So

they just need to arrange the space according to the guideline. So that really simplifies the work that automates the processes and of course reduces manual work on the level of the stations and refocuses employees on what they should be focused on uh during their uh day work time. >> Absolutely. And that mobile app I think most of the customers finds a significant game changer for them in terms of uh communication and reacting to the changes ensuring that their employees are following guidelines on time. uh this is an important uh solution uh to the merchandising uh management processes. So uh it seems like a significant overall gamecher and a really serious task for the viata balance. This is a serious project and uh definitely it it requires a serious strategic decision to step into that. So I'd like to focus shift our focus a little bit towards implementation process itself. Um from the perspective

of the customer and the feedback you received uh how did uh the overall implementation process was structured and how did you approach this project? >> Um when we are talking about the implementation we have created the unified uh um way how it is better to implement our solutions. uh if we're talking about the separate solutions I mean the separate implementation of shelf efficiency or in optimization uh and of course uh it works for the platform integration. So we are defining three stages uh in terms of the implementation and first and from my perspective one of the most important stage is the uh preparation uh setup and methodological integration. So on the first step of the implementation we are simultaneously making two different tasks that are

interconnected between each other. The first task is more technical when we need to prepare the data integration between the ERP solution accounting system and leure platform uh based on the structure of the solutions the customer uh is implementing. [snorts] Uh this is more technical. Uh we are preparing a technical assignment and we are connecting to the we are connected to the technical team of the customer uh to ensure that all the data flows would be correct and uh sufficient. Uh on the another hand we are preparing and making the methodological integration when we are diving deeply into the current business processes of the customer and are trying to understand how it works now and based on that we are preparing the asis diagram process and afterwards based on uh uh our uh understanding of

the retail sphere based on our uh experience Inside of the retail business, we are preparing the recommendations for the customer how it would be better to um um digest the processes so that they would be more efficient not in terms of the better integration of our platform but in terms of the potential outcome that comes from the project. uh and this is called the method methodological uh integration and as a result we are preparing the 2B business processes diagram and where the customer can find the information uh how it would be better to make some changes uh to ensure that we are coming to the aim of the project. So this is basically here's uh I'll just jump in to reiterate it's not uh as it may seem initially the providing the tool to the customer itself and letting them use it but it's basically more serious more as you said

Helen methodological approach where we basically help the customer to uh adjust to tune their uh processes so they can benefit from the tool more and uh have their business process established uh I would say more to the recognized standard if I if if that's the right way to say so that they can uh enjoy better benefits not just uh using the system as uh you buy a subscription you start using it and you can use it uh whichever way you want it's really important to use it properly and that's where Leo is it's so important to have the team that can support and guide the customers team to properly using this. >> Uh yes absolutely but uh at the same time we do not like standards. Each and every company has its own processes and its own specifics. So to consider this specific uh and based on the specifics

and on our experience across uh more than 100 retail chains, we can suggest some decisions uh that would be more efficient for this particular uh case because uh really company from company differs a lot. Even if we're talking about the company, two companies with a pretty similar format with a very similar retail vertical in the same country. So no great differences but at the same time they have some specifics that need to be considered to ensure that we are not changing the structure and the strategy of the retail company. And one more point here. So we are not um how to say we are not uh just the customer success. We uh have people who are implementing the projects the project managers uh and all these people they have huge experience in retail for

years that gives us not only uh like our own uh liio AI uh experience but also the real experience uh in uh retail. So uh as uh the integration part is done we need to collect the sales historical data and to ensure that all the files are transferring uh in the proper manner and we are switching to the second stage of the implementation which is a training and pilots. So basically uh when uh we are um sure that the data flow is correct when we are sure that everything all the data is transferred in a proper way >> uh we are uh starting the training process to ensure that all team members both for shelf efficiency and for inventory management they totally understand the logic that lies behind the systems. uh they totally understand

how it works and uh what are the benefits of this the usage of the solutions uh and of course we are starting on one hand the auto orderering processes uh and we are uh scaling it to the limited number of stores categories or suppliers depending on the decision on the first step and of course source on based on shelf efficiency uh we are making the piloting planagrams for the limited number of planagrams or suppliers or stores depending on the format of this second stage. Uh and on the third stage of the implementation when we are sure that uh all the team members are well instructed when we understand uh that all the team members understand the logic and know how to uh make it work uh we are scaling. So our core aim here is to um cover all the assortment uh that was discussed on the

first stage of the implementation uh by both of the solutions and uh uh only after that the system uh the let's say people system and all the processes are transferred to the customer success team who are caring and taking care not only about the um system usability let's say and the system work uh but also about the processes because we understand that supply chain is a very very um changing environment and sometime business model can change some new processes are added uh some other processes are hard stopped and we need the system to work in all of the consequences uh uh that are coming from these changes. So the customer success team uh are focused on the uh continuous improvement of the key performance indicators on one hand and ensuring that the customer has all the

necessary functionality for covering all the processes that are in place. So it's a really complex pro uh project complex approach here and as I understand the first two stages of implementation there they serve to build the strong foundation as you said Helen so the team is know how they know how to use the system they have uh the data in place they have uh we've built together with them the expected results they want to achieve after the system so that the system can be properly configured and only after that we and support them uh with the scaling and those initial two stages are so extremely important and that's where the customers typically need that uh involvement of the project managers on the highest level and that guidance because it's really complex to build it uh and just use the instruction you know you just true >> uh okay and uh in terms of merchandising um uh how does the process or how does

it look uh approaching the merchandising implementation. >> Uh so actually Helen mentioned a lot regarding the merchandising processes as well. Uh in terms of the implementation I that when we are going into the complex project uh we are doing the first stage simultaneously because we need to prepare the data basically for the platform and then the platform decides which flow which data is needed for each particular model of the system. And when we are during the first stage we are analyzing the whole like business processes in both areas with both departments. It's different departments different people are who are responsible for that. Uh so we are analyzing we are talking with both of the departments. And on the second stage uh we start uh to divide these two flows into one flow. It goes to the inventory management and demand forecasting process and the second one it goes to the merchandising team to the space management team. uh in case of Baltic Petroleum uh there were no people uh who were previously

responsible for that. So they had to hire a separate person who became to build this process in terms of the merchandising. We on boarded this person how to work in the system, how to build the panagram, how to make uh the standardized process, how to make the automatic panagram and communicate that to the stores. And additionally the system uh first of all it highlighted some problems in terms of the layout. So and in terms of the assortment as well and it allows them to analyze the assortment in some way. We have a separate solution for that. But in some way shelf efficiency can also help here because we can clearly see we have analytics on the level of the planagram and we can clearly see what are the slow movers and we can make decision about deleting these items from the assortment and from the shelf of course. Uh so that's from the perspective of the merchandising process. >> Yes, thanks for sharing this Hannah. uh and I think we uh discussed a lot of potential improvements that the system

may have and the implementation allows to achieve already at the stage of implementation how we can impact the process. However, that uh important area which is visibility I think with it would be great to dig a little bit deeper here. So for VIA uh if you could share a couple of uh words about how did uh analytics impact the company uh how did it improve their visibility of the processes both related to inventory and uh merchandising part. Yeah, thanks Victor. Very nice question because uh of course each and every retail company now has its own BI block and it is a very frequent question from the potential customers. Why do we need to use your specific analytics? Because we have uh 100 very visual and very user friendly uh analytics uh reports that help us in

different angles. Uh but from the standpoint of our specialization, from the standpoint of inventory management uh and shelf efficiency, uh the system uh supports very specific reports for these specific spheres, which means that we are introducing uh this in-depth analytical reporting. Some of them some of the KPIs are quite transparent and some of them are very unique for and can be calculated only with the help of the solutions like ours. For example, the reasons for the loss sales. So it's automatically uh identifying the reasons for having the loss sales and afterwards aggregate all these reasons and gives the pie chart for the user to understand what are the most common reasons for having the loss sales for this specific category or supplier or etc. uh and of

course it gives uh their total understanding and control transparency and control over these processes that can really influence the result. Our approach in automation uh is uh like is working based on um we are trying to transfer or all the routting tasks to the system that can be handled by the system even better than by the manager by human. uh and to pay attention of managers of planners of people who are um responsible for planagramming to the reporting because as I have mentioned previously uh supply chain is very unstable and uh we need to focus on these changes to ensure that we are doing good that our key performing indicators are at least not getting

worse. uh and our analytics module really helps us to ensure this task is completed. >> Absolutely. Something works uh well, it's better to keep it as it is. Yes. Uh referring to what you said, it's at least not to reduce the efficiency after the implementation and making sure that we have that clear uh understanding of uh how the system impacts and that's where the analytics are frequently used to assess how it was and how it became. Uh so in terms of the analytics in the merchandising area uh we have uh various tools inside the system to um analyze that and to evaluate both the flow plan the microspacing part the microspacing part and additionally we have a separate BI blog that highlights specific key performance indicators in the space management and merchandising areas and uh first of all it uh very clearly highlights uh for the company when they

uh digitalize the planagram where are the gaps and what needs to be changed. So they can clearly see the sales, what brings them the sales, what they need to decrease, what they need to increase both in terms of the facings particularly on the shelves and additionally in terms of the uh brand presence, category presence, subcategory presence because all of that can be analyzed in the BI block as well. So the correlation so ideally we should have the correlation in terms of the part in the sales the percentage in the sales with the uh percentage on the shelf and in terms of the convenience store is very important to plan the right number of facings on the level of the shelf because uh people uh don't always have in place at the stores they don't always have the possibility to check the shelves on the regular basis and for example such category as drinks. It can be purchased frequently and it is important to ensure the number of

facings to cover this time periods until like the manager can come to the shelf and check the shelf. So that the system can also help with that in terms of planning the right quantity. Uh and uh as we all understand it directly influences the sales because for sure the customer should find what he uh came for uh on the shelf and take it and buy it and that what brings us sales brings us money >> 100%. And I myself actually find analytics part is the most interesting as for myself because that's really cool when you can assess like you can look back in history and see how it changed how the solution or how the decision uh of the managers uh directed the growth of the company. I wish there could be more analytics in our life so we could better assess our decisions and uh uh our experiences and that's what Lithia provides to the retailers for supply chain. So >> say what can be measured can be managed.

>> Absolutely. That's actually a good quote uh and I'll write it down after this podcast. Well, I want to use I I want to use it on the I thought you knew that things >> and maybe I knew but I forgot can be the case. >> Uh so uh what is important is the Arab Baltia uh it was your customer Anna right? So you were leading the this uh customer to the implementation and supporting them on the implementation as well. Um so they're already I would say a long-standing customer with us. they've completely uh ended the implementation part and they have achieved obviously impressive results with the solutions. Uh we help them to achieve the impressive results and it's also their dedication their uh persistence to complete all the works and uh learn properly how to use the system. Uh so this is a combination of both. Uh I want to understand is there anything any space to grow farther uh in

um inventory optimization as uh this is uh one of the first solution they implemented. Helen is there any space for them to grow farther with Lethia? >> There is a lot of space to grow further in terms of inventory management processes for every company. uh but specifically for viata belt the next step is the full centralization uh of the order supervision. So currently they are still decentralized. Uh yes the system is in place. Yes the system is uh calculating the demand forecasting and making the order generation. uh but um the company is planning the complete shift uh of this function to the central office to ensure even greater efficiency and consistency. Uh so that uh there would be uh specific people who will be responsible only for this functionality. So that people store managers uh store

operators they will receive uh a lot of time for working um in the area uh with the customers ensuring higher level of service which is critically important for the gas station specifics. There is a there is yet a lot of uh areas actually to uh improve in and for the company to grow and Anna in terms of merchandising. So have they hit the ceiling of improvement or they still can grow farther? >> Sky is the limit here. Uh so yeah we are still working. The team has made a lot in terms of centralizing the process, standardizing it. uh they formatted the stores which simplified the work and improved business processes. Uh we still have some area for improvement in working in terms of the execution control and uh which is done with the help of the mobile application. Uh so

basically how it worked when this team in the central office is making the panagram uh and publishing it uh communicating them to the stores the team at the stores receive the digital version and they sent the feedback to the central office in terms of confirming what has been done on the level of the stores. So we are still working on this part and also we are considering for future maybe implementing the assortment performance module uh to think about to more work on the assortment and standardizing the format in terms of the regions because the demand is different obviously and depending on the location of the gas station. So that's uh that's the type of the solution that might help them in terms of uh optimizing processes uh in the assortment part. Thanks Hannah. Uh and uh additionally uh they plan if I'm correct uh Helen uh but I heard that they are planning to

enhance their replenishment their uh ordering processes with our machine learning model that we uh propose as an extension to inventory optimization in regards to the short-term planning but also for the promotions planning and uh also utilizing leveraging seasonal factors to plan better in the long term. Right? So, is this the case for Viata? >> Yes, of course, this is the case for each and every company who has uh promotional processes and I can say that this is 99% of all the retailers. H and of course in terms of the long-term uh forecasting um within sharing some information with the suppliers um maybe some imported goods and uh uh ensuring that we are utilizing all the possibilities of the more modern uh technologies. Uh yes, this is the case.

Uh and hopefully we will have uh the case study for this specific sphere in the recent times. I look forward to this also. I want to share it with uh other customers. Should be very inspiring. Uh I want to thank you first of all to you Helen and Anna for sharing your experience and uh the history of this customer, the challenges they faced and how they overcame them. And also I want to thank our listeners and viewers. Uh hopefully today's episode was uh insightful. We tried to explain how Leafio solutions can help revolutionize the supply chain in inventory management uh in merchandising process and how it can lead to significant improvements in the company's performance all within just 6 months uh after implementation. Uh if you have any questions or if you'd like to uh get a consultation of uh how

LEA solutions can be used by your company, feel free to book a meeting with our team and we'll be happy to discuss it further with you. And uh again, thank you for tuning in and uh hope to see you in the next episode. >> Thanks. Thank you [music] everyone. Have a good day.