Unlocking Retail Potential: The Secret Behind Baltic Petroleum’s 62% Sales Growth

Hello. My name is Victor. Welcome to the new episode of Lifio AI podcast. And today we have very interesting topic. Particularly, today we will discuss is it really possible for the company to reduce overstocks by 50% and at the same time increase the sales by more than 60%? And even adding to that, is it possible to achieve uh over 1,500% ROI in the first year after the implementation? So, for this we have prepared a really brilliant case study uh of Lithuania's gas stations operator, one of the largest gas stations in the region, Baltic Petroleum. And we will discuss their case together with my colleagues, our inventory optimization expert Helen Kom and Anna Irma, who is our shelf efficiency space management solution expert. And we have prepared a small addition, a brief interview with the

deputy CEO uh of Baltic Petroleum, Lukas. And he will share his experience and insights of working with Lifio. So, we will break it down onto these parts and we'll share what the results were able what results were able to achieve um team of Baltic Petroleum after the implementation of Lifio solution. So, let's get started. Uh before implementing the Lifio solution, Lifio AI retail platform, Baltic Petroleum was facing significant operational challenges. And here I would like ask Helen and uh tell us more about what particular challenges they were facing in the inventory management. Absolutely, Victor. Thank you. Thank for having me here. So, uh um before the implementation um the order creation process and inventory management and demand forecasting in general uh was managed uh with the

help of uh store operational managers uh across uh 84 gas stations. So, you can only imagine the quantity of time and efforts to manage these processes. So, each store manager placed and calculated the order manually, which took about uh 2 hours daily. Uh and um we can sum up that it means that particularly 168 man-hours per order cycle uh was used just to um make this process work. Uh of course, it was influencing a lot of inconsistencies, uh overstocking, inefficiencies. So, we can um understand that this uh manpower, this um human factor, of course, influenced the not only the quantity of time and efforts, but of course, the quality of

these orders because each and every person um based on his or her experience will definitely decide based on uh some and like general understanding of this particular person. Additionally, uh there was no uh systematic way to uh keep in track of the orders if to compare them with the uh created orders and sent orders with the actual deliveries, which of course, made the inventory um discrepancies uh in like a common issue. Uh so, um the stock and promotional item management were handled in Excel spreadsheets, of course, in a manual way as well. And of course, it led to a lot of risks and frequent miscalculations. Well, Helen, to be honest, when you said about human factor, it reminded me of plenty of other customers, especially

that reliance on the spreadsheets. It really faces It really creates a significant problems. This human human hours that are required for managing a large chain when there is a lot of reliance on the human resources. Completely aligns, and I'm not surprised to hear that for this customer, the same challenge was faced before the implementation of Leafio. But also, we were implementing and Anna as a key manager on this project for Baltic Petroleum, she was in Solux regarding all the solutions, and in particular for space management software. So, Anna, could you guide us through what were the main challenges for Baltic Petroleum in terms of their space management activities? Hello, everyone. Thank you for inviting me to this podcast. Yeah, in case of Baltic Petroleum before Leafio implementation, there was no standardized process in visual

merchandising and space management at all. So, similar to the inventory optimization, there were like store managers who were responsible for placing the items on the shelf. So, it wasn't like centralized, it wasn't guided by the headquarters, by the central office. And as a result, all their gas stations, they were like different. There was no consistency in terms of the merchandising layout, in terms of how the shelves look like, how the planogram look like. And Baltic Petroleum initial aim was like to standardize that, to make it consistent on the level of all the gas stations so that people like entering different locations they can like recognize the same layout the same space. Also as like Baltic Petroleum they didn't have any assortment matrixes so it was harder for them it was actually one standard assortment matrix for all the gas stations so as a result it was very hard to like adjust that on the level of every air every gas station cuz like the

demand is different there are different people different locations who are entering these stores and they really needed a solution to centralize it to make some kind of like a guideline and to create this layout this planograms based on the numbers based on the sale of each particular location. So and as also as since they didn't have any kind of solution to manage this process there was no person that was responsible for this process so there was no merchandising manager and category managers who can handle that and as a result it was also difficult to understand if something was like implemented on the level of each and every gas station so they had like to check it maybe manually go to the store each particular store or ask for the photos in different chat so it was like kind of a chaos and it was very hard to manage that so that's why Baltic Petroleum they came up with the idea to have a solution and to implement the solution to centralize this process to

uh uh bring the consistency to all of the gas stations and to organize this merchandising and space management processes to make it data driven to make it based on the numbers of each particular location. So basically they had very similar challenges in terms of a reliance on the human factor in terms of as Helen described in inventory management process in space and you as you described Anna in space management process. So, Yeah. It's evident it's evident why they decided to implement both solutions. But as I know initially their initial interest as our talks with them discussions with them started, it was primarily interest in the planogram software. So only after some time they decided to implement multiple modules engaging more with the platform. So in your opinion, what was the main decisive factor for them to go for the

multiple modules rather than focusing at the beginning on one of the modules of our platform? Okay, I will step in if you don't mind. Yes. So that's right. Initially our colleagues from Baltic Petroleum really were more interested in planogram optimization solution. But during our negotiations and discussions we also introduced them to the inventory optimization solution. And first of all, the functionality really impressed the leadership team on the Baltic Petroleum side. But at the same time we faced with a rather interesting discussion with them because due to the financial approach with their suppliers and vendors, they had the deferred payment. That meant that basically they were not paying for inventories before the inventories were sold or otherwise like some

quantity of days left after the delivery was done. So in such kind of a case and it is a very frequent situation when the customer has a deferred payment that it is harder to convince the customer that it is really important to implement such kind of a solutions because they do not really feel any kind of pains that are connected with the cost of inventories. But uh during a couple of meetings we were successfully convincing them that really the cost of stocks even despite they're not paying for inventories at the moment of the delivery, but at the same time the cost of overstock is very high and it consists of a lot of different pain points. Maybe that that are not so obvious, but at the same time they are taking place. And that is why these two reasons

and the overall challenges with this human power and the human factor in inventory management that they were facing basically it made perfect sense to implement the entire platform with the both solutions. I really like the point about how they didn't initially recognize the problems they had. I believe this can be the case for multiple companies as they were paying in the first payment, but the overstocks themselves were creating in fact significant financial struggles for them because when you have overstock you're basically reducing, slowing down your cash flow which restricts your company grows and spendings on other activities which are significant for strategic development of the company. So this is a really good point and I would like to highlight here. In the previous version in the previous edition of the podcast we I think we discussed that part of why it's

what's the importance, what are the advantages of implementing platforms versus silos solution basically single solutions from multiple providers for different areas. So, I think in this case describing this case of Baltic Control, it's really important to highlight this one more time very briefly for the listeners. Anna, if you could guide us through the main advantages of implementing platform providers. Yeah, sure. Actually, we are noticing this trend among like many of our customers, potential customers, and existing customers that they are coming and they're interested initially in one of the modules, but after that they decide to go to the integrate into the integration of like two or even three modules sometimes, cuz it really like facilitates the whole process over like different spheres in the supply chain management. So, in case of implementation of the platform, there are many advantages, cuz first of all, it's the seamless integration, and this

kind of solutions like add-on modules to the ERP system, they require not like changing the ERP structure, but enhancing the current ERP with additional modules that can be more efficient in different like niche spheres, like in our case like the inventory management, visual merchandising, assortment performance, and so on. So, after that, also it's about scalability, cuz for example, if the company implemented one of the add-on modules, they can easily add an additional module maybe like for some sometime after that, like 1 month or like 1 year after that, they are just like adding additional data, and they're going into the implementation, there are not so much resources needed. And of course, it's about like the automatic data exchange, that's one of the biggest advantages, cuz it's already like the ready data flow to the Leaf Retail platform, and we don't need like to make there one more time the

integration, and of course, it's like less resources on the customer side and we are saving on them their efforts and their resources, human resources and IT resources in terms of the integration. Well, let me actually give you the example how this flow works and why it is important not only to integrate like one of the parts of this is a supply chain management platform, but to integrate like the whole process and to have this a whole process as one ecosystem. So, let's imagine like we have the category manager he inputs new SKU to the assortment. So, once like he analyzed that okay, there is some new SKU in the market or it's among the competitors, we need to enter it to our assortment in our retail chain. So, what happens next? He like enters this list this is a SKU in the assortment matrix and it goes like automatically in our case to the shelf efficiency platform so that the merchandising management manager he can enter he can first of all see that

there is new item that cuz there is like the full visibility on that. He can see that new item appear or appeared where it should appear in which particular store. And he can add this item like also automatically on the level of the planogram. After that, of course, we need to make sure that what we updated on the level of the planogram, we need to order that. In case of like different different customers, some customers they have like distribution center and they need to maybe import these goods and so on. So, we need firstly to order that from to the distribution center and after that to ensure the allocation and replenishment to the stores. In case of the Bel Petroleum like we need to make sure that these items will be ordered from the external suppliers. So, automatically these statuses they go from the assortment performance tool to like the inventory management tool that gives the sign to the system to start ordinary ordering this items from the supplier. And it's similar with the

delisting of the item when we need like to remove some of the item from the assortment, it also automatically like goes to all of the modules of the LIFO platform with like automatic notification about that we need to like to delist and to start to stop ordering this process. Uh Baltic Petroleum had an amazing case recently with the cigarettes cuz there were like some changes in the uh legal on the legal part on the level of the country regarding like the decreasing of the parts of the cigarettes that were present on the shelf. So they made this example that like previously before implementation of LIFO solution, they had like to notify all the gas stations to make sure that like they decrease the layout, they like stop ordering that. And it will be like a huge amount of time to make sure that everyone is aware among like 80 full locations. But what they did now and it took me like one day for them, they just like made adjustments in the

inventory optimization in the shelf efficiency modules and it took just like a couple of I don't know like minutes to readjust that, to stop ordering, to decrease the planogram and all the flow it automatically went to the level of the stores. So that's why it's very important to like have not only the automation which is important for sure, but to make sure that the consistency and like flow between the systems and that this processes that they are centralized and in this way they're like less human resources that are involved in all these like operational processes. Yeah, and uh thanks for sharing. I think this is really one of the strongest features of implementing the platform, this seamless data integration so you can basically without any extra efforts when making change in one module, this change is reflected in other module without with no need to communicate it to the departments involving other resources and so on. So, this is really

important and also as you described scalability because for companies who are deciding to go into the implementation of new solutions to change their infrastructure, implementation process is always the question, how long will it take? How much will it cost us? How much time will we need to invest? How much people we have to involve? So, definitely the scalability allows companies to be more economic in terms of implementation. After implementing one module, all other modules which cover other areas, whether it's replenishment, whether it's promo planning, whether it's sortment management, allows to be added very quickly with no extra resources spent as it would be in the case when implementing solutions of other providers. So, it's really it's really good takeaway from that. And as I know like for Baltic Petroleum, they they haven't they they didn't implement it one by one. They it was not like scalability scale a scalable implementation on their part.

They decided to implement all solutions uh at least they decided to start with the all solutions at the same time. So, Helen, could you to guide us through this process? How Now coming back again to the Baltic Petroleum, how that was how the implementation process was built and how did it happen? Did it happen simultaneously or there were some first phases that were prioritized and then you had to connect other solutions. Or could you just take us back to that part and tell us more about this process? Yes, Victor, you're absolutely right. So, the implementation of Lifer inventory optimization solution and Lifer shelf efficiency solution done simultaneously following the three-stage methodology. So, on the first stage of the implementation, it is crucially important to deep dive into the business current business processes in terms of the planogram creation and management and inventory

management. Why it is so important? Here in Leafio, we are rather strategic partner, not just the implementators of the software. That is why it is really important for us to understand how our solutions would be implemented in the business processes of the customer and how we're going to gain these financial effects and outcomes we're going that we're going to discuss a little bit further. So, that is why on the first stage we're drilling down to the business processes. We are creating the diagram of the as-is business processes and afterwards the to-be business processes for us and the customer to understand the transition process and basically we're giving the recommendations of how from our standpoint, from the experience of more than 100 retail chains, it would be better to manage some kind of processes.

Simultaneously with that, we are managing and making the data integration between the ERP solution and Leafio platform. Um basically, we were discussing it in the previous point, so we need to regularly receive the all the necessary data for making all these processes working automatically. Uh on the second stage, after we are done with the methodological integration and data integration, we are switching to the go-life process. We call it the pilot phase. It means that we are connecting some part of the assortment that was discussed previously and we are making the automated purchasing and replenishment at the same time. We are creating the test planogram.

This stage is really important because on this stage we are introducing our solutions to the end users. We are making all the trainings for we are ensuring that they the team really understands how it works and why the system is making that or this decisions. And on the third stage of the implementation when we are pretty sure that everything works mostly when we are sure that all the calculations are done perfectly right. When we are sure that we don't have any lack of data. When we are sure that all the settings in terms of the solutions are done in the correct manner, we are ready to the full-scale deployment which means that we are adding all the assortments that the customer has in place to both of the solutions to ensure that all the planograms are created and to ensure that all the assortment is ordered automatically.

The calculation of the forecast is done automatically and with the proper level of the accuracy and that's the whole the whole process of the replenishment and purchasing is working in general. So we are ensuring that the cycle by cycle the orders are calculated and afterwards delivered. And that we are moving to moving forward in terms of the improving of the key performance indicators in which in each of spheres in plan creation and in the trade management. And afterwards, uh, when the process of the implementation is done, when we are ready with all the assortment, uh, and, uh, all the planograms are created and we, uh, are sure that everything works smoothly, uh, we are transferring the customer to our customer success team who are, trying, uh, to continuously,

um, improve the indicators, who are keeping track of the changes, because really the supply chains and retails in general, uh, is a very, very fast-changing environment. That is why, uh, we need to, uh, apply some changes if needed. Uh, we are introducing the new features of the solutions to the customer with the help of the customer success team. Uh, and, uh, we're just supporting the customer and, uh, uh, checking, uh, proactively checking whether we do have some issues that can be covered with our solutions. Thanks for sharing this approach, actually. I now understand why we have this opportunity to discuss this great case of Baltic Petroleum today based on the thorough approach that you just described to the implementation, because it's really important. It's just not It's not always just the question of good, great software that you have to figure out by yourself, but it's really the question of the provider who is there to support you and to set up to configure the system properly in

accordance with your business with the company's business process. So, it's really, uh, very detailed. Thanks. I think it's, uh, really important to understand how that process looks, uh, from the from the inside. Uh, and, uh, after they implemented, after this implementation was over, what what key, uh, impact here, noticed, uh, and the customer noticed after the system was launched live. Mhm. So, basically, when we're talking about the implementation of the inventory optimization solution, it is really different, and it gives different outcomes in terms of different companies, I mean, customers, depending on their initial stage. As I have mentioned previously at the very beginning, so they had the decentralized purchasing and replenishment uh function. It means that on the first

stage, we really needed to change the processes. So, the shift from the store level ordering to a centralized system, when only four people at the level of the headquarters replaced these 84 store managers in placing the orders. So, it is like a very dramatic, very huge shift for any retail company. So, and these four people who were specifically um doing all the work in terms of the inventory management, they were figuring out everything. They were just checking everything. They were working and are working with the analytics. They are in not placing the orders. It is done by the solution, so it is done automatically. And these 84 store managers, they are not wasting their time on the routine tasks of

order creation and sending and checking and communication communicating with the suppliers, but rather they are making everything possible from their side to make the sales happen. So, which is the most important function of the store personnel on the level of the of the store. And this change significantly improved control, transparency, and of course operational efficiency. And one more important point that all the processes with the help of the analytics, with the help of the ongoing tracking of the KPIs, so each and every top manager now is able to check each and every order to understand the reliability of the supplier. So, this is a very controlled and transparent way how to manage the inventories, which is one of the biggest assets

of the retail companies. Well, that's definitely a huge leap forward, especially in terms of operational efficiency. I'm also glad to hear that these 84 managers didn't lose their job. They still are working. So, I think this is also on the user on the manage on the lower management side. It's important to understand that we do not our solutions do not force to fire people, but it's rather finding them the more effective more effective place to work where they can actually impact the sales and the financial situation of the company using their brains rather than using their time to do some routine tasks. That's really it's really great great takeaway from that implementation. And you briefly described also you mentioned about merchandising part. I would like to just deep dive a bit more on that on that section. Anna, could you tell us

more about what was the implementation of space management part for Baltika Petroleum. Yeah, for sure. Actually, I would like to enforce your thought that Liko is not only like the implementation partner, but first of all the strategic partner and we are not only like applying the software on the side of the retail chain, but we are helping to restructure their business processes. So, similar it was like in case of the visual merchandising and space management cuz we recommended Baltika Petroleum to hire a dedicated person and to assign dedicated person who will be responsible for the category management and planogram management. So, that he can like centralize that, he can bring this function to their merchandising management and can be responsible for the implementation. So, now like they centralize this business processes like to the to the headquarters and they are not relying on the manual

work of the store managers. They like made one single guidance. They are tracking their they eliminated the usage of the spreadsheets for sure and manual work of the store managers on thinking how to recreate this layout. And now they are relaying or relying on the data. Of course, like after making and restructuring the planogram planograms on the level of the stores, they analyzing that, they are analyzing how the stores are performing and in case if needed they are making some changes. So, thanks to their BI model that is available in each and every solution, Baltika Petroleum now has a possibility to track the sales per meter, to monitor the compliance with the help of the mobile application, to see how the stores are performing the tasks of the implementation of the digital planograms and they are sure that every each and every SKU has its perfect place on the shelf and in perfect number of faces that will allow

Balt Petroleum to get more sales to get more consistency on each and every gas station that they are operating. Thanks for sharing on that part, Anna. That's really incredible in terms of the improvement of their processes on both sides. Uh uh inventory and merchandising. And now we will also have a brief interview with the deputy CEO of Balti Petroleum. His name is Lucas. He is here with us to share his experience, insights, and tell us more about his journey of Alifia solutions. Lucas, we're extremely happy and proud to have you with us. So, how did you find out that you need solutions such as Alifia AI? And at what moment you decided that the way it is working right now in our company, it's not more suits us, so we need to change. Okay. Well, first of all, Victor, thank you for having me today. And to answer this question, we need to understand that our company was not always as it is today.

Uh we started almost 25 years ago in the year 2000 with only a few petrol stations, and we grew over the years to nearly 90 stations. As we were growing, more difficult processes were needed to control everything. And around the year 2018, I think, when the number of our petrol stations reached around 70, we started looking for a solution to eliminate decentralization in merchandise management. And since our main customers are middle-income earners, it was especially important for us to control the cost cost of good goods and thus maintain our promise for good prices to our customers. That's when we began to analyze the weak points in our processes. And when we started to do that, it turned out that our petrol stations petrol station managers spent around 25% of their working time on forming orders. The same product category was ordered chaotically and without taking analytics into account. Well, it was chaotic.

Write-offs on fresh products, sandwiches for examples that were for example that were produced on site were really significant. And all this led to financial losses, of course, and the inability to keep our low price promise to our customers. And in context of rapid network growth, this situation required a comprehensive solution. So, after looking at a lot of software from different vendors, we initially turned to Leafio AI specialists for a solution. And however, during the discussions, it became clear that Leafio inventory management system was exactly what we needed to eliminate the identified inefficiencies. The ability to implement two solutions on one platform was the deciding factor for choosing Leafio AI. If you could give us a bit more details on what were the outcomes, so in terms of quantitative impacts on your sales, on your financial growth. Okay. Well, no results could be achieved without hard work. And first of all, I would like to say thank you. Yeah. And

first of all, I would like to thank the Leafio team for their constant work with our sales team. We have weekly meetings with our dedicated success managers who help who help us improve the way we work and thus improve our results. I won't get into many specifics, but I have a few examples that were the most the most noticeable. First one of them was the management of the fresh product category as we were talking before of the sandwiches, hot dogs, and everything like that. Previously, our sandwich write-offs were stuck at 11% and just 2 months after implementation of Leafio, the figure dropped to 3% and now it is really stuck at 3% and it's not moving. So, that's a great success. And the other great example presented itself right after the display ban law that was implemented in Lithuania for cigarettes and tobacco products. Since we were no longer able to show our customers what products we have, we were able to reduce excess inventory by 50%,

which is a lot of money. And all it took was the change of some system settings, which only took 15 minutes. Those are really significant numbers. And all in all, there were a lot of great improvements that directly impacted our our results in a positive way, but the main message here is that we gain control and a power to implement decisions on the spot. Thank you for sharing the results. One more thing, in terms of the business processes after the implementation, what impact did you notice if you had on your operations on your daily operations, how you manage different tasks? Well, as I said, the most significant change in the redistribution was in the redistribution of time and resources. Previously, our managers spent a huge amount of time on manual order management and the display of the merchandise was not really controlled at all. It was chaotic as as we spoke before, yeah. But now the system does all the routine work. The system automates stock replenishment. It optimizes shelf space.

It generates analytical reports for us to analyze. Lifie really allows our team to focus on strategic business development and improving the quality of service for customers while the system takes care of the routine and operational tasks. That was Lukas and his story of implementing Lifie solutions and the groundbreaking, I would say, fantastic results that they achieved with the help of Lifie. And we are extremely proud of it. We're extremely grateful of having a this hardworking team with us on board and uh create such a huge success story together. Thank you. Thank you, Lukas. Thank you, Baltic Petroleum team. And now I'd like to ask Helen, uh what key take away take aways from your opinion can other retailers learn from this from the discussed case study? Um It will be surprising, but the first thing and the first point I will be not like the business process changes or some KPIs improvements. It is the

personal relationships with the customers. So, I think that in this case, this significant, fantastic, dramatic results were gained because of the team and the very friendly attitude to the implementation of the solutions and of course big thanks from all the Lithia team for the Baltic Petroleum side. And because because it really impacts the speed of the implementation, the quality of the implementation, and the outcomes the the sizes of the outcomes. So, the friendly attitude is really important. Secondly, as I mentioned, the centralization of the replenishment and purchasing, which is really very important point. And I think that I have commented on that. And the transparency

and that the like the figures that just now are really transparent for each and every person on the customer side. And they're really diving deep into into the analytics. They're trying to make the improvements. Just now the project is on the customer success level or team. And the customer success team is just now working with them and even though even the implementation is already done, they are still trying to make the improvements. Great. Sounds really great. And on the merchandising side, Anna, what are the key takeaways in your opinion here? Yeah, we should understand that actually the shelf is the way that the retailer is communicating with their customers. So, it's really important to have them like data-driven to place the items that

clients really need to see on the shelf and very easy to find them. So, that's why implementation of the merchandising solution and also about and first of all about driving the sales and through the right product placement. And having data-driven planograms is very important cuz we in this way we make sure that we get everything that we can get from their shelf, from the space management. And in case of Baltika Petroleum, I would like to add to Helen's word that um it was very important that the team trusted us and they have very high loyalty to the L'Oreal team and it was really a teamwork that enforced and made this project successful. So, these are all fantastic insights that you shared. So, is there What is the limit for Baltika Petroleum farther or is the limit is the sky? What are the next goals for this project since it's already implemented?

The limit is the sky. Okay. But if talking about the inventory optimization, so we continue just working closely with the team. Monitoring the KPIs, improving some processes as I mentioned on the customer success level. Uh and uh we have a challenging goal. We are going to enhance even more the promotional forecasting for Baltic Petroleum. And I'm pretty sure that just in a half a year we will hear a great case on that occasion. Yes, and Anna, and maybe you'd like to add something. Yeah, we'll like to add that for sure we are working on more automation on the side of their space management on kind of like more automatic planograms, have more of like scalability. But also we are considering enforcing Leaf out platform on the Baltic

Petroleum side with different other modules like assortment performance, a super app implementation for helping them to have more like standards in terms of the category management and in terms of having the full control on the side of the like all the gas stations that are they are operating. Okay, so really from my side big thanks to our team, to Helen, to Anna in terms of sharing their experience with this company. Also separate thanks to Edvin, CEO of Baltic Petroleum who took time to have an interview and share his experience. Really it was very eye-opening a discussion. I believe also for the listeners, for the watchers of this episode. This is a real case of the company that implemented that decided to change, to go through this transformation and the impact they had on their sales, on their waste reduction, on their space management process. And basically this can be applicable to other companies.

There are more episodes coming of other companies who had similar results, who achieved same transformation. So thanks everyone to also to our listeners, to the watchers of this episode. If you like this episode, please hit like here, uh subscribe button, and notification bell to make sure not to miss any future videos. So, it was a pleasure, and keep innovating, and looking forward to our next meeting. Thanks. Okay. Thank you, everyone, and have a very good day.