Webinar: Xmas race: How to avoid empty shelves or overstock. 8 tips for retailers

perfect while while you are sharing I wanted to notice that in case of some lacks in connection or some difficulties if you don't hear or don't see something uh so please uh log in for once more time or otherwise you can type in the chat for us to understand that there are some issues for you to connect definitely so we have actually a very good occasion which is a Christmas but of course during today webinar we are not only going to look at from the point of Celebration that we are having but of course from the point of challenges and kind of tips we can do to help retail companies to operate and prepare for this period better so my name is Andy and I'm a sales team lead at Leia Ai and also joining me today Helen who is a product directory for inventory management so she will provide us with some use tips on how can we plan our inventory management better and specifically prepare for this great but

sometimes a very challenging and overwhelming period of time so we will start just talking a little bit about us to understand what are our credentials to be experts on the topic but uh Leo is a company that provides a Supply Chain management platform for retail companies it consists out of four composable models and each one of them is dedicated to specific big area of Supply Chain management our highest return on investment product is inventory optimization which helps you to automate your replenishment process and when we're speaking automate we're speaking again reduce any manual actions which are related to it apart from that we are also providing modules for promotion intelligence which helps you to create and structure your uh trade marketing campaigns much better and more efficiently and better understand what do effect it's going to have on your inventories and operations overall apart from that we are also specializing on merchandising workflows and therefore we have a two solutions which are called

shelf efficiency and assortment performance which help you to better understand and help you to drive better layouts better planograms and your assortment strategy as general in the story so how did we get here well actually it's 15 years of the experience present currently in the 20 countries worldwide and more than 180 implemented projects So currently our uh all of these uh projects are supported by the team of 120 employees uh apart from that just to give you an idea of what kind of companies we work with and specialized with so generally speaking we work with retail companies who are uh who are uh who can be from various different segments so of course it's more traditional like grocery stores convenience stores but of course we have ACC companies from such sectors as DIY Pharma liquor stol gas and oil and health and beauty because of course we

are focusing on some of the universal parts of the Supply Chain management that can be automated and of course help companies to gain a lot of operational efficiency um so with regards today webinar having implemented those projects we of course gathered a lot of experience gathered a number of different stories from our customer of what kind of challenges they had during the Christmas rush and of course uh so during the today meeting we will focus on key areas first of all you know what are the common and Universal challenges that our customers experience in this area specifically those customers who are affected by the change in demand during the Christmas because of course we understand that it would heavily depend on what you're selling who are you selling to but at the same time there's a number there's a common uh determinator that on on season on Christmas season the demand is going up uh apart from that we will also provide you with a checklist on you know what kind of things can I check what should I

be looking for in order to prepare myself better for the Christmas rush and of course we will show you how can you also apply technology and for instance using our Leia inventory platform to prepare better and make this perod much much nicer for you as well as many other useful hints so I think think we are ready to start so let's go to the good part and the key part of the session so first of all with the challenges and there are a number of them I think you know not probably only from retail category manager but in any way everyone understands that Christmas period is a rush but for retail it's something special so first of all what are the challenges you understand that you have a lot of demand coming up your hand and you know sometimes you can okay I will order more products but you need to understand you're not the only one and your suppliers are can be overloaded as well and this can create issue of course it really depends on the industry but just to give you more extreme example some of our customers in the toy retails

uh the information they tell us that around half of their annual revenue is only generated in December so again you can imagine the extent to which it spikes in demand at the same time it's also very difficult to identify which are the particular items that are going to to be growing in demand of course it's easy for us to say oh alcohol is going to be growing in demand oh I don't know maybe turkey or maybe some kind of other things which are traditional depending on country where you from what people would like to have for Christmas but what are the particular products how much are they going to increase is the champagne going to increase 100% or 150% and of course we understand that predicting individual products is definitely challenging apart from that we understand that overall we are going to to be ordering much more we are going to be working with much more goods and what it can create is of course issues with elistics uh because number of things can happen when we are working with a such

large number of total products we need to understand you know number of things that probably haven't been tested fully in the normal time I mean just a very simple question you know do we understand that our warehouse for instance is going to be capable to to fit as many product does it have enough capacity to do that and of course there are a number of different operational issues that can arise during this period the period during which it's most harder to solve them uh apart from that sometimes as I mentioned you know like your suppliers might be overloaded so what would you do you can get a product you're not going to miss you know a Christmas sale you're not going to miss you know one of the biggest parts of the month so you might take some new products but if you take the new product and you're introducing it how are you going to you know predict and forecast accurate demand if you don't have the last year information this is another big challenge which makes it much more difficult to forecast when we are introducing the new products and of course it could be any kind of products that were introduced for

instance during the year but uh they weren't introduced during the last Christmas rush so we might not know you know what is exactly happening at the same time again when we are forecasting we understand that it's another force is affecting and we're trying to estimate you know like how much much is it changing but again during the Christmas season we understand that there are two factors that are affecting our demand first one is of course seasonal Factor because Christmas is coming people are naturally going to shop more but at the same time we understand that retail chains are competing against each other and there is a huge promotional uh promotional season is going over and of course when you have a Christmas rush and at the same time you have a fact that is going to be is going to be done by the promotion it's going to be much hard to estimate accurately you know how many inventories are we going to need uh apart from that another thing to consider and you know we all all to go to shopping holiday shopping and we all like to see you know nice Christmas tree

which is for instance made out of chocolates or out of Champagnes and all those awesome decorations that we can see in supermarkets hypermarkets and so on so forth the issue that requires additional inventory you know to make them look that good and of course again you know people are going to be coming over taking over and we need to understand that these additional skus are required to ensure that we can have the layout that we want uh another common challenge we've heard from our larger customers who operate more of B type of stores different formats for instance like much larger stores and much smaller stores which are for instance designated to different type of customer groups or different type of shopping experience against something local convenience store or something as a hypermarket we need to understand that if we are selling within two different formats the shopping list for the Hypermarket or Supermarket is going to be completely different than for a convenience store because if I'm going to do my main shopping for a celebration

I'm going to go to the largest store but sometimes I'm going to forget some type of goods you know something that to do with my dish something that can be do with some traditional cuisine and of course on the convenience store level there's going to be completely different assortment is that it's going to be increased in price and we to understand that we really need to differentiate between the approaches to the assortment strategy when we are speaking about a Christmas period and at the same time we understand that again from the point of view of logistics from the point of view of operations we are going to be having much more transactions we are going to be doing a lot more things if we are getting twice as many SS it means means twice as many cars quite likely are going to have to deliver it twice as many times people are going to have to collect to ensure that they can take uh you know those products and ensuring the number of things happen you know like if you have if you're ordering twice as much you know you can have many overlaps between different deliveries and do you

have actually enough resource can you plan enough resource to make sure that you fit with the demand because the closer you are getting you know to failure the more it's going to end up in the cow situation because of course we understand that every Department in then retail supply chain is really depend on another and again failure in one can cause a lot a lot of distress to the overall organization and again Financial impact that's going to have so again planning and allocation of workload are critical during this period and uh also an extremely important and something that happens every time all the time maybe not on the extreme basis but probably happens every Christmas R Forest majour you know the weather got too bad so we couldn't get our deliveries a car of our supplier have broken down or I don't know someone ordered a mistaken quantity so one of the customers I remember uh he told us

uh that one of the category managers by mistake simply by mistake because the process was so manual instead of 30 bottles of expensive wine one of the most expensive in the category or Ed 300 bottles and of course the effect is horrible because first of all he frow in a lot of the funds that could be dedicated to other categories and secondly again you know like how are they going to sell it you know like what is going to be effect overall so definitely there is a huge number of challenges which are specifically related to the Christmas rush but uh you know it's better to understand how to tackle them and you know once you're equipped we are sure you would be able to get over them so I will pass the word to my colleague Helen who apart from again frightening us with regards to those challenges is actually G to focus on how do we solve them so Helen passing the word to you yeah thank you I'm not going to frighten you more than Andy did

previously we will try to focus on how these challenges can be solved and how uh we can work through them um for gaining the best level of the efficiency during this hard period of time so basically when we are talking about the preparation to holidays especially to Christmas holidays in terms of the inventory management the main challenge here is to prepare the balance quantity for at least uh for the last four days or week before Christmas basically uh this exact period of time uh is uh the the the most rushy let's say uh because people they are just preparing for the upcoming holidays to achieve this goal uh to prepare the balanced inventories um we have uh a checklist that can help you to understand which points needs to be taken into

consideration while you are preparing to the holidays in terms of inventory management first of all we need to identify the list of items which will will be uh which will definitely increase in their sales um during this period of time so it is one of the hardest task because uh uh usually we see the overlapping uh effect of the promotional activities uh and seasonal spikes of demand that are uh going on at the same period of time uh and uh uh the second reason uh for being for this task to be so comp complicated is that um you need to analyze all the product range uh and uh calculate the increased forecast uh to calculate the forecast for the increased sales for each particular s in each particular storage location uh as Andy mentioned previously when we are um talking about different

format of stores uh the seasonal effect in terms of the holiday preparation will be different uh so we need to take into consideration like to make the forecasting not based on the category level or even SQ level but on the level of the SQ location uh also um the it is interesting that we have noticed uh that um um we can have even rather High spikes in demand uh for not so obvious categories like for example the household chemicals uh during Christmas holidays and especially after the end of the Christmas holidays uh this example highlights that we really need to investigate all the product range and it is rather hard to make this investigation without the tool that can help you with the automation of this task uh the second task is to decide

where the increased quantity need to be stored before the beginning of the spike um on the DC or distributional Center or the central warehouse level all or in stores directly of course um we understand that this decision depends on the structure of the supply chain whether you do have the distributional center or not uh and the capacity of the overall capacity of the distributional center um and uh one more thing to mention here here that uh we need to understand that it is rather crucial uh that um as the store capacity uh is decisive Factor here and for instance we have uh for example a convenience store um retail chain uh as a customer and the uh square of trading area and the back room was so so limited that there was no way to store The increased quantity on

the level of the stores that's why they allocated The increased quantities uh on the level of the distributional center and increase the quantity of deliveries to stores durine High season period so there is a number of different different approaches how we can tle the task for increasing the quantity of a particular skus or all the skus depending on the forecasted spikes of demand uh the next task is to make a Quee of items in the the order to be delivered to the distributional center or store so basically on the first stage we need to identify um we need to identify the items that will increase in sales afterwards we need to uh decide like based on the forecast made uh whether we need to storage this increased quantity um on the distributional center

or the storage locations uh of course uh it is like more Logistics tasks but it is it can be rather crucial and afterwards when we already understand the capacity of the stores on one hand and the capacity of the distributional center on the another hand um we need to understand uh the cue of these items uh to be when these items really need to be delivered to uh the storage locations where they will be stored uh the next one is to identify the new esus that are predicted to increase in sales um as Andy mentioned we have the high level usually we see the high level of um item rotation in terms of one year uh and uh particularly new do not have the sales historical data for the previous year and we cannot use this for example for some uh forecasting activities that's why uh it is

um crucial to uh have the tool that will help to uh forecast the new ESU SP seasonal spikes of demand especially during the Christmas holidays but not only um during some uh gender holidays during some seasonal spikes like summer or winter seasons and so on uh the next point is to calculate the forecasted in increased demand and divide it into Parts according to the recommendation in the point number three so basically based on the overall forecasted quantity when we already obtain all the information that is needed uh from um the suppliers from our side in terms of the forecasting when we have already included all the necessory factors that will definitely influence the forecast um we need to to align this

forecast with the queue uh that was done to prevent the overload uh of the capacity of the distributional center or uh the storage locations afterwards we need to define the order dates for store and warehouses to have the deliveries according to identified queue of items to make and make those orders so um basically uh um we um we calculate the order dates and um um deliveries due to this order days and there could be dozens of suppliers who will make these deliveries so this point should be done automatically uh as uh uh due to the quantity of orders due to the quantity of Asus and of course due to the quantity of different suppliers stores and a lot of factors uh that are need to

be taken into consideration while we are making this action uh the next point after receiving the increased stock it is very important to proceed with regular orders uh so basically we need to divide the promotional sales seasonal sales and regular sales because usually our customers they are preparing for the upcoming holidays holidays in advance and usually it can be even up to uh four five months in advance before the holiday itself especially when we're talking about the Christmas holidays uh but when we um obtain this quantity when we are um like we start to receive uh the delivered orders from vendors and suppliers for this increased quantity for the preparation uh we need to understand that this is the untouched

quantity for the upcoming season but we still need to proceede uh with the regular coverage of the demand it is necessary to identify the end date of the demand Spike uh usually it is the date of a holiday or the next date uh when we already understand that it's off and we need to um count uh the ship yeah after the end of the holidays period uh to um identify the overstocks to calculate the loss sales during this period of time uh and so on and uh the last but not the least which is connected with the previous one very important to analyze the efficiency of all actions by the end of increased sales to better prepare for the next seasonal demand Spike uh yeah it is important not only for the holidays uh

deliveries uh for like calculation and forecasting but for the whole range of processes in terms of the supply chain uh not during uh the particular holiday for example but during for example the promotional activities during uh some other Limited in time actions uh and uh we see in our project in our experience we see that these actions are not usually analyzed uh throughout all the uh Supply Chain management or people who are involved in the supply chain processes but it's really it really works and helps uh to um not to um continue making the same mistakes in future uh so uh here I had um an example it is a graph from our system like a classical example of how the preparation

uh can be done unproperly uh with the astim martini uh with the astim martini wine uh so basically um here we have like the increased quantity uh of balance here the light blue line is the balance quantity the quantity on hand on the level of the particular storage location uh and you can see that it was increasing before the upcoming holidays and afterwards it had increased for once more time due to uh the St Valentine's Day and basically afterwards uh uh there was a decision to decrease uh the stock levels uh but unfortunately uh it was like done with a slight mistake so we had the increased quantity the sales were not so good at as it was expected and that's why we had

the rather high level of the Overstock and uh like our system identifies such kind of overstocks and gives a recommendation what can be done with the overstocks after the end of the uh seasonal activity or promotional activity and as well just now I will make a short demonstration how this functionality work in lefo Inventor optimization how Leaf inventor optimization can help you to automate this uh uh check list and to tle the task for making and preparing the balanced inventories for the upcoming holidays uh so we have a special functionality which is called the holidays deliveries if and um basically the system can adjust the stock levels in advance depending on the decided que as uh I was mentioning

previously uh Quee of orders for each specific category first of all uh you don't need to identify the particular ask used that will increase in sales the system will do it automatically uh the our recommendation for our customers uh is like like to make these calculations in terms of uh different categories just for like to understand which specific uh skus in which specific categories were increased in sales or will be increased in sales based on the forecast and uh I have two examples here for whiskey and for sparkling wine basically for whiskey uh I have decided that 70% of all forecasted quantity need to be delivered by 14th of November and other 30% need to be delivered uh by the sixth of December the same pretty the same

example with the sparkling wine here I have decided uh I have divided um these deliveries into three parts the first part is 20% afterwards 50% and afterwards 30% by the 20th of December to fulfill all the necessary quantity uh so this is the only decision that must be done by uh the demand planner like uh for which particular parts and for which particular quantities do we need to divide everything else would be done fully automatically by the system itself uh so here we have a number of different setting that can help you to automate the calculation uh and to ensure that the deliveries would be done strictly on time the first uh the second task the delivery St strictly on time uh so um the system will automatically identify

when exactly due to the supplier schedules do we need to calculate and send the orders to the supplier to ensure that by 11th of December we will for sure receive this increased forecasted quantity uh we have different options how to calculate the upcoming spikes of demand based on the forecast or otherwise based on the sale historical data I prefer of course to uh make it based on the for forecast uh and we recommend it to uh all our customers but some of our customers still prefer to use um uh their uh sales historical data U because they like it is more uh obvious let's say it is more obvious so uh this system uh counts the upcoming period like for the period based on the forecast and of course we need to identify the end date

of the spike of this demand uh and uh we need also to identify the um and action based on uh like our vision based on uh uh our strategy um in case uh uh we need to restore the old values uh we can make it and also the system can not only restore the old values of the forecast but also restore the old the previous uh version of the normalized sales level that will uh be used uh for the further uh calculations of the order and here we just have a t T of um all the esus that are considered to be in the sparkling wine category as I have mentioned that uh it can be uh very relevant uh when we are talking about the Christmas holidays specially

Christmas holidays that um the seasonal spikes of demand they're overlapping with the um promotional spikes of demand so the promotional um the promotional um percentage of the es that are being uh held in the promotional activity they increase uh as well in during this period of time uh and our system can take into consideration this overlapping and help to prepare not only for the seasonal spikes of demand but also to the promotional spikes of demand uh during the same period of time uh I will uh have uh just a quick number of comments here basically it works um in a similar way but of course in a more complicated way uh here the same we need to understand when exactly basically the system will understand when exactly do we need to ensure the increased level of

uh uh inventories to cover the promotional demand uh but not only here the task is a little bit more complicated as uh uh like to if to compare the seasonal spikes of demand that can be used um the data this historical data can be used like for the previous year or or the year before previous some additional Trends and that's it uh but if talking about the promotional spikes of demand here of course we need to take into consideration the price elasticity uh that's why the algorithms of the machine learning forecasting model uh differ here a little bit uh due to this specifics uh but not only this specific it's taken into consideration here the system takes into account the promotional type promotional advertising promotional mechanics the category level uh the canalization of sales in terms of the same category and so on so all the

necessary factors here are taken into account as well which helps uh our customers to gain um increased efficiency of the promotional activities uh and also the system uh takes into account the overlapping of different promotional activities and seasonal spikes of demand and based on this overlapping for each es on each storage location the system will definitely calculate uh the um uplift coefficients uh based on all levels of overlapping if we have some and forecast increased quantity for each particular delivery to ensure that you're not losing sales and at the same time uh to prevent the overstocks uh on the level of the location and uh distributional Center okay and going back to uh our presentation uh here we have like to sum

up we have some useful hints that can be used basically even without our system uh but of course it's better to use the automation uh and especially when the vendor has the relevant experience and we have it so basically uh the first hint is the increased calculated quantity must stay untouched till the beginning of the seasonal sales now we had an interesting example that uh like um before the implementation of our solution um our customers shared this story with us uh they were preparing for uh the Christmas holidays uh and they have ordered some um sparkling one wine if I'm not mistaken they increased quantity from the wendor and it was delivered like in a months after the order was done and everybody were so happy that we did it it was for the

perfect price and for like the exact quantity that was needed but un Unfortunately they uh as this quantity appeared as a quantity on hand uh the regular orders were stopped and uh this quantity was already sold by the beginning of the um um of the seasonal Spike of demand of this holidays uh because nobody like mentioned and take into consideration that basically we ordered this quantity for the particular aim uh the next uh hint is to the process is fundamental before starting any kind of preparation you need to develop the logistic process and clearly understand where the increased quantity will be stored and not only stored basically uh so we always um have the same manifestor even in our uh

development processes first of all we need to clearly understand the process uh with uh understanding the process from the beginning till the very end uh we can easily understand like see and visualize how it can be either automated or just built from scratch or etc for uh this being done promotional forecast must be calculated separately from the seasonal projection of course uh yeah like um um we need to take into consideration a lot more factors during the promotional sales forecast if to compare it to the seasonal projection but at the same time we need to overlap to multiply this both forcasted quantity if they are taking place for the same SQ on the level of same storage location all calculations must be done using uh store storage capacity as a basis uh of course

uh because otherwise and we really faced with such kind of situations in our practice that um like some of the products were spoiled and they have become based due to untaken into consideration the storage capacity uh because they were stored like outdoors and of course it influenced the quality and the supplier holidays should be considered during the order calculation uh it is a special uh functionality or a special process uh that uh the suppliers usually take a break just after the end of the seasonal Spike for a week or for a couple of weeks they do not deliver the items and goods to the stores of course not all the suppliers and not in all categories but still uh it is a common practice and we need to align with it and to prepare

in advance for the upcoming suppliers holiday period problems and mistakes discussion after the end of the season uh have to be made as well at the conclusions to ensure that it won't happen in La yeah it is very important to uh build the process of the continuous Improvement uh to learn uh on the lessons and uh to identify the bottlenecks and to work at the team uh facing real problems not to avoid them happening in the future uh we wish you good holidays and uh we wish you to your inventories to be like very um enhanced and uh due to the necessity level thank you very much Helen and definitely when you mention the suppliers break I believe number of our customers will require a break after this Christmas rush as well so we are

very grateful for those who attended this webinar and of course we can be you can get in touch with us through our website in case you require any kind of assistance consultations or digital transformation for your Supply Chain management we are not the team who does the development and provides you with the software we are the team of experts in the retail business and we help you to achieve the business goals so again our website is www. leo. feel free to interact there with us feel free to reach out to us and we will be more than happy to support you thank you very much everybody and have a great holidays ahead thank you bye thank you