- Stores inventory turns increased by 60% in 3 years
- Warehouse inventory turns increased by 50%
- Stock Effectiveness was improved by reducing 20% of assortment, without affecting sales
A genesis of Goldratt Group, Onebeat is a global software company that develops and implements advanced retail solutions. Resolved to fundamentally change the world of retail operations, through their superior planning, dynamic execution, and customer-centric approach, Onebeat platform takes a customer-centric approach in guiding and developing next generation of retail optimization solutions for its global customers.
Cromā is an Indian consumer electronics and durables retail chain. The Cromā brand is operated by Infiniti Retail, a Tata Group company, of which there are presently 101 stores and 7 distribution centres in 25 cities across India.
The case study focuses on Onebeat enhancing stock effectiveness and streamlining Cromā’s warehouse and in-store inventory.
It started in 2011 when Cromā was already leading the Indian Consumer Electronics Retail Market with 60 stores and annual sales of 20 billion INR. Despite the leading position in the market, Cromā was expecting a constant negative cash flow, occurring due to inventory management issues and a lack of ability to capitalise on sales opportunities. Despite a constant growth in sales, inventory was growing at a faster rate month after month. The first aim of the implementation was to increase the inventory turns and to achieve positive cash flow.
The main problems Cromā faced were:
- Overstocking of slow-moving products
- Lack of availability of best-selling products
- Non-effective range and ageing products
- Low level of supplier reliability, with regards both on-time delivery and promised quantities
Onebeat’s implementation included rolling out in two phases to best address the multiple problems from which Cromā’s operation was suffering:
Phase 1 implemented ‘Depth’ management across all stores. Onebeat solution was implemented to manage store inventory. MTA buffers were introduced and dynamically managed for all products in store. The buffers triggered a pull distribution-based operation to avoid unnecessary inventory being pushed to the stores. This phase was operational three months after implementation and was completed within less than six months.
In Phase 2, purchasing and ‘Width’ management was applied. After stabilisation and the reduction of inventory within stores, pull distribution was introduced within the distribution centres. Due to various supplier reliability problems, Onebeat’s purchasing module was adapted to meet the specific requirements of Cromā’s purchasing environment based on a hybrid MTA-Coverage solution. In parallel, a range management solution was implemented.
Range management was implemented to ensure the most effective assortment for each individual store, based on the customers’ preferences. And, end of life management process was implemented to mark and handle slow moving products in order to better control and prevent the creation of aged stock.
“Initially, we had looked at Onebeat as a software to help us manage inventory in our stores. We had not understood its strategic importance and the effect it would have in turning around our business. We started to see benefits within three months of the commencement of implementation. The implementation has provided a greater control over our buying team, which in turn, is improving the effectiveness of purchasing.”
– Nidhi Manpuria, Manager of Business Process Improvement and Merchandising
Key Business Outcomes Achieved
Onebeat’s retail solution dramatically improved the main purchasing and distribution KPIs. Annual inventory turns within stores increased from 8.8 to 14 (60%) over three years. Annual inventory turns within distribution centres increased from 5.2 to 7.8 (50%) over one and a half years. Non-moving inventory (more than four months old) decreased from 550 million INR to 220 million INR within a year of implementation (a reduction of 60%). Assortment effectiveness was improved by reducing 20% of the range without any reduction in sales. Best-seller availability improved by reducing stock outs from 19% to 10%. Cash flow became positive with a turnover of 1.08 billion INR over the past two years.
In addition to the financial and operational improvements, Onebeat has greatly helped Cromā to establish a more stable and controlled process. The supply chain is much more adaptable to the introduction of new processes and initiatives, which can all easily be modelled and monitored via one holistic system.