Retailer Increases Annualized ROI with Advanced Analytics
Author: Dominic Yacovella | | July 18, 2018
The larger your business grows, the greater challenge it is to optimize your business processes in order to extract the most value and return on investment. This blog post will reveal how one of Datavail’s recent clients, an office products retailer, used custom software and business process management tools to become more efficient and productive – and save millions of dollars in the meantime.
The Problem: Serious Business Inefficiencies
The client is a major enterprise retailer of office products, with tens of thousands of employees across dozens of countries. With so much on its plate, the client was facing three major challenges for its supply chain and operations.
First, the company’s merchandising team was evaluating vendors based solely on price comparisons. Of course, while price is an important consideration during procurement, it’s not the only factor that matters. Metrics such as fill rate, on-time delivery, lead time, turns, out of stocks and customer service all influence the vendor relationship.
Second, the operations team was storing SKUs (stock keeping units) in company warehouses and flow through centers without any regard to prioritization. This made the process of picking, packing, and shipping highly inefficient, and employees had to work overtime to meet the levels of customer demand. The profit margins for both individual stores and the entire enterprise were significantly lower as a result.
Third, freight shipping expenses were steadily increasing due to both fuel surcharges and LTL (less than load) shipments. These costs were eating away at the company’s profit margins and creating a burden on individual stores’ profit and loss statements.
The Solution: From Inefficient to Best in Class
Struggling to address these three challenges internally, the client approached Datavail in search of analytic automated business solutions. The results of collaborating with Datavail were transformative for the client, with a total annualized return on investment in the tens of millions of dollars.
For the most harmonious working relationships, the client wanted a way to evaluate vendors based on more than simple price comparisons.
Together with Datavail, the client developed a “vendor scorecard” that graded the performance of 100+ partners in eight different categories: fill rate, on-time delivery, lead time, price, customer satisfaction index (CSI), quality, out of stocks and turns. Each vendor was statistically measured against its peers and placed into a percentile to help the client find the top performers.
Thanks to this scorecard, the client saw significant improvements in revenue, with an ROI of several million.
To optimize its warehouse and flow through operations, the client needed a standardized methodology that would maximize productivity while minimizing employees’ travel and pick times.
Datavail worked with the client to develop an “ABC by picks” process for ranking the SKUs in a warehouse, based on the frequency of pick and the sale movement.
This project took 180 days from concept to completion, and the efforts were well worth the investment. The client savings was in the multi-millions thanks to the increased labor productivity.
In order to lower its freight shipping costs and achieve an economy of scale, the client wanted to “cube out” its trucks. This would allow truckers to use as much of their vehicles’ capacity as possible, rather than wasting space.
Datavail developed a truckload rounding application for the client that would optimize the inventory and number of items shipped to each store. Using Datavail’s custom-built application to cube out the company’s truckloads was far less expensive than making multiple LTL shipments. The client estimates that the application saved the company another several million annually.
There are numerous benefits to taking an analytical approach to operational inefficiencies – and using a partner like Datavail to fine-tune the solution.
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