Unichel

Challenge

Stock planning and redistribution of inventories in the company were manual and time-consuming. As a consequence, planning covered only a small part of the product mix and deliveries of goods to stores were made situationally without a regular schedule. The company set several goals: increase sales through inventory optimization, reduce inventory maintenance costs and adopt GoodsForecast's industry best practices and accelerate retailer inventory turnover by more accurately forecasting demand for footwear models in specific stores and planning optimal store placement.

Addressing the problem

Projects in the fashion segment have a number of peculiarities: production plans are drawn up six months in advance and forecast accuracy must be achieved in fewer iterations while handling size ranges requires forecasting down to product units. During the trading season, Unichel had to forecast demand for each model in each store as accurately as possible and plan the delivery of goods from distribution centers in time so that the footwear models in demand in certain stores would always be in stock there and would not be delivered or stocked where demand for them was low.

Project implementation stages:

• Prior to the start of the season, the product matrix was entered into the system
• Based on the product matrix, the demand forecast for all matrix products in all stores was generated
• Based on the statistics, “size slides” showing the distribution of probability of demand for one or another size for all “shoe style - sales region” combinations were calculated
• Based on the demand forecast and other parameters, stocking rates for each size of each shoe model in each store were calculated
• Based on inventory ratios, orders to be placed with the distribution center were calculated and recommendations on reallocating inventory between stores were issued
• GoodsForecast’s professionals also delivered corporate trainings in inventory management and planning of seasonal collections for Unichel’s representatives.

Outcome

The results of the first season of operation were estimated and the estimate showed that the application of the automated information system designed for inventory management by GoodsForecast enabled accelerating inventory turnover by 18%. Turnover acceleration was achieved through more accurate calculation of inventory rates as well as more rapid generation of inventory movement plans. The achieved acceleration is the main component of the economic effect from implementing the automated information system design for managing Unichel’s inventories and attests to both functional and economic efficiency of the system developed by GoodsForecast.

Other results:

• Employees responsible for inventory management in regions do not waste time on analysis and planning, the plan is generated automatically at the beginning of each working day.
• Planning covers the entire key product mix.
• Product deliveries from distribution centers and transfers of goods between stores occur under a regular schedule (once a week or every 2 weeks).

Technology

The automated information system for inventory management developed by GoodsForecast consists of an algorithmic kernel designed for preprocessing initial statistics and forecasting demand as well as order management, calculation adjustment and system administration modules. Additional modules were developed for standard solutions to handle the product mix matrix, calculate statistics of demand distribution for shoe size and, generate recommendations on inventory redistribution between retail outlets