MySales implementation at Chudo Market grocery chain resulted in a significantly increased business efficiency. Sales forecasting accuracy exceeds 80%, employees spend significantly less time on placing orders. With 97% OSA (on-shelf availability), the retailer almost entirely eliminated the problem of lost sales. Turnover increase of 15-20% released funding for new initiatives, write-offs significantly dropped. How did that happen?

Chudo Market operates in a proximity store format with 30 locations across Kharkiv and Donetsk regions. The assortment consists of a wide range of everyday use products, groceries, including private label products. Constant improvement of internal process efficiency coupled with ensuring high-quality products and customer service is what Chudo Market considers vital to success.

High OSA is one of the key determinants of customer satisfaction according to the retailer.

Demand forecasting and product replenishment are key processes in the FMCG retail business. Sales are influenced by prices, promotional activity, seasonality and a number of other factors. Incorrect forecasts and orders lead to lost sales, write-offs and frozen working capital.

MySales help retailers with automating sales forecasts and ordering. Chudo Market entirely migrated its forecasting and auto-ordering operations to MySales in April 2020. The results are impressive.

Forecast automation

Any retail business faces a challenge of satisfying customer needs. The key role plays the availability of goods at the right time and at the right place - says Chudo Market co-founder Oleksandr Udovenko. Excessive stock generates costs and inconvenience for warehouse staff. With too little goods on shelves customer leaves disappointed. The other big thing is ordering predictability and the possibility of planning the purchases ahead. This is especially important for imported goods which take much more time to deliver.

Retail sales are affected by factors such as price, promotions, seasonality, weather, quarantine. It is almost impossible to manually make an accurate prediction of hundreds of thousands of SKU combinations for all stores by analyzing huge data sets. MySales performs this complex calculation for Chudo Market automatically.

Forecasts are built even for new stores and new SKUs (with or without an analogue). "We help businesses to order as many goods as they need. Enough for customers but not too much due to write-off risks" - says the founder of MySales, Alexey Ivasiuk.

Retailers using MySales forecasting do it at the most granular, SKU-store level. For each such a combination factors such as price elasticity, price changes in a group of products, past sales history and weather conditions (temperature, snow, rain) are taken into account. The system also analyzes the cannibalization of products in the event of a reduction or price increases. Separate module dedicated just to promotions allows for checking sales at certain promo conditions. After approval, the promotion is merged to the global forecast.

Forecasts are recalculated every day, taking into account new data points on products, price changes and promotions launched. Hundreds of thousands of positions for forecasts and orders get created automatically. The forecast is built 52 weeks ahead, but adjusted for the next 2 weeks by taking into account the sales of the last days. It allows for reacting to the factors that were not apparent in the past.

After the integration of MySales, the accuracy of sales forecast at Chudo Market exceeds 80%. This indicator depends on the volume of sales - the larger the volume, the more accurate the forecast. For popular items like bananas and sugar, the forecast accuracy is even over 95%.

Auto-ordering and promo modules

Promotions have a strong impact on sales and most retail chains conduct promos all over the year. 70-80% of consumers are promo hunters according to Nielsen research. Typically, retail chains make sales from 30% to 80% turnover from promos.

During promotions, sales of some products can increase tenfold. If the retailer does not order enough goods, the customers will be disappointed. After all, many consumers come specifically for a promotional product. Re-ordering the product may lead to crowding warehouses, write-offs and leftovers, which will have to be sold for a long time after promotion took place.

"When it comes to over-ordering products from the food category, the math is simple: if you write off 10%, then depending on the margin, you are most likely operating at a loss." says Alexey Ivasiuk.

In addition to promos, FMCG retail observes increased seasonal demand connected to events such as Christmas, Valentine's Day, summer period among others. For each of these peaks, it is necessary to make an advance order of goods from suppliers in the required volume.

MySales provides Chudo Market with auto-ordering for the entire assortment, including ingredients for its own production. The system supports both direct orders from stores to suppliers and orders through a distribution center. Thanks to MySales, the retailer pre-loads the stores with top positions on the eve of high sales, and does it according to the forecast. The system sets the delivery dates, which allows to reduce write-offs. MySales also takes into account the bull whip effect.

After the introduction of auto-ordering from MySales in Chudo Market, the time dedicated to ordering by employees significantly decreased. It became possible to plan vacations and holidays for suppliers and employees involved in ordering, which is very important during New Year's holidays and long weekends.

Turnover indicators improved by an average of 15-20%. On-Shelf Availability reached 97% with only 1% accounting for incorrect orders. With MySales it is easy to accurately measure these indicators and analyze the reasons for the absence of goods on shelves.

"We are aiming for maximum automation in the supply chain process: from orders and processing to delivery to stores," says Oleksandr Udovenko. This allows us to reduce costs and offer the most competitive prices to customers."

Text: Yulia Belinska "Chudo Market

Ссылка на источник: https://retailers.ua/news/tehnologii/13171-yak-u-mereji-chudo-market-doveli-dostupnist-tovariv-na-politsi-do-97-ta-zbilshili-oborotnist-na-20

Aleksey Grishin, the Head of Logistics at Good Wine shares his impressions on MySales implementation in the flagship store at Mechnikova St in Kiev.

How long have you been working with MySales Labs?

We launched April-May last year (2015) and plan to continue using MySales.

How is MySales used in your company?

All orders are made through MySales automatically. The system is implemented on cloud and we can access its analytics dashboard. If we have doubts about the forecast, we can enter the dashboard and understand why it was produced this way. We also can modify the forecast by setting various predictors that we consider relevant. The system relies on sales of past periods.  If the product is new, it relies on similar products that are in the system. Generally, we do manual corrections on very rare occasions.

How often do you actually need to go to the system and correct something?

Typically not more often than once a month. MySales dashboard allows for checking the forecast in detail, but we basically do everything in our ERP integrated with MySales. Everything is automated and convenient.

Who is in charge of it?

Our logistics specialist whose responsibility is store replenishment. Goods are shipped from our own warehouses and providers of both alcoholic and non-alcoholic beverages.

So far, we have not yet implemented MySales to replenish stores from local suppliers of milk, groceries, and meat products.

What’s the reason?

It is related to the human factor. It does not work yet because a lot of people are involved in planning, and I can see that this is not effective. This year we decided that we will try to combine and adjust the processes for MySales: literally from Monday, a specialist comes to me who will have to centrally place these orders. Yes, there may be errors, since this is a new group of goods for order calculation. But MySales has such a system of predictors that, I think, it will be possible to set everything up correctly. It's probably worth starting with a fireproof stock, since we started last year, and we will gradually release it and trust the system more. And the person who will deal with this, of course, will monitor each delivery and balance.

How do you deal with safety stock?

I will say that now we are consciously overstocking. Previously, it was equal to one unit, that is, 100% of the display of goods in the hall. Now, seeing how the system works, our safety stocks for some items, for example, for strong alcohol, have just recently decreased to 25% of the display in the hall (safety stock was reduced by 75%). For all the other positions, MySales helped us reduce overstock by 50%.

Our assortment is growing, the number of articles is increasing. The warehouse is not limitless, and therefore, with an increase in the number of articles, it is necessary to reduce the stock of existing goods. We started back from last year: safety stock reduction by 25%, that is, the coverage became 75% - and absolutely did not feel this decrease. Now we continue to reduce further and we do not see any losses yet. Ideally, we should give up safety stock entirely and leave forecasting fully to MySales. But here there is some fear of unpredictable sales surges: when a person comes and says: “Give me three boxes of this wine,” and we have literally 12 bottles on the shelves (a box of 12 bottles). Therefore, we are afraid that it will not be enough. But for now, we have enough. The system analyzes, relies on sales of past periods, seasonality, etc. and keeps a certain stock.

Is it difficult to monitor a huge number of SKUs?

Challenging. We have 7,000 articles and 2 stores, but one person handles them. Should the number of stores increase, we still plan to manage it with one person only. The system is highly scalable. In practice, the logistics specialist spends about 2-3 hours a day on order calculations.

The way we structure our work is that at 4 pm we look at sales for today and planned deliveries for tomorrow. That is, at night all this is collected and at 5 am the car is loaded with an order for the distribution center. As a result, in 12 hours we manage to make orders, process them, send them to the warehouse, the warehouse collects and at 6 in the morning the car is already with the goods in the store.

How often do order errors occur?

I’ll tell you a story from yesterday. Warehouse preparing delivery to our Mechnikov contacted us. Pickers visually see that they overstock for certain positions. They looked at recent sales - 4 units per week, and there are 50 units in the warehouse. The question goes to the logistics specialist. “Why?”. The first assumption is a system error. After checking, we determined that we brought all these overstocks deliberately through manual control. Once again, we made sure that there are no system errors in this. Errors occur only when people interfere with the system (he laughs :)) So this is the way it is: if no one interferes with the system forecast, everything is fine. People are interested in creative work, not routine calculations.

MySales and Drogas integration project in Latvia and Lithuania

MySales helps retailers with producing more accurate and automated sales forecasts leveraging its deep learning technology.
Drogas, the leading home and beauty retail chain in Latvia implemented MySales two and a half years ago.
This year (2022) MySales was launched at Drogas in Lithuania.

In the interview Artyom Usakov (Supply Chain Manager) and Igor Scebrin (Commercial Director) from Drogas talk about goals that forecasting sales automation helped achieve, what were their criterias of choice for the forecasting tech provider and why did they decide to go with MySales.

— Please tell the readers more about Drogas.

—Drogas operates in Latvia and Lithuania, part of A.S. Watson Group, which has over 16,000 stores in Europe and Asia. A.S. Watson Group operates in 35 markets and in each market is either a leader or one of the leaders in the segment of health, beauty and home products. Drogas operates in the hygiene, cosmetics and home goods segment. We have 95 stores in the Latvian market and 55 in Lithuania. Drogas is the leading retail chain in the health and beauty segment in Baltics.

— Who are your customers?

— Our product is targeted for all age and price audiences in the mass market. Typically, our customer is a woman between 18 and 65.

— How is the store assortment being determined?

— The assortment depends on the size of the store. There are locations with an area of 100 sq.m and 400 sq.m., but this is rather an exception. Our standard store area is 250-300 sq.m.

— Tell us about your online store, how important is it to your business?

— We do not consider a website only as an online store. It aggregates all information about the products, our projects, the company, tips&tricks. Customers can check the reviews written by other clients. We see many customers familiarizing themselves with the products online and heading towards the store to make a purchase. It doesn't really matter for us if they buy online or offline. We consider ourselves an O+O (offline plus online) retailer. For a relatively small Latvia, we have a fairly high coverage of physical stores. If you take 15-min through Riga city center, you’ll encounter 13-15 Drogas stores. In Latvia half of the population lives and/or works in the capital and we have half of our stores located here. For stores located within walking distance, it is easier to pick the product on your own than order online. Traffic jams in Riga are not really a big enough problem to disencourage from visiting stores. We don't have huge malls where it takes 30 minutes to walk from the parking lot to the store. Coronavirus restrictions in offline stores have done the best marketing for online shopping. As soon as they were removed, sales in physical stores immediately increased.

— Your audience is fairly large and diverse.  There are a number of motives, factors, preferences for its various segments. Which factors influence the sales the most for your business?

— There are a lot of factors and they are relevant not only for our business, but for the entire retail industry. These are seasonality, local holidays, weather, tourism, consumer preferences, trends, prices and promotions. For example, recently Korean cosmetics have been especially popular throughout Eastern Europe. It is almost impossible for a human being to analyze everything, so help from algorithms is needed. In the past, store managers ordered goods in our company. It was ineffective. The quality of ordering depended on people whose expertise did not really lie in ordering goods. They could see their store's sales, but not the general trends. We were dependent on a person in case of personnel changes. Will the new manager be able to order goods efficiently? And the quality, shall we say, was “average”. Our colleagues from other countries told us that they did tests and the best store manager ordered the goods at the automatic order level. Instead of dealing with an order, store managers can focus on improving store operations by serving customers, preparing the store for work, preparing goods for presentation, etc. This is why we started looking for a solution to automate the ordering process. There were already operational solutions for that within the other chains of A.S. Watson Group. Our shortlist consisted of two vendors: MySales, which was already used in one of the A.S. Watson businesses that time and another well-known system operating in another retail chain in the group. We spoke to our colleagues from various departments of the company that used MySales. In the end we came to the conclusion to go ahead with MySales sales forecasting module and stay with our present auto-ordering tool. So far we did not decide to move to MySales automated replenishment module due to significant effort needed for conducting such a migration. We load MySales forecasts into the solution we’ve used before.

— Why did you choose MySales?

— It was important for us to keep the number of people involved in working with the system at the minimum and how autonomous it is.

An alternative solution involved a significantly larger number of human effort..

It is worth noting that our Latvian and Lithuanian business use two different system instances since they have separate databases. The same product from the same supplier for different markets has different article numbers and SKUs. Latvian and Lithuanian markets in terms of sales are radically different. In Lithuania, our stores are more focused on beauty. In addition to beauty, personal and home care products are in demand in Latvia. With various sales patterns, different store specifics and other top products, two auto-ordering systems is a must. We saw that a team of three people is able to comfortably control orders in around 90 stores in Latvia. Currently a team of four controls ordering in two parallel systems for two countries. According to our estimates, for an alternative system we’d need to involve 15-20 people. I can't really say if MySales is more accurate than the other solution we looked into. Certainly there was less automation there. For us it was crucial that MySales allows for a significant process automaton and keeps resources needed to maintain it at a reasonable level.

— Which departments within your company are involved in working with MySales sales forecasting module?

—  It is a commercial department encompassing logistics, online store, planograms, analytics, category managers, and even some marketing specialists. Only HR and Finance are not involved.

— What difficulties did you encounter during the implementation phase?

— An unexpected difficulty turned out to be that it was difficult for store directors to step away from the ordering process. There was a question of trust. Previously they kept control over it and now it is being taken away. It was a psychologically difficult moment for them.

We also had to rebuild a lot of processes. The department of orders was created from scratch with new procedures. System requires filling in new parameters. In all planograms, we had to set the x, y, z indicators for the product and we needed to improve the quality of order schedules from suppliers. A lot of processes have been revamped to fit the new system and make it work. During the implementation process, we saw anomalies, that is, a discrepancy between what we expected and what actually happened. We contacted the MySales team, who studied the issue and quickly implemented the required changes. The system is self-learning and every month it gets better. We encounter fewer and fewer anomalies. At some point, 2,5 years ago, something broke, but MySales quickly resolved everything. After that, there were no major breakdowns.

— MySales stresses the importance of the existence of a history of sales and all activities for the system to work properly.

— Indeed, before the launch, we spent a lot of time preparing historical data on sales, promotions and marketing activities, so the system had a basis for forecasting. Before the launch, we discussed in detail with the MySales team all the nuances, including how certain factors will be taken into account.

—  How many factors are taken into account in the forecast?

— Definitely more than 10 factors. Among them are weather, seasonality, and competitor activities. Keep in mind that MySales is different for each market. After relaunching, we did certain optimizations in the system setup. By trial and error, with both us and MySales involved, we got a good result. Another important point, there are significant differences between Drogas and  other retail chain from A.S. Watson that has already used MySales. They have their own warehouse and we don't. This significantly affects the process and orders. We have a 3PL partner who provides logistics services. They have their own system, which is not integrated with ours. Therefore, MySales focuses only on forecasting at the store level. It works with deliveries to stores but not to a centralized warehouse.

— For how long do you build a forecast and how often is it recalculated?

— The forecast is recalculated every day. Forecast date range in the future covers all the active promotions and marketing activities. As soon as we receive information about the next promotions, it is added to the system and forecast recalculation takes place. In case of changes in input parameters, we can manually start the recalculation at any time. For example, promo rules were changed and the forecast recalculation was requested. With fresh data, the system may interpret the data differently based on the latest sales. For example, 6 months have passed since the last similar promo. The same SKU which was sold at a 50% discount may now perform differently. There are various factors that affect product sales at any given time.

Results of Drogas and MySales cooperation

— Have you achieved the results that you set as goals before the start of the project?

— Without any doubt, yes. The system is now working well and ensures optimal inventory levels in our stores. We use several KPIs: inventory qualitative indicators and inventory availability (i.e. Slow Moving Inventory, Weeks of Cover). There are certain budgetary frameworks that we need to fulfill and we can see that everything is in order.

We separately monitor the best stores and top products to ensure their availability for the nearest dates. An important KPI is On-Shelf Availability. This indicator is kept at a good level. And if it decreases somewhere, then as a result of the analysis, we can identify the reasons. Recently this is the impact of Covid, the logistics and energy crises. In most cases, this is not related to MySales.

— To what extent do forecasts and actual sales match?

—We didn't check for it specifically, but colleagues from MySales provided us with a report that the accuracy of promo forecasts is at the level of 80%+, and regular at 90%+. If the forecast is lower than actual sales, then very quickly we will receive feedback from the store that there is not enough product or, conversely, there is too much of it. We can track it by such queries. For some time we do not receive such feedback, which means that the system does the job.

— How does MySales deal with promotional sales? This is an important area for a mass-market retailer. 

— We sometimes had questions about promo forecast output. We asked questions to MySales representatives and they explained the rationale behind such a forecast output. We also worked on our bugs.

We apply some safety stock management factors that allow us to slightly offset the effect in case MySales is wrong. We apply an increased coefficient on top products and on top stores. This is a certain insurance. We developed and independently added these coefficients to the MySales settings. The system allows you to add custom parameters for every store and product.

— Could you share any other business results after the MySales implementation?

— Definitely saving store resources. In each store we freed one person to work directly at the outlet rather than work with ordering. We have optimal store inventory levels and keep a control over it - if 90 people work with it and each of them does it his/her own way, you can’t really call it a good level of control. I’d like to also stress the simplicity of the system. This was a must-have for us. Currently, sales forecasting for our two businesses in two countries is done by MySales with only 4 people involved in the process.

— How much time did it take from choosing MySales to having the first forecast delivered?

— In Latvia it took us more time, because we worked on it from scratch. Procedures had to be redesigned, information exchange and collaboration between departments needed to be improved. We did a lot of tests: how data is transmitted, how providers receive it. And when we did all the preparatory work, there were still certain concerns. The system is new, but what will happen? We started with migrating small suppliers, then medium ones. We were connecting big suppliers one by one, checking results in each case. From a technical point of view, the process took up to 6 months for us, and 2-3 months for MySales. In Lithuania, the process has already gone faster. From the MySales side, everything happened quite simply and quickly.

— What would you recommend to top managers who are now on the way to implementing an automated sales forecasting system in their stores?

— I would recommend not being afraid and trying something new. If we talk about MySales, then on a 10-point scale, I would give 8-9 points. Having learned how to work with it with little human effort involved, you can achieve good results.

‘Those who are directly involved in the ordering process, admit that the MySales tech is really effective’ — Alexey Kruglikov

Accurately predicting sales and optimizing inventory is the key to success in the retail segment. The innovative MySales technology supports in this mission the leading grocery chain in Ukraine, Eko Market (eko.com.ua). It is currently implemented across all the stores of the chain for one of the most difficult product groups to plan: fresh products. In the near future, it is planned to extend MySales tech to all product groups available in Eko Market stores.

Alexey Kruglikov (Head of Inventory Management) and Sergey Pritykin (CIO) from Eko Market shared with us their impressions on MySales and mentioned the future plans of the retail chain.

Alexey Kruglikov

What was your main motivation behind implementing MySales? What were your expectations before the start of the project, and to what extent were they met?

Our main goal was minimizing the so-called “lost sales”. Due to suboptimal sales forecasting which led to bad decisions in the ordering area, we had problems with assuring the presence of demanded products in our stores. We were searching for a solution to that problem which will not lead to overstocking, being an issue especially for short shelf-life products.

What were your KPIs?

First of all, minimizing forecasting errors which led to wrong ordering decisions. Automating the process is crucial, since many mistakes were driven by human errors, for example negligence due to haste. We wanted the orders to be placed based on fully automated sales forecasts. At the same time it is important for us that the system enables us to analyze in detail the forecast and order recommendation.Secondly, we do our best to isolate our employees from repetitive work and create the environment in which they can grow in areas which can not be automated.

Last but not least, we aimed to improve the quality of service provided to our customers. After all this is the main indicator of the company's success.

Thirdly, we focused on improving the quality of service for our customers. This is the main indicator of the success of our company. 

MySales allowed us to achieve these goals. It definitely saves the time of our employees. Their forecasting technology takes into account a multitude of factors like seasonality, weather, macroeconomic indicators, exchange rates and more. No human can take it into account in the manual forecast. For example, the hotter the summer, the greater the growth in sales of ice creams or water. If the temperature outside rises to over 30 degrees Celsius, sales can increase even tenfold. It is incredibly difficult for a person to calculate this relationship precisely, while the system builds it instantly. We did the pilot implementation on fresh goods which are the most difficult group of products to forecast. MySales did a great job in improving the sales forecasts and optimizing the stock levels in our warehouses.

How would you describe MySales auto-ordering system?

Auto-ordering is based on several key parameters. The main parameter is the sales forecast built by MySales. The second parameter is the safety stock, which is calculated also by MySales. We are responsible for preparing the schedule of delivery dates, based on which the number of days for which we place an order is calculated. The final parameter is the minimum stock level desired to have on hand for display purposes in stores - also called presentation stock.

Could you describe an example of how you work with MySales?

Yes, let's use milk as an example at which we show how MySales auto-ordering works. The milk supplier delivers goods to certain stores. Each delivered package contains a certain amount of products. Delivery frequency is usually three, five or seven times a week, depending on the region and the store. The frequency of milk deliveries is quite high, that is, orders can be formed almost daily. In MySales, we prescribed the minimum inventory for each SKU, determined by the delivery schedule and sales forecast.  We also take into account the overhead cost and safety stock for a certain number of days. After that we subtract the current stock, subtract the goods transit period and as a result we get our net need. This entire process is automated in MySales. Both our central team and stores are able to check the recommended order by system at any time. If necessary, we can always make changes to the order and inform the supplier. Currently, the order is sent to the supplier upon our employee confirmation, but in the near future it is planned to move to a completely automated workflow.

How often do you need to amend forecasts and order recommendations provided by MySales?

Based on the results of the 3 months that we have already worked with the MySales product, we received a very small number of adjustments from stores. The reasons for the edits are mainly related to the fact that at the moment only the store itself can track, for example, the actual availability of goods in the store, so for the time being it is still possible to make manual adjustments.

Which product groups have benefited the most economically from implementing MySales?

The greatest impact was observed on goods with a long shelf life, 1-2 months. There is practically no need for manual intervention.The same can be achieved for goods with a shorter shelf life if we introduce batching and RFID tags. Future looks bright!

How did your employees react to this innovation?

Frankly speaking, there were different reactions. Of course, some team members took the innovation enthusiastically. Typically young people. Certain share of employees was rather skeptical, but we did not encounter any open opposition to it. The main conclusion I would like to share is that those directly involved in the ordering process, consider MySales to be effective and saving their time. It really allows them to dedicate more resources towards more creative tasks requiring human touch. According to our analysis, employees dedicate significantly less time to the ordering process with the quality of ordering improved . For stores with balanced assortment and efficient staff, MySales almost imperceptibly helps to achieve excellent results at the store level.

How did the implementation of the MySales system affect the availability of goods in your chain stores?

With regards to the availability of goods, we can already see improvement, however it is still too early to discuss it more in depth. We have been using the system for only three months. The main point I’d like to note is that the order processing time has been reduced by 2-3 times. I consider it a huge success! We can also see improvement in certain qualitative indicators, such as the display of goods, their appearance, and accuracy of information about discounts and promotions. As I mentioned, MySales forecasting is currently working only on the fresh product segment. We go step by step, but ultimately plan to deploy it across all product categories.

Did you deliberately choose one of the most difficult to predict product groups for testing?

Yes, definitely. We are actually pleasantly surprised with the quality of forecasting. MySales forecast accuracy is much higher than any other forecasting system I ever worked with. One of the common reasons for our forecasting failing in the past was inability to precisely measure the price impact on sales. Unlike systems, humans do not always manage to recalculate forecasts after the price change. It is a huge advantage of MySales that it makes it automatically. We already see a significant reduction in lost sales and excess inventory that led to write-offs of wasted food and poor cash flow.

What are your plans for the future?

We plan to implement MySales forecasting for all groups of products. At the moment it is live at 105 stores in the fresh group products. Additionally, we plan to create a so-called automated work area, which would allow our employees to see all the analytics on: movement of goods, sales, write-offs, returns, receipts, price, etc. Wrong data is sometimes the reason for wrong ordering decisions nowadays. Further, we want to formulate a flexible ordering formula which can be tweaked to match the needs of various product categories. That will allow us to keep the isolated order logic for different products. Even further, we aim to build modules for controlling orders and other processes.

After scaling MySales throughout our store network and adding incremental improvements, the benefit we get from this technology will definitely increase. According to my estimation, we are just now seeing 5% of what can be achieved in terms of total optimization thanks to this tool. I am pretty confident about that. As soon as we make the case in our company that automated forecasts can be trusted, we will keep moving forward. There is still so much room to grow. And if we execute well on that, effects may be incredible!

Sergey Pritykin

Tell us briefly about yourself.

I have been working in the IT field for 15 years of which 12 years in retail: You can say I know it inside out. I structure my work so that 40% of my time goes to managing IT operations and the remaining 60% is reserved for supporting research and creating conditions for new technology related business initiatives.

How did the project with MySales start?

The project began with a demonstration of the product by its creator, Alexei Ivasyuk, to the management of our company. The MySales forecasting system, in our opinion, is very innovative. Our management approved it and supported the implementation.

What are the main stages of MySales implementation?

Before starting the project, we had to develop the logic for management of delivery schedules. It is a rather complicated workflow, given that it is often changed in our retail chain. Next, we needed to do an integration with MySales. There were no difficulties and it went quickly. Week and a half taking into account all the development work. We plan to invest more in this integration, however it already works stably and there are basically no problems with it. There was no need to hire additional staff, we managed to do it with our own resources.

What has already been achieved and what are the further expectations from MySales?

This automation of business processes is aimed at reducing operating costs. Our goal is to improve the quality of work without increasing the number of staff. We want to free our employees from monotonous and routine work so that they can focus on improving sales efficiency and the quality of service provided to our customers. We are constantly working to improve the skills of our staff and strive to retain the most qualified team members.

MySales helped us quickly solve three main problems. Firstly, minimizing human errors. Secondly, improving the staff productivity by expanding their expertise. Finally, reducing the negative business repercussions of human errors. We expect to see decreased write-offs on wasted food due to improvement in the ordering process. It is still early to say, but we already can see that persons involved in the ordering process dedicate much less time to it. We expect to see even better results for the other product groups.

Original source (RU): https://medium.com/mysales-labs/%D0%B8%D0%BD%D1%82%D0%B5%D0%B3%D1%80%D0%B0%D1%86%D0%B8%D1%8F-mysales-labs-%D0%B2-%D1%8D%D0%BA%D0%BE-%D0%BC%D0%B0%D1%80%D0%BA%D0%B5%D1%82%D0%B5-eec0a50e82fd

Chervonyi Market (chervonyi.com.ua) is a leading non-food discounter in Ukraine with over 170 retail outlets. 

Thanks to MySales Labs technology, the company increased the accuracy of regular and promo forecasts, optimized its inventory levels and minimized the impact of the human factor across the number of processes.

In this interview Olha Danilochka (VP Sales&Marketing) and Yuriy Tatsokha (Head of Inventory Management) shared how they use MySales Labs.

Could you quickly describe your business to provide the readers with more context?

Sure. Our first store opened in 2013 and it offered basically everything a household needs in terms of non-food products. After a successful launch, we decided to rebrand to "Best price" and scale up. During the first 2 years, we opened 20 stores in the Kiev city and region. During these two years, we analyzed a lot not only what sells well, but also dived deeper into who our customer is, what are her/his preferences, habits and needs. One of the conclusions was to move away from the brand "Best price", which is difficult to remember, to a simple, convenient one associated with our corporate color - Chervonyi Market (Red Market in English).

Our business kept expanding and it is still not slowing down. By business expansion we do not only refer to quantitative growth (number of stores), but also qualitative growth. After all, scaling any business is not possible without a review of existing business processes and adapting to new requirements - including the opening of own distribution center and introducing an automated replenishment system.

The clear sign that all these efforts were worth its effort was winning the award for the best 1 Dollar Store format chain in Ukraine in 2021.

How did you start your cooperation with MySales Labs. Which module have you implemented first?

With business growing rapidly, we were on a constant lookout for innovative and modern business solutions. The first task was to find a promo management tool. MySales was the most flexible and suited our criteria most out of all the tools we checked. Originally we were planning to introduce only a promo module. After analyzing in-depth other modules, we decided to immediately implement them and switch completely to a single solution for automating inventory management.

How do you organize the replenishment process?

Store replenishment is centralized around the distribution center and can take place according to several schemes. At the moment we use two.

First scenario:

Ordering from the distribution center takes place as per store replenishment schedule.

Schedules are formed in such a way that at the time of the next delivery, the balance of the goods is enough to cover the minimum stock on the shelf (layout).

Second scenario:

The delivery from distribution center to stores takes place on the day of goods arriving in the distribution center (Pick-to-Zero).

This tool was developed together with MySales Labs. It significantly increases the accuracy of meeting the needs of stores. 

In the event of a supplier delivering a different amount of goods than agreed, it eliminates the probability of suboptimal inventory redistribution across the stores.

Ordering from suppliers is organized in a way that there is a sufficient amount of goods at the distribution center to cover the needs of all the stores in line with any replenishment scenario. Until the next delivery from the supplier to the distribution center.

The orders are sent to suppliers automatically via email.

How do you organize the pricing process? What are the top factors affecting your sales volumes and how do you take them into account when forecasting sales? How accurate are the forecasts compared to the actual data?

We monitor the market very carefully and aim to be the most price competitive in each product segment. Thanks to the MySales Labs Monitoring module we have a solid view on competitors’ prices and a good understanding of price dynamics in the market overall.

The key determinant of our sales volumes is ensuring enough stock at great prices for products demanded in a given season.

The sales forecasting system takes into account many factors, such as price elasticity, seasonality, promo share, trends, exchange rate fluctuations and others. The system's forecasting accuracy is quite high.

How often do you run promotions? What is the share of promo sales in total? What would you say about the effectiveness of your promos?

Any promotional event must be approached thoroughly. All our promo activities are conducted according to the promotional calendar. It takes into account seasonal factors as well as popular holidays. Developing the calendar a year ahead allows us to prepare better for the promo implementation. It includes developing a communication strategy, selecting high-quality merchandise, preparing sales forecasts  and creating a solid ordering plan. For each promotional event we model which products should be playing the leading role. We fix clear KPIs based on which it is possible to determine whether we achieved what was planned and how satisfied were the clients with that particular promotional event.

While constructing our promotional plan, we make sure to run some promos any single day of the year.

Promo share in total sold goods depends on how intensely we push promos at the given time of the year. In high season promo sales share can reach up to 80-90% of total.

How long did the MySales integration process take? Which of your systems required integration? Could you share the results of implementing MySales?

The full integration process took us three months. Another 3 months took to fine-tune the system to our specifics and needs in all MySales modules. The systems connected to MySales were 1C UPP, 1C WMS Logistics.

In general, MySales technology helped us to increase the accuracy of forecasting for regular and promo sales; optimize inventory and minimize the impact of the human factor through maximum automation of processes.

Original source: https://retailers.ua/news/tehnologii/13154-yak-mereja-chervoniy-market-atomatizuvala-protsesi-popovnennya-zapasiv-prognozuvannya-ta-tsinoutvorennya