Store replenishment optimization based on sales forecasts for Sklepy Komfort
- Client:
- Sklepy Komfort S.A.
- Duration of cooperation:
- October 2022 – present
- Industry:
- home & decor
Sklepy Komfort S.A. is a Polish company operating in the home & decor industry. As a market leader in bathroom, flooring, door, and kitchen furnishings, it has built a strong reputation primarily thanks to its extensive product portfolio. The brand’s assortment also includes other product categories such as rugs, decorations, wardrobes, as well as installation and floor care accessories.
The retail network comprises 160 brick-and-mortar stores along with the company’s own online store. Sales are also conducted through popular marketplaces and in a B2B model.
Background and challenges
Under the “Komfort” brand, over 160 brick-and-mortar stores operate across Poland. Approximately 75% of the company’s total sales are generated through the offline channel. The stores are divided into three main categories, differing in retail space and product assortment. The smallest stores offer only flooring and door products, while the largest locations also feature tiles, bathroom fittings, kitchen and bathroom furniture, and many other items.
Sklepy Komfort S.A. offers around 100,000 SKUs, including both regularly stocked items (core assortment) and seasonal products. New items across all product categories are introduced several times a year, based on market trend analysis and sales performance of individual categories. The slowest-moving products are phased out of the assortment.
Some products are available to customers in a “cash and carry” model, while others can be ordered from in-store displays or catalogs based on individual requests. In such cases, the goods are delivered either from the central warehouse or directly from the supplier’s warehouse.
Store replenishment is managed by a team of specialists who place orders based on historical sales analysis and expert knowledge. This process is time-consuming and largely dependent on the skills and experience of individual planners. High-level analyses do not take into account the specific characteristics of each product-location combination, which increases the risk of lost sales – due to product unavailability – or overstocks in stores.
Goals and directions
of change
The management of Sklepy Komfort S.A. aimed to optimize the store replenishment process.
The optimization efforts targeted several key areas:
- business -ensuring the right products are available in the right stores, in the right quantities, aligned with anticipated demand, in order to boost sales and allocate capital to the fastest-moving products,
- analytical – shifting away from fragmented and generalized analyses towards leveraging the power of Big Data and sales forecasts generated using machine learning models,
- process-related – defining business rules and parameters for each step of the replenishment process, enabling automation based on advanced algorithms tailored to the company’s specific business context,
- operational – delegating the most time-consuming and repetitive tasks to the IT system, thereby freeing up experts to focus on responsibilities that require their specialized knowledge and expertise.
These objectives were achieved through the implementation of the Replenishment module of the Occubee system, which includes three key components: sales forecasts, store demands, and warehouse orders.
Implementation
of Occubee
The Data Science team at Occubee developed a machine learning model to forecast sales for core assortment products. The model is trained on the client’s data on a recurring basis, ensuring it is tailored to the specific characteristics of their business. Forecasts are generated at the SKU–PoS level once a week, projecting four weeks ahead.
Based on the sales forecasts and a range of additional parameters – such as the capacity of store sections or the time horizon for which inventory should cover demand-store-level – store demand is calculated.
In the next step, the system generates warehouse orders, taking into account factors such as the product’s logistic minimum and the minimum total order size for a store. The system also accounts for reservations made for individual customer orders, distinguishing between total inventory and inventory net of reserved stock. As a result, reserved products are excluded from the replenishment process.
All process parameters generating outcomes were configured through close collaboration with the client to meet various business needs and enable full process automation.
During the implementation of Occubee, numerous business-specific requirements were addressed. For example, one of the functionalities supports sell-through of a product designated for discontinuation and replacement (e.g., with an item from a different supplier). In such cases, the system considers the stock levels of both the outgoing and the replacement product across stores. This ensures that replenishment orders do not include an excessive quantity of the new item. As a result, the system facilitates the sell-out of the discontinued product without overstocking retail locations.
Within the Replenishment module, representatives from Sklepy Komfort benefit from a range of features that help optimize store inventory. For us, this is clear proof that Occubee delivers real business value. This wouldn’t have been possible without the commitment and openness with which our client’s team embraced the system within their organization. We truly appreciate this, as it allows us to fulfill our mission of being a trusted business partner for our clients.
– says Michał Koziara, Chief Operating Officer at Occubee S.A.
Benefits and impact
on the Client’s business
The implementation of the Replenishment module at Sklepy Komfort S.A. has contributed to the optimization of store inventory. Analysis of the results for product categories such as accessories, carpets, and floor panels (excluding seasonal products) showed positive impacts on product availability, stock sufficiency, and stock value.
Over the course of 6 months of using Occubee, the store inventory value for the three mentioned categories decreased by approx. 20%, which resulted in the release of around 2 million PLN in capital. At the same time, product availability in stores increased by an average of 2.3 percentage points. The best result was achieved for floor panels, which are the flagship products of the company, with availability increasing by 4.1 percentage points, reaching nearly 96%.
The optimization of store inventory, taking into account sales forecasts generated for each product-location combination (SKU-PoS), enabled more accurate and locally adapted product distribution across the entire retail network. This is confirmed by the fact that the average stock sufficiency for accessories, panels, and carpets improved by 29 days.
By implementing Occubee’s Replenishment, we are continuing our journey towards leveraging the latest technologies for inventory management. Just a few months after the system was launched, we increased product availability in stores while simultaneously reducing store stock. Now, with both Replenishment and Demand Management working in sync, we are stepping up to the next level of inventory management within our supply chain.
– says Krzysztof Niciejewski, Supply Chain Director at Sklepy Komfort S.A.
Key results at a glance
