Customers Success story - X5 RETAIL GROUP

Fast facts

Industry: Grocery Retailer

 

Company Description: X5 Retail Group is the leading and largest Grocery Retail in Russia, counting 3,800 stores and 30 logistic centers all around Russia. The chain operates 3 retail formats Hypermarket, Supermarket and Heavy discount small stores.

 

Revenue: 12 B Euro

Number of Employees: 109,000

 

Business Challenge

X5 realized it needed to deploy advanced supply chain solution to manage the entire supply chain across its thousands of stores and various retail formats. In the grocery business, availability of the right SKU in the right quantity on the shelf is crucial. The replenishment model has to take into consideration lead times and safety stocks before ordering items or transferring items from the suppliers to the DC or from warehouse to the stores. Errors in this replenishment process can be expensive, resulting in either excess stock for a low-selling product or out-of-stocks for a top-selling SKU.

 

 

Business goals

  • Creating higher degree of automation in Forecasting and Replenishment Processes
  • Improved Working Capital / Inventory
  • Right sizing inventory to meet service level /margin
  • Accurately forecasting and managing demand across diverse product mixes
  • Improving information velocity & visibility internal & external collaboration
  • Maximizing asset utilization & reducing cost

 

 

Solution Components

  • Forecasting & Demand Management
  • Fulfillment


 

Business Solutions

X5 Retail Group is the leading and largest Grocery Retail in Russia, counting 3,800 stores in 3 Retail formats and 30 logistic centers all around Russia.

As part of its organizational strategy, X5 defined the need to improve the efficiency of supply chain management, and as a result, increase the Retail Trade Turnover. 

X5 realized it needed to leverage its business processes, organizational structure and supporting IT solution, in order to enable fine-tuning of its product offering and streamlining supply chain efficiencies by optimizing its DC's and store replenishment processes.
The initiative was challenging as the selection and implementation of such a project had to bring in increased efficiencies and productivity, as Well as ROI requirements

 

 

Implementation project

 

In order to design planning processes, organizational structure and implement the technology that support the solution, X5 Retail group selected ISCS, an international expert company specializing in Supply Chain Planning.

 

ISCS delivers a complete end to end solution, utilizing "Planning for Success" methodology that enable Fast, Simple Process of project management including AS-IS, solution Design, Configuration and roll out. The implementation of planning software solution was done side by side with organizational structure change and creation of Supply Chain Planning department.

 

The project was divided to 3 implementation stages:

 

  • Demand & Replenishment of Distribution Centers
  • Demand & Replenishment of stores
  • Optimization & Collaboration

 

Each of these stages had few milestones, where Planning processes started first for Dry categories (60% of turnover), than fresh (30%) and finally non-food categories (10%).

The first stage of the project included forecasting and replenishment processes for DC's, from both local and international suppliers, as well as distribution plan between DC's.
The solution was designed to deliver weekly demand process and daily replenishment plan for X5's 30 local DC's and 5 regional hubs, and went live successfully on Decemeber 2012, only 7 months from project's opening shots.

 

The second stage includes sales forecasting and replenishment processes of the stores, beginning with Hypermarket and Supermarket formats. The solution is designed to generate daily orders for each store both from DC and local suppliers that supply directly to the stores.

 

After completing the foundation of advanced planning processes through the distribution network, X5 will be fully equipped to perform superior optimization and collaboration processes as optimize ordering cost versus inventory cost, share forecast, promotions and constraints with suppliers and so on.

 

In addition to business processes design, software solution implementation and creation of Supply Chain Planning department, ISCS is also responsible for defining interfaces to SAP and training 110 planners working daily with the solution.

"X5 gained enhanced abilities to manage the flow of inventory throughout a multi-echelon supply chain network, while minimizing inventory investment, ordering and logistics costs" says Ilan Benichu, X5 Project manager on behalf of ISCS.

"ISCS consultants work collaboratively with X5 team in this strategic project, and I am proud to be part of a process that enables X5 to achieve real results from planning through execution and to meet customer service objectives".