Code: EDI-2018-8-SONAE

Domain: Retail

Summary

Improve existing levels of security stock and wastage due to excess stock, while improving or at least maintaining current out-of-stock levels.

Proposed by

Sonae Center Serviços II, S.A. is a leader in the Portuguese retail market owning hypermarkets & convenience supermarkets, electronics stores, fashion stores, cafeteria and restaurants, bookshops & stationery, health & wellbeing stores.

Description

Improve existing levels of security stock and wastage due to excess stock, while improving or at least maintaining current out-of-stock levels. Teams may focus on improving forecasting error.

Retail demand suffers from high variability which can be attributed to several variables, such as seasonality, weather, promotional activity and external events. This reality adds complexity for an already busy supply chain, which aims to deliver in time at a lower cost more than 50.000 different SKU’s available at stores.

Stock-outs, a key business metric, controls the lack of products in the shelves, which are missed opportunities for selling a particular item and hinder customer service. Typically, a balance between stock safety levels and real needed stocks are a trade-off that has to be managed, if forecasting of demand is consistently accurate safety stock levels can be decreased, elevating the supply chain efficiency. Both stock-outs and safety stocks are unnecessary costs for a retailer, therefore the aim of this challenge is to decrease existing levels of security stock and wastage due to excess stock, while improving or at least maintaining current out-of-stock levels.

Data

The challenge has the following sample datasets available for download

Expected outcomes

Reduce current levels of security stock by 10% and total wastage production derived from excess stock, while improving or at least maintaining current product availability and consequently out-of-stock levels.

The project teams may strategize to focus on improving the forecasting error, but the challenge objective is broader, as described in the previous point.