INVENTORY AND PROCUREMENT STRATEGY OPTIMIZATION FOR AN ECOMMERCE GIANT

INTRODUCTION:

The client helps businesses and brands soar online. They’re adept  in helping brands walk through complex and abundant marketplaces. Their mission is to scale  their customer’s  businesses, and be the reliable and expert help they need in order to grow. Partnered with several hundreds of  brands, they play a very significant role in the e-commerce industry.

 

PROBLEM STATEMENT:

The company deals with lakhs of SKUs – some of which are Private label brands and others are external brands. In order to cater to the demand and avoid stock-outs while optimizing the cost of inventory, the company needs to accurately predict demand and place the POs.

 

Seasonal fluctuations of demand, sales promotions events, varying lead times of different products and vendors need to be taken into account to solve this problem.

 

The company also wants to understand:

  • The quality of the inventory that is being received from each vendor for every SKU – sellable and unsellable stock
  • What is the inventory ageing of different products?

SOLUTION:

Sail Analytics has worked to implement the Inventory Ageing and Purchase Order dashboard for the ecommerce giant.

 

Data from disparate sources was consolidated using best-in-class data warehouse architecture on AWS supplemented with PowerBI front-end to make this possible.

Real-time metrics were made available on intuitively designed dashboards to the Decision Makers regarding:

  • Sellable and non-sellable inventory
  • Quantity and Cost of Inventory by Ageing buckets
  • Historically non-performing SKUs leading to slow-moving and non-moving inventory – based on which they made future purchase decisions. This also helped prioritize the right partnerships leading to the desired business outcomes.
  • Pareto analysis of the inventory to understand the long-tail SKUs and opportunities for saving through vendor consolidation and purchase order consolidation. 

 

THE RESULT:

The procurement department has become more efficient as a lot of their work was automated, and their strategies and planning became more effective as now they can visualize the data in a more comprehensible way.

The stock-outs of overall product portfolio has been reduced by 24% and the holding inventory value was reduced by 17% over a period of 6 months post implementation of the solution.