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  • Inventory Correction using Analytics for a leading Retailer helped Optimize Capital , Improve cashflows

Case Study

  • Project name: Inventory Streamlining with Analytics for Retail Major
  • Category: Product
  • Client: Leading Retail company

Inventory Correction using Analytics for a leading Retailer helped Optimize Capital , Improve cashflows

Problem Definition : A leading Jeweller based in India, was facing severe cash flow issues with piled up payables, continuous pressure from suppliers, overflowing overdraft, financial tightness and strained cash flows. Though the business was running very well with highly satisfied clientele, premium base, best in class locality, good products / designs, still there was something missing. The client approached Align Associate to come up with a solution to overcome the problem Approach : Align Associate’s experience in the sector for 14 years, knowledge of business standards, best practices, key performance metrics were used to assess the problem. A varied team of experts drawn from finance, operational, sector expertise were drawn to research & identify the root cause of the problem as under: • Balance Sheet Analysis • Financial Ratio Analysis • Working Capital Analysis • Cash Flow Analysis • Industry Benchmarking Analysis From the research, it was found out that root cauase of cash flow issues was due to overstocking than what is required to meet the Sales through put. The company was performing at half the level of stock rotation in comparison to industry best players. Once identified Align Associate worked towards putting in a comprehensive solution. Solution: To address this issue, last 4 years Historical Sales Data was analyzed in detail to understand sales patterns in various categories & sub-categories across price & design ranges. Pattern based, algorithmic analytics were designed using advance data crunching tools and user friendly Dashboards were developed to provide decision support with respect to Inventory Management were deployed. Advanced Analytics Dashboards were able to provide a comprehensive direction through: • Optimum stocks to be maintained and Industry Standards for every Jewellery category • Optimum Stocks split across various weight and price ranges, including designs • Right suppliers for jewellery categories that customers bought to plan sourcing Adoption of the Advanced Analytics Dashboard by the Client took 6 to 9 months and with its user friendly design and intuitive view, the client was able to closely monitor and take action taken. Align Associate experts were continuously supporting and handholding the inititiative through external watch & monitoring. Challenges  Faced : In the initial stages of the project, the Sales force had to be convinced that the myth of “more stocks leads to more sales” does not hold good. Once the root cause of the problem was identified, there was deep effort to educate the client on maintaining optimum stock levels. Right sizing of inventory was necessary to optimize working capital apart from increasing sales. Further, getting the right data was also a critical challenge, Align Associate had to cleanse data which was provided in complex formats. Team members at Align Associate had to use their extensive knowledge of Oracle, SQL to convert data into the relevant formats. Benefits: The client, after initial hesitation, realized the importance of optimizing and achieved positive changes through inventory correction. Business derived significant benefits with the help of Advanced Analytics Dashboards: • Reduction of inventory by 40% • Sales increased by 20% • Usage of excess Cash flows generated to buy other valuable capital assets • Payment of Overdraft Please contact Align Associate for exploring possibilities of providing your organization similar support.