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ProCogia helped US telecom leader optimize inventory and save $2.9m in 3 weeks.

A leading US telecom provider determined that many of its retail locations were understocked on fast-selling items and overstocked on slower-moving ones. The company engaged ProCogia to help optimize the inventory, and amend the automated store replenishment routines to rebalance stock holding.

ProCogia’s solution resulted in a target-store inventory reduction of $11.5m after stock repositioning. The company realized a $2.9m inventory savings within the first 3 weeks of implementation.

THE CHALLENGE:

A leading US telecom provider with retail outlets nationwide determined that many outlets were understocked on faster-selling products and are over-stocked on the slow-moving ones, with 82% of the SKUs selling less than 1unit in 2 weeks. The company engaged ProCogia to help optimize the inventory, and amend the automated store replenishment routines to rebalance stock holding.

PROCOGIA’S APPROACH:

ProCogia worked with the company’s leadership and retail team to:

  • Define business rules for identifying slow SKUs and test hypothesis to define filter rules and their refresh frequency to identify slow SKUs
  • Develop alternate approach for slow SKU replenishment
  • Evaluate the potential solutions based on benefit-vs-risk analysis and complexity to implement
  • Develop detailed plan for implementation with the test and roll-out strategy to track benefits

THE RESULTS:

  • 20.8m reduction in target store inventory with actual inventory reduction of $11.5m after stock repositioning
  • Stock reposition led to 2% reduction in stock-outs which would result in increased sales of $0.35m per week
  • The increased sales exceeded the risk of losing $0.03m sales in a week
  • $2.9m inventory savings realized within the first 3 weeks of implementation

 
 
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Data Analytics

 
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Prognosis: The Procogia IDOP Framework in Action

This project exemplifies the Prognosis component of the ProCogia IDOP framework. a holistic methodology that applies business, technical and mathematical expertise to your company’s various data elements. Learn more