Omni-Channel Demand Forecasting, Allocation, and Replenishment: FLO Reduces Lost Sales by 12%

The FLO customer success story at a glance

FLO is one of Europe’s largest footwear retailers, currently operating in 21 countries and 3 continents. The retailer serves millions of customers everyday through its wide retail network of 650+ stores and its multi-brand e-commerce channels.

The retailer aimed to increase forecast accuracy, maximize availability, and optimize inventory smartly to improve supply chain efficiency. FLO also needed superior omni-channel inventory planning capabilities to reduce lost sales, increase sell-through and improve fulfillment efficiency.

FLO rolled out Invent Analytics’ AI-based retail planning solutions, including Allocation Optimization, Replenishment Optimization, Transfer Optimization, and Markdown Optimization. As a result, leading footwear retailer has reduced out-of-stocks and inventory, lowered fulfillment costs, and improved gross profit.

The challenge: Making optimized allocation and replenishment decisions

As a leading footwear retail chain, FLO wanted to generate highly accurate forecasts at all levels of granularity and determine the right amount of inventory required in their stores and distribution centers.

The retailer needed to replenish stores, DCs, and hub-stores with the right amount of inventory at the right time in anticipation of omni-channel demand that could be fulfilled from every possible source.

Gaining a full-season perspective to enable more accurate and timely allocations and making profit-optimized inventory decisions was also critical for FLO.

Choosing Invent Analytics

After evaluating multiple vendors, FLO selected Invent Analytics to meet their evolving omni-channel retail needs.

The Impact

Upgrading inventory decisions to a financial optimization-driving process

FLO implemented Invent Analytics’ tailor-fit solutions. Invent Analytics delivered speed to value and proved the benefits of its profit-optimal solutions with pre-go-live simulations and A/B testing.

Following the implementation, FLO upgraded its inventory decisions from a judgment-driven, KPI-measured process to a financial optimization-driven and measured process. The retailer was able to deliver superior omni-channel customer experiences while increasing margins.

Benefiting from AI-powered demand forecasting

Every day, Invent Analytics’ system generates forecasts at all levels of granularity. The solution using explainable AI and fast learning algorithms predicts how, when and where FLO’s omni-channel customers want their orders to be fulfilled.

Advanced allocation and replenishment optimization

With Invent Analytics’ Allocation and Replenishment Optimization, FLO sends the right amount of inventory to its stores, reducing left-over risks at stores and early stock-out risks at the distribution centers.  

As a result of the dynamic and smart positioning of inventory, FLO gets higher sell-through and reduces overall fulfillment costs. The retailer optimizes inventory by anticipating omni-fullfilment of demand and easily calculates optimal inventory levels for each item-store-day.

While balancing lost margin from out-of-stock and the cost of carrying inventory, FLO ultimately achieves better inventory planning.

Financial impact of pre-pack optimization

 

Optimally timed markdowns

With Invent Analytics’ Markdown Optimization, FLO accelerates its margin growth by optimizing markdowns throughout the product lifecycle.

Invent Analytics’ Markdown Optimization solution optimizes FLO’s markdown path through the season and directly improves the retailer’s margin and end-of-season sell-through.

Increasing omni-channel profitability by rebalancing inventory across locations

Using Invent Analytics’ Transfer Optimization solution, FLO rebalances inventory across locations for maximum efficiency. By moving products from underperforming locations to other locations where demand is higher, FLO minimizes lost sales and markdown losses.

Future-ready next step: Omni-Network

In 2021, FLO started its new Omni-Network Project with Invent Analytics. FLO focused on knowing the network structure best positions their supply chain to fulfill omni-channel customer demand.

The retailer wanted to assess how many DCs and hub stores they need to serve to which locations of stores and customers. And more importantly, they wanted to see what alterations of network structure are necessary to better position their inventory to reach their online customers on time and in the most cost-effective way possible.

“With Invent Analytics’ Omni-Network, we were able to move from 62 omni-store network up to 360 omni- store network to be able to obtain 2.7% improvement in their annual sales revenue. That also means around 17% improvement in shipment duration while obtaining 1.1% additional gross profit and 0.9% additional net profit without any additional inventory,” said Burak Ovunc, CEO of FLO.