How AI-powered Inventory Optimization Helped a Coffee Retail Chain Achieve 15% Stock Reduction
Summary of the Impact
A popular European coffee retail chain used ThroughPut AI’s product mix optimization capabilities to achieve:
- 15% inventory reduction
- 5% labor productivity gain
Read the entire case study here.
About the Coffee Retail Chain
This coffee retail chain has over the span of a decade grown rapidly offering hand-brewed, iced, and blended coffees, fresh juices and smoothies, and a range of delicious and healthy food options to go with its beverages. The chain focuses on providing great food and beverages made using locally grown, fair-trade, organic produce of the highest quality.
Inventory Management Challenges for Coffee Retail Chains
In the aggressively competitive café business space, customer demand is ever-increasing. They want fresh, innovative, artful food and an unparalleled experience, and they want it all now. However, regardless of how many different tasks there are to do to get this right, getting the menu right is undeniably the first step to establishing a successful café business. The client thus faced the following major challenges in terms of optimizing its menu options:
- Lack of Visibility into Great and Not-so-Great-Performing Offerings
Given the existing competition, it is critical to match the menu to the market. To really gain a competitive edge, cafes need to be able to identify changes in tastes and trends early enough to be able to pivot and adapt to these shifts with minimal operational disruptions and financial losses.
- Inventory Pile-ups and Waste of Food and Other Precious Resources
Managing orders and inventory is another headache typical of the retail industry. If customers fail to get what they ask for when they ask for it, they will be sure to find it somewhere else. Running out is just not an option, of course, but neither is producing dead stock. This means that the entire value chain has to be streamlined to deliver just the right products, at just the right time. All supplies need to be sourced ahead of time, but not so much ahead that freshness becomes an issue. Overstocking can result in rotting and wastage – of not just ingredients, but also of finished products that do not sell (leading to inventory pile-ups), not to mention all the resources that went into making them. Inevitably, costs shoot up as well.
- Logistics Challenges
Shipping costs are a permanent concern in the retail industry – and with fuel costs on an unprecedented climb, logistics costs are currently nearly inelastic. This means that only the right volume of goods and materials should be moved at the right time. Cafes, therefore, need a SKU-level visibility not just into product performance, but also into material movement across their value chains. They need to accurately sense and plan for demand, and trickle down that data to affect operations across their supply and value chains.
The client wanted to overcome all these challenges by adopting an intelligent, agile, and cognitive approach to optimizing its product mix, based on precise demand sensing, planning, and fulfillment.
How AI-powered Inventory Optimization for Coffee Retail Chains Eliminated Stock Pile-ups
With ThroughPut’s AI-powered supply chain software suite, they were able to immediately eliminate inventory pile-ups and wastage of food, affecting a 15% reduction in inventory and 5% productivity gain in labor.
Having gained full visibility into inventory turnover frequency, customer reorder frequency, shipping costs, and lead times for premium products at an individual SKU level, the café chain was able to leverage ThroughPut’s demand-value matrix and prioritize products based on demand sensitivity, easing up free cash flow.
Dynamic Menu Modification
ThroughPut AI not only provided the café with real-time visibility into current customer demand, but also predicted what it is likely to look like in the near term. The café could then modify its menu in response to anticipated changes in customer tastes and preferences – without disrupting customer experience, wasting food or other precious resources, or running out of essential stock.
High OTIFs for Fresh Products, Always
ThroughPut’s custom AI also helped the client ensure that it could prioritize its goods and materials for maximum effective utilization. With full control of its operations end to end, the café had access to just the right materials, in just the right volume, at just the right time – enabling it to serve its customers in exactly the same fashion.
Impact of AI-Powered Inventory Optimization for Coffee Retail Chain
ThroughPut AI enabled the client to continuously optimize its product mix to offer uninterrupted, delightful customer experiences, while at the same time ensuring maximum profitability, healthy inventory turnover frequencies, and minimum logistics expenses.
Consequently, the retail chain could register:
- 15% inventory reduction
- 5% labor productivity gain
Optimize Inventory in Retail with ThroughPut AI
ThroughPut AI has been designed to help transform retail operations with minimal disruption. By integrating seamlessly with existing systems, it harnesses the power of your current data to deliver actionable insights. This allows retailers to optimize inventory levels, reduce waste, and ensure that the right products are available at the right time, significantly enhancing overall efficiency.
The crucial benefits with ThroughPut AI are –
ROI in 90 Days
One of the most compelling aspects of ThroughPut AI is that it starts to produce faster return on investment (ROI). Retailers can expect to see tangible results within just 90 days of implementation. This quick turnaround is possible because ThroughPut AI uses advanced analytics to optimize the product mix efficiently, reducing excess inventory and stockouts, which in turn drives up sales and reduces operational costs.
Work with Existing Data
ThroughPut AI is designed to work with the data you already have, eliminating the need for costly data overhauls or extensive system upgrades. It taps into your existing datasets, analyzes trends, and provides recommendations for product mix optimization, making the process both cost-effective and time-efficient.
Customizable to Your Industry
Every retail business is unique, with specific challenges and goals. ThroughPut AI’s solutions are customizable, allowing them to be tailored to the specific needs of your industry. Whether you operate in fashion, electronics, grocery, food, or any other retail sector, ThroughPut AI adapts to your business requirements to deliver precise and relevant insights.
Patented Algorithms for Analytics
At the core of ThroughPut AI’s effectiveness are its patented algorithms. These advanced algorithms are designed to analyze vast amounts of data, uncovering patterns and trends that might be challenging to notice with other systems. This deep analytics capability ensures that your product mix is optimized based on real-time data, leading to informed decision-making and better results.
ThroughPut AI’s innovative approach to product mix optimization enables retailers to achieve significant improvements in operational efficiency and profitability, all while utilizing their existing resources.
