Anticipating customer wishes with predictive applications

German supermarket chain Kaiser's Tengelmann sells quality fresh products and is introducing predictive applications from Blue Yonder at all of its 500 German stores. With it, goods planning can be automated using accurate, special forecasts tailored to the individual store. In this way, the forecasting software prevents both understocks and overstocks and thus improves profits.

 

Tengelmann

 

On the way to spend an evening with some friend, a woman stops at a grocery store to pick up a few bottles of wine. But what happens if the shelf is empty? At worst, she will just leave the store having not found what she wants and try her luck at a competitor around the corner. But the next time she decides to purchase some wine, chances are high that she’ll go straight to the competitor that had sufficient stock.

Whilst exiting the store, the woman notices the seasonal fruits display. They are arranged in a way that is pleasing to the eye, between heads of lettuce and potatoes. But the next day, they don’t look nearly as pleasing to the eye. Just days later, they can’t be sold and cause high write-offs.

Both of those cases are common in the daily life of grocery stores. Both cases lead to monetary losses — and both cases can be avoided. Kaiser's Tengelmann proved that in 2013, in a pilot project (you can read the success Story). From October to December, goods ordering were automated at three of the stores using Blue Yonder Predictive Applications. A three-person central product planning team at the greengrocer helped carry out the project, which originally comprised alcoholic drinks, fruit, and canned vegetables.

The result: Expensive overstocks and understocks were prevented. The entire product range was available in the individual stores and the order process was made tighter. The following advantages became evident:

  • Time and effort in sales planning in the stores was considerably reduced
  • Customer demand in the individual locations was captured in a manner reflecting real demand
  • Write-offs were reduced with much more accurate sales forecasts
  • With improved goods availability, customer satisfaction rose

The management at Kaiser's Tengelmann decided in favor of Blue Yonder’s Predictive Applications, because they felt that the software could be well adapted to the individual conditions of the specific stores. After the successful pilot project, the solution is being rolled out to all 500 stores in Germany. As of November 2014, ten stores were working using predictive applications. Whether it is a location at the edge of town or in the center of town, the forecasts work for each store with its unique clientele.At the Internet World Congress, Mark Michaelis, Retail Systems & Services area manager at Kaiser's Tengelmann GmbH talks about the Blue Yonder project. Enjoy his talk entitled “Smart data as SaaS solution. Branch store materials planning in brick-and-mortar grocery stores.”

You can find more on the subject of automated materials planning at.

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