ToolsGroup: Powerful yet simple technology to reduce cost in Retail

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Modern retail companies compete through different strategies in critical business variables: product range, pricing, own brands and fresh products. These variables define the key differences between the players in this sector. In addition, the degrees of freedom given to store managers in decisions relating to what and when to order creates operating models which lead to different results for the different retailers.

In all cases, cost efficiency is fundamental to achieve good business results. ToolsGroup offers innovative planning and optimisation solutions which can reduce inventory, free-up cash, increase sales, rationalise and streamline processes and reduce logistic costs.

ToolsGroup optimisation projects are characterised by rapid implementations time; from 3 to 5 months, we provide customers with tangible results within the same business cycle as the decision to implement. ToolsGroup has extensive experience, a loyal installed base and demonstrable success stories. We also offer a highly experienced professional team with recognised domain knowledge and understanding.

The sales, inventory & operations planning process in retail

Restocking planning simply means placing orders with suppliers so that the movement of goods into the distribution network and to the stores is as close as possible to the movement out through the check-outs. Cost savings as a result of greater efficiency in this process may come from several sources: savings from inventory reduction (lower financial cost, lower operational cost, reduced wastage), savings in transportation (orders for full truck-loads, whether of retailers' own brands or supplier brands), savings through cutting the direct labour cost of personnel calculating the orders (fewer staff working on low added-value tasks). And all this must be achieved while maintaining or improving high levels of product availability, to prevent stock-outs and the risk of lost sales.

Different product categories have different problem sets and behaviour dynamics. Thus a single store may stock products which follow a "push" logic (toys, textiles, etc.) but also products for which the replenishment is largely demand-led (such as food, personal hygiene and household products). There are also business strategies (promotions) which change the normal behaviour of demand, as well as products with strongly seasonal behaviour (beer, soft drinks, clothes) and others which only sell at certain times of the year (Christmas fare). In addition, managing products with short shelf lives presents planning difficulties where the amount to be ordered from the supplier may sometimes be incompatible with the target availability rates for the category.

Given this great diversity in behaviour, the demand forecast preparation process requires robust and automated technology. ToolsGroup has developed several powerful and simple techniques for calculating demand forecasts. These allow planners to analyse 'by exception', only i.e. those few cases the system detects as candidates for revision.

Another critical decision is how much stock must be held on the shelf and in the warehouse. For the shelf, merchandising considerations usually determine the presentation stock, but in the warehouse, the stock level must be the result of the service level to be provided to the stores. ToolsGroup's powerful and simple simulation tools can reliably calculate the amount of stock required for different service levels at detailed and aggregate levels and, as a result, optimum service policies can be implemented which are vital for reducing inventory. The daily calculation of how much to order from suppliers is the last link in the planning process. This is where there is great potential for reducing direct labour costs by using ToolsGroup's automatic replenishment engine which can generate highly reliable order proposals for placement on suppliers.

An attractive value proposition: reduce inventory, improve availability and save on labour costs

ToolsGroup assists retail companies in making improvements which rapidly and directly impact business results.

Improving product availability

In a stock-out situation, there is a high risk that some demand cannot be met. The entire contribution margin of the lost sale negatively impacts the profit and loss account. A reduction in stock-outs has the direct consequence of recovering this contribution margin. Beyond improvements in brand image that ensue from increased "right-sized" availability, costs such as those relating to urgent deliveries are also reduced. ToolsGroup helps you increase your service levels by precisely defining the product mix that must be available at all stocking points.

Reducing fixed assets

Although there are occasional stock-outs for some items, the more common situation is an overall excess of stock. This is because it is impossible to size the inventory and product mix correctly using the conventional planning methods of most ERPs. Not only does overstocking lead to stock obsolescence, it also uses up financial resources which could otherwise be spent on more profitable investments. ToolsGroup can help you improve EBIDTA by ensuring the right make-up of the stock mix. A reduction in stock also contributes to an immediate improvement in operating cash-flow.

Automating the process by adding intelligence

ToolsGroup's advanced models automate and add intelligence to the process of calculating replenishment decisions. As a result, the personnel directly involved in controlling inventory, service and supply can be reduced.

How do we do it?

ToolsGroup's principal contribution to our customers is our Service Optimizer 99+ (SO99+) technology for modelling and optimising inventories. 'Inventory modelling' means creating robust, reliable mathematical models which relate the service performance levels that the market requires to the stock necessary to achieve them. Most models in conventional tools simply don't work.

'Inventory optimisation' means our technology is able to find the optimal target stock mix on the basis of the margin contribution each item makes to the business. The technology was created at MIT (Massachusetts Institute of Technology) and later developed on the basis of experience and real cases in major customers worldwide over a period of more than 30 years.

A multinational expert in the best software solutions for inventory optimisation

  • Offices in Europe (Amsterdam, Barcelona, London, Milan and Paris), North America (Boston, Mexico City, Toronto) and Africa (South Africa)
  • Distributors & support worldwide
  • More than 300 implementations at more than 250 customers
  • Recognised as the leading supplier of inventory optimisation by prestigious analyst groups (Gartner, ARC, Aberdeen, Industry Directions)
  • Continuous presence on the worldwide market for the last 20 years

The key values ToolsGroup brings to its customers:

  • Knowledge
  • Experience
  • Advanced technology
  • Commitment
  • Shared risk
  • Self-financing

About ToolsGroup

ToolsGroup, a leading supplier of Powerfully Simple solutions in the fi eld of demand analytics and supply chain planning, is the innovation partner of companies wishing to achieve excellent service levels at the lowest overall inventory cost and to calculate their forecasts with a high level of accuracy. We offer the most innovative and advanced solutions for companies to automate their planning processes, improve forecast accuracy, optimise promotion planning, optimise inventory and give their customers excellent service levels, all at the lowest overall cost in terms of inventory and transportation. Powerfully Simple is the philosophy underlying our solutions - simple, user friendly decision support systems driven by powerful engines


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