Team Manager, Matas logistics
Health and beauty retailer Matas Takes Advantage of Automated Forecasting and Replenishment
Intelligent logistics is part of the success at Matas. Today, all Matas’ chain stores use automated replenishment based on forecasting, which frees resources for customer service in the stores. The SAS® solution covers 95% of the product range, and Matas has fully-automated its replenishment process.
- ’You have to be careful not to describe this transformation too positively, as it is not easy to introduce innovative new technology into an entire chain. However, there is no doubt that automated replenishment is a success. We continue using the solution, and we extend the automation to procurement,‘ says Jesper Amsinck, Logistics Manager at Matas. Today, all Matas’ chain stores use the SAS solution for automated replenishment and forecasting. The intelligent logistics is one of the major and lasting transformations, which Matas has undertaken on its journey from owner management through to private equity management to listed company with success. In the logistics area, the warehouse has been modernized with a pick-to-voice system and elevators, and a new distribution center has been established.
After having fully-automated the replenishment process, we see the effect of the system for real. The store saves approx. nine hours per week
’Our automated replenishment passed an important test when we introduced perfume products to the new distribution center. Previously, these items were delivered directly from the suppliers to the stores, but now we will deliver these items from the distribution center. The solution handled this without too much trouble and a minimum of coding. It actually went quite smoothly, when we doubled the number of items all at once,’ says Jesper Amsinck.
Store Saves Time
The SAS solution handles planning and locked order proposals from the stores to the distribution center. Store staff no longer see the order proposal generated by SAS. When the SAS solution has generated proposals from all stores, a central logistics employee will review them for approx. 10-15 minutes to see if there are any ‘strange’ proposals. Previously, each store spent one and a half hours daily reviewing the proposals based on statistics, but now this time has been freed for customer service.
Logistics Manager, Matas
- ‘Our automated replenishment passed an important test when we introduced perfume products to the new distribution center. The solution handled this without too much trouble and a minimum of coding. It actually went quite smoothly, when we doubled the number of items all at once.'
Matas is Denmark’s largest health and beauty retailer offering a distinctive one-stop retail concept, which serves a broad range of health, beauty, household and personal care needs.
Matas has developed a strong reputation for professional advice and customer service excellence utilized for establishing one of the best-known retail chains in Denmark.
The Matas chain comprises almost 300 Matas stores in Denmark and a web shop. Matas stands for quality at reasonable prices and works according to the motto: ‘The good advice makes the difference’.
’After having fully-automated the replenishment process, we see the effect of the system for real. The store saves approx. nine hours per week. In addition, we have significantly fewer out-of-stock situations, where the intelligent forecasting has taken over and has run without human intervention,’ says Johnny Rolsted, Team Manager of the logistics function at Matas.
Earlier, store staff handled the entire replenishment process, and it was thus a cultural change to rely on the computer. However, Matas conducted a blind test comprising of 10 stores with a fully-automated replenishment process up against 10 stores with a manual process. This was the decisive factor. The test demonstrated that when a store converts to full automation, the store saves time and has fewer out-of-stock situations without increasing capital tied up in stock.
Convincing Full Automation
‘When we showed these results to the management, it blew away all doubt – and since then we have operated with locked order proposals, i.e. full automation,’ says the Logistics Manager at Matas. He is satisfied with the cooperation with SAS Institute; the provider of software and consulting services behind the intelligent logistics. The SAS solution manages allocation of items for the distribution center, order proposals for direct suppliers, campaign items, items distribution and long-term forecasts for procurement and suppliers.
Originally, Matas gained the first experience with automated replenishment during a pilot project involving two stores. The results were convincing, and the automated replenishment process demonstrated a potential to reduce capital tied up in stock by 40 per cent. These results have now been extended to the entire chain, covering 95% of product range. In this way, Matas gains a multidigit million saving, even though the project was not defined as a savings project. The overall objective was – and is – to reduce the store staff’s time on inventory management for them to focus on servicing and providing experiences to the customers.
’We also use the SAS solution to support our procurement function. It generates forecasts to our suppliers with a six-month horizon, and it provides purchasing proposals. For this reason, we only need one person to manage the procurement of many thousands of item numbers for the entire chain,’ says Jesper Amsinck.
Matas Keeps up with Developments
The SAS solution takes several conditions into account, when it provides a purchasing proposal, including whether it is a seasonal item, the trend of the item number in one particular store, opening hours, the item's delivery time and several other conditions. The solution extracts the required data from the operational systems and generates statistical forecasts on the future sales based on historical sales data and campaign data. Statistical forecasts, data on inventory and financial key figures generate the orders.
’When we compare ourselves internationally and in Denmark, we see that we keep up with developments. We level with the big retail chains, and we are ahead of most specialized chains regarding computer-assisted ordering,’ says Jesper Amsinck. When the SAS solution automatically orders items, it takes expected sales and variance into account. It is also equipped with rules for optimal inventory policy in relation to the first opening of the item, and order size will be calculated so that the cheapest option is selected compared to next whole packages. In this way, it contains quite sophisticated ‘human’ considerations, however, it is still only able to fulfil its task, if the store staff provides it with data on the actual inventory in the store. ‘Our experience shows that 9 out of 10 errors in the forecast to the stores are due to incorrect inventory and erroneous master data; it is not due to the forecasting. For this reason, the store's accuracy of inventory count is crucial to our total efficiency,’ says Johnny Rolsted.
The fully automated forecast is thus an indisputable success at Matas, which sees some opportunities for saving time by changing the number of items in a delivery. The computer's accuracy can provide small order sizes, and while it may provide a slightly larger capital tied up in stock, Matas might benefit from choosing slightly larger order sizes in the future to save time on order management.
Matas wanted to save time by automating the replenishment process of the stores.
Matas uses historic data, campaigns, item’s delivery time and season as input to the SAS® Forecasting, Replenishment and Inventory Optimization solution, which in actual facts manages replenishment on 95% of the product range in the Matas stores.
Store staff is freed to customer service.