14 May 2018

X5 introduces solutions for automated demand and replenishment planning

Moscow, 14 May 2018 – X5 Retail Group ("X5" or the "Company"), a leading Russian food retailer (LSE and MOEX ticker: "FIVE"), has successfully completed a large-scale project to automate the processes of demand and replenishment planning at Perekrestok and Karusel stores and DCs. The Company has changed its core logistics, marketing and commerce processes and implemented JDA end-to-end supply chain management software. Algorithms and automation have increased forecast accuracy by 17%, enabling stores to boost actual availability of goods by 5% while the Company has simultaneously reduced inventory levels by 13%.

X5 introduced the Demand (forecasting) and Fulfilment (replenishment) solutions of JDA 9.2 to Perekrestok and Karusel, making JDA the main tool for demand forecasting and supply planning at the Company’s supermarkets and hypermarkets.

Perekrestok Logistics Director Denis Shulga said: "JDA 9.2 was implemented amid a transformation of the business, which in concert yielded a completely new approach to organising logistics processes. We are extremely happy with the supply chain management system and its effects on the operations: it took us just two months instead of eight initially planned to achieve a positive return on investment."

The software forecasts demand based on the Company’s data on sales, marketing and market activity for the past two years, and other inputs such as information on catastrophes and natural disasters, public events, and other items that influence consumer behaviour and retail operations. The system analyses the data and predicts sales volumes for each item at each store, adjusting supply plans accordingly to meet demand in full and in advance. The settings and calculation processes are customisable, which allows for more flexibility when it comes to different product categories.

X5 boasts one of the most feature-rich demand and replenishment planning systems in the world, as it builds on top of the JDA functionality. For example, X5 forecasts factor in price changes, promotions, higher visibility of goods, etc. (in real time or after the fact), which can all have a significant effect on demand. The system reviews changes in sales and makes daily adjustments to forecast with no input from the user, which substantially increases accuracy with no extra labour costs.

The software also includes end-to-end inventory management (from supplier to store), reviews of shortages, and automated generation of orders and supplies for promotions based on actual sales, as well as automatic adjustments to orders to meet supply terms.

In the future, X5 plans to fine-tune JDA’s solutions to fit the specifications of individual product categories, goods and stores. The Company’s experts will start by defining store parameters (shelf capacity, shelf depth and width, back room space, etc.) and feeding them into the system, as well as entering DC parameters into a digital format.