Case studies / Retail and Supermarkets
Case studyReplenishment planning for an 85-branch supermarket chain
A regional supermarket chain replaced habit-based ordering with central replenishment, tackled shrinkage and promotion waste, and gave managers sales and margin by store every morning.
Overview
A family-controlled supermarket chain in the Philippines with 85 branches across Luzon and the Visayas, ranging from large city-centre stores to small provincial outlets, plus a growing online grocery service.
Scale. About 18,000 products, two distribution centres, direct store deliveries from hundreds of suppliers, and online orders fulfilled from selected branches, delivered as a phased, multi-location programme.
The challenge
Stores ordered by habit. Each branch manager or department head walked the aisles, glanced at the back room and placed orders based on experience. Busy branches ran out of rice, cooking oil and canned goods before the weekend; quieter ones accumulated stock that sat for weeks. Online orders made it worse, because pickers took stock from shelves that the ordering process did not know about.
Shrinkage was handled differently everywhere. Some branches recorded damage and expiry carefully; others wrote it off in bulk at month end. Theft, breakage, spoilage and administrative errors were mixed together, so loss prevention could not tell where to focus.
Promotions were planned centrally but executed locally. Suppliers funded many of them, yet nobody measured whether a promotion had grown sales or simply moved them from one week to another. Stores often ran out of promoted items early, then held surplus afterwards.
Head office saw results only when monthly accounts closed. By then the reasons behind a poor month in a given branch were hard to reconstruct.
The solution
Replenishment is now calculated centrally each night for every product in every branch, from point-of-sale data, online orders, stock on hand, deliveries due and shelf capacity. Suggested orders go to suppliers and the distribution centres automatically, and branch managers review exceptions rather than building orders from scratch.
Shrinkage is recorded at the moment it happens, with a reason: damage, expiry, spoilage, suspected theft or administrative correction. Loss prevention sees patterns by branch, department and product, and targets visits where the losses are concentrated.
Promotions are evaluated after each run, comparing sales, margin and stock against comparable weeks. Supplier price and catalogue feeds keep product data and costs current. Every morning by seven, each branch manager and regional manager receives the previous day's sales, margin, availability and shrinkage, drawn from the data warehouse.
The engagement
- Nine months
- Seven specialists, with merchandising, store operations, loss prevention and finance leads
- Process mapping, central replenishment, shrinkage control, promotion evaluation, online order integration, shared master data, pilot and phased rollout.
Integrations
- Point of sale and ecommerce
- Payment and courier services
- Supplier price and catalogue feeds
- Data warehouse
How we delivered it
- 01
Map the work and agree measures
Six weeks
We worked shifts in city and provincial branches, in both distribution centres and with the merchandising team. At the start, the executive committee agreed the measures by which the programme would be judged: on-shelf availability, shrinkage, promotion return and the timeliness of store reporting.
- 02
Design common processes and integrations
Twelve weeks
Merchandisers and store managers designed a central replenishment process based on sales, stock and lead times, with local adjustment for known events. Shrinkage was recorded by reason at the point it occurred. Online orders, payment and courier data were connected so online demand counted in replenishment.
- 03
Pilot in one branch cluster
Eight weeks
Eight branches around Metro Manila piloted the processes. The pilot exposed duplicate product codes from supplier catalogue feeds and shelf capacities that were never recorded. Both were fixed before the wider rollout.
- 04
Roll out in waves and track results
Fourteen weeks
The remaining branches joined in four regional waves, with store staff trained during quieter trading hours. The executive committee reviewed the agreed measures every month.
Results
- Stock-outs fell and availability improved
- Shrinkage reduced once recorded by reason
- Promotions evaluated and weak deals renegotiated
- Sales and margin by store every morning
Stock-outs fell. On-shelf availability for core grocery lines rose noticeably, most visibly on weekends and paydays when demand peaks. Branches hold less surplus, freeing back-room space.
Recording shrinkage by reason revealed that spoilage in fresh produce, not theft, was the largest loss in many provincial branches. Changes to ordering and display for fresh lines did more to reduce shrinkage than any security measure.
Promotion reviews showed that several supplier-funded deals simply shifted sales between weeks; these were renegotiated. The chain now sees sales and margin by store every morning, and because the measures were agreed at the outset, progress is clear to everyone from the board to the branch.
I used to wait for month end to know how my branch was doing. Now I know before I open the doors.
What made the difference
The chain saw sales and margin by store every morning. Agreeing measures at the start made success easy to recognise.
