Salus Group: Modern sales forecasting and stock optimization platform

Challenges that we solved together

As a companies’ offering grows, it reaches a point where the manual ordering of goods becomes too complex and labor-intensive. Consequently, it becomes impossible to do proper forecasting on various types of items.

Head of purchase department states that the usage of AI-based platform for supply chain management was a new challenge for the team:

Using the AI-powered SCM platform provided by BE-terna posed a new challenge to my team. We had to establish confidence in understanding our future sales in order to be more precise and accurate with new purchase orders.

-  Head of purchase department, Salus Group

Get more confidence in your stock orders with AI support

Our platform has three core innovations; using state-of-the-art algorithms to provide sales forecasting based on both historical and 3rd party data, utilizing optimization techniques to optimize orders using constraints, and improving decision-making with interpretability.

The use of the AI platform gave us a better insight into the sales dynamics and consequently into the dynamics of inventories of goods. Based on this data, the purchaser better optimizes the value of the stock of goods and the frequency of placing new purchase orders.

- Purchaser, Salus Group

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We delivered results in three business areas:

• Demand forecasting: Our platform managed to predict demand with high confidence for more than 85% of total items, taking off burden from the purchasing department by using historical and 3rd party data. 
• Ordering automatization: Stock-out or overstock risk was nullified by the daily stock monitor, one of the platform‘s key components, proactively tracks demand on every item and triggers & replans orders accordingly.
• Inventory optimisation: By using the platform‘s forecasting model and ordering suggestions the company managed to lower stock by up to 65% on selected items while managing to avoid stock-outs on A-level items.

The key benefits of AI-powered SCM platform 

1. Sales Forecasting brings the following benefits:

• Users can rely on the automatization of items that are being sold consistently with data models built on sales history, allowing for high-precision in processing short-term and long-term sales.
• Automatizing the vast majority (85% and more) of items, gave the purchasing department enough time to focus on slow-moving but high-value items and seasonal jumps, which bring a high risk of overstock and stock-out.

2. Make better-informed business decisions:

• Manual effort time was lowered by up to 50% for all team members, providing them with the opportunity to focus on non-standard, high-value items.
• Support human decision-making by using daily stock monitoring to spot outliers in sales and to react faster in potential stock-outs
• ERP integration allowed users to receive order proposals every morning and provided them with interpretability analysis in the self-service BI tool.

3. Inventory savings are just the beginning:

• Cash flow savings compared to the as-is scenario was 25% - 65%, depending on the item category.
• The Number of stock-outs was minimized and the algorithm calculated new minimum stocks which customers could supplement with some hard restrictions coming from vendors.
• Stock coverage in days was optimized without having an impact on the number of stock-outs

The crucial factor for achieving that goal was the consideration of numerous additional factors needed when purchasing and the fact BE-terna successfully included most of them to correctly forecast sales. My team is now able to understand correlations that in the past were taken into account only by heart. Our current expectation is that we will optimize purchase processes for at least 50% and we expect to have lower stock levels while not risking stock-outs at the same time, but in fact reducing them. For us, this is a very important part of the optimization process and is the reason for our decision to start using an AI-powered SCM platform and to entrust the development and implementation of the project to our long-term partner BE-terna.

- Head of purchase department, Salus Group