Background:

An E-Commerce seller of Medical and Dental Supplies was having difficulty properly managing their inventory. With 200+ SKUs of varying Medical and Dental Supplies, the organization found it difficult to manage their inventory, and was constantly dealing with stock-outs – therefore losing revenue. With increased supply chain difficulties due to the COVID-19 pandemic, it was more important than ever to properly manage their inventory.

This would include:

· Inventory optimization system, dashboard and insights to help reduce procurement costs and streamline processes

· Mapping of backend data system for messy product codes.

· Sales team support, including automated priority system, product and customer intelligence automation

· Automated pricing for online platforms like Amazon, eBay and other eMarketplaces

· Strategic analysis for the president to find new profit and revenue opportunities in an uncertain and shrinking margins environment.

· Aid in establishing both strategy and technological implementation of new eCommerce site, new distribution and product opportunities.

· Building automation to collect, store and report competition information.

Summary Results:

· Year over year increase in gross margin of 43% on wholesale activities

· Year over year increase in gross margin of 51% on eCom activities

Challenge:

The challenges included:

1. Create a dashboard to track each SKU’s inventory levels, depletion rate, and sales through each selling channel and in each specific geography.

2. To reduce stockouts by accurately forecasting demand and leveraging an automated optimization model to balance inventory holding cost and stock out cost

3. To create a closed feedback loop for the sales and operations team.

The Approach:

First, AAARL did an extensive Exploratory Data Analysis (EDA) on the organization and each of their SKU’s, delivered a formal report about the health of each SKU, and recommendations for next steps of the project. From this, it was determined that three tasks must be completed as outlined in the challenges above.

AAARL then created a dashboard on PowerBI that allowed the management team to have an easily digestible glance at the overall health of the business. Specifically, it allowed management to look at each SKUs performance, depletion, determine the best and worst performing SKUs, determine seasonality and more.

AAARL then began working on a demand forecasting and inventory optimization model. This was done using a combination of deep learning time-series demand forecasting with Economic Order Quantity (EoQ) systems and restock cost management based on past sales, seasonality, lead times, and other crucial factors.

Results:

AAARL was able to deliver a dashboard that gave management an at-a-glance view of their overall operation, with drilldowns to assess the health and performance of each individual SKU. Further, AAARL integrated the demand forecasting model into this dashboard, including a real-time alert system, which dynamically recommended to the management team when they should order each SKU based on this forecasted demand and each SKU’s respective lead times. This allowed the organization to stop losing out on potential E-Commerce sales due to stock-outs, minimized storage costs, and successfully reduced operational costs and streamlined the process for inventory restocking in order to maximize profitability. In addition, this helped the organization create a feedback loop for their sales and operational teams.

See diagram’s below for an example of the dashboards we delivered to the organization.