STUDY: M.Video puts planning in the cloud
By Retail Technology | Thursday January 2 2014
Retail Technology talks exclusively with the CIO of Russias largest electronics retailer that has begun running many critical assortment management applications in the cloud
M.Video first selected the software-as-a-service (SaaS) offerings of Predictix and begun implementation to improve the company’s planning and forecasting processes in 2009.
As Russia’s largest consumer electronics retailer and the 12th fastest growing global retailer, M.Video runs 316 brand name stores in 140 Russian cities and operates 50 regional websites.
Since first implementing Predictix, the company achieved sales of $5.2 billion (£3.2bn) in 2012, an increase of nearly 20% year-over-year, with online sales growing by 56%.
Chris Mangham, chief information officer (CIO) of M.Video, spoke exclusively to RetailTechnology.co.uk about the development of its assortment planning and forecasting capabilities.
“We selected Predictix’ forecasting and planning SaaS solutions in 2009 and have since rolled out several rounds of implementations,” he confirmed. “We felt that Predictix offered the best combination of assortment planning and forecasting capabilities.”
Service levels, overstocks and stockouts
Mangham explained: “We wanted better control over assortment, forecasting and replenishment to take command of our merchandising and supply chain processes. M.Video needed more accurate forecasting and planning decisions across all channels, in addition to building and improving our sales plan on a SKU [stock-keeping unit] and chain level. We also wanted to improve service levels and reduce both overstocks and stockouts, allowing an ever higher level of customer satisfaction.”
The SaaS delivery model was also an important factor. “Our growth to date and planned growth were also key considerations in our choice of platform; the elasticity of the cloud means that, as CIO, I know I can support the business going forward, however fast it grows,” he added.
M.video initially went live with the Predictix Demand Forecasting and Item Planning solution to help build and improve its sales plan on an SKU and chain level. “During the second phase, we implemented Predictix Purchase Planning, extending the item plan down to the [DC] centre and vendor level,” Mangham added. M.Video subsequently rolled out Predictix Assortment Planning, Store-Level Forecasting and Target Stock Optimisation.
He continued: “Predictix takes all of M.Video's information into a single data mart that then orchestrates the application needs. While integrating such a wide array of products required careful and diligent planning, having SAP and Predictix provided a solid foundation. This approach will enable M.Video to move forward on future extensions of the Predictix software based on our changing business model, without the need to create new pipes of information.”
Unified merchandising decisions
Mangham outlined the key business benefits of using Predictix. “The Predictix merchandising suite is based on a unified platform that extends across all Predictix applications and connects seamlessly to M.Video's enterprise applications, including SAP and MicroStrategy,” he said. “With one unified source of data, analytics and demand forecasting across all applications, Predictix breaks down the silos inherent in traditional standalone merchandising applications, enabling M.Video to make better decisions across all our omnichannel business processes.”
He also acknowledged that there are an enormous number of factors that influence consumer demand in an omnichannel world, and retailers must consider vast amounts of data when trying to understand the key influencers of demand. “Predictix enables us to really understand what drives demand, to model the likely impact of our merchandising decisions, and to align our supply chain through a more accurate, better informed forecast,” he added.
In addition, the predictive analytics of the Predictix solutions, combined with better visibility due to unified business processes, is allowing M.Video to quickly adjust assortments, forecasts and plans in-season. “As a result, we have improved our service levels, reducing both overstocks and stock-outs,” Mangham reported.
Planning and integration improvements
There are several areas where he said M.Video has been able to maximise the benefits of Predictix. “The first is forecasting, as our forecasting group did not exist prior to Predictix; The SKU/chain forecast that is now being generated by Predictix is reviewed by the forecasting group before it is sent to the merchants, which makes the operational planning process far more efficient.
“In addition, Predictix has allowed M.Video to move forward with integrated assortment, sales planning and purchase planning. We can also now have clear processes to review and approve purchase orders (vendor to DC) and target stock levels (DC to store) between our merchants and supply chain planners,” he said.
The retailer plans to ensure it continues to maximise its returns on Predictix in line with its current business strategy by driving better, unified merchandising decisions. “The Predictix cloud-based architecture, superior predictive capabilities and agile approach are ideal for supporting M.Video's rapid growth and expansion,” Mangham concluded.
