Inventory levels down by 30% through customized reporting
JYSK Canada supplies around 8,000 items for its stores. They operate 41 home furnishing stores and 2 distribution centers in Vancouver and Toronto.
Business needs
Lars Larsen opened the first JYSK store in 1979. Throughout the years, the company as expanded to run over 1,550 home furnishing stores in 32 countries. JYSK employs 14,000 staff and generated 3.5 billion USD in 2008. The company has become a leading brand in many European countries including Denmark, Germany and France. JYSK’s reputation for passing savings onto customers has enabled the company to evolve into the international organization that it has now become. JYSK Canada was looking for a system that would enable the company to expand its cost focus and provide a stronger competitive advantage through inventory optimization and accurate demand forecasting. An improved managerial overview for its rapidly growing operation was also a strong prerequisite as well as the importance of efficient implementation possibilities with its current ERP setup.
LS Retail and Inventory Optimizer
JYSK Canada relies on the LS Retail software solution, which is built on Microsoft Dynamics for its business operations, from accounting to point of sales and logistics. After examining a number of inventory solutions to add to this setup, JYSK selected Inventory Optimizer for its operations in Canada, Iceland, the Baltics, Bulgaria, and Romania. The LS Retail Inventory Optimizer is specially designed for improving operations in the retail and distribution sectors. It uses raw data from Microsoft Dynamics and automatically selects the best fitting forecasting method available to estimate future demand. Order proposals that minimize inventory costs and optimize service levels are generated from these forecasts and uploaded back into the ERP system.
Initial setup
In Canada, JYSK uses LS Retail Inventory Optimizer to run its two distribution centers in Vancouver and Toronto. The company supplies 41 stores across 4 time zones, with over 8,000 units. Demand is forecasted per item, based on sales figures extracted from Microsoft Dynamics. The forecasted demand is then allocated to one of the two warehouses, depending on store location. Although the organization has over 500 suppliers worldwide, the bulk of its purchases come from China. This generates different lead times for items, depending on whether the final destination is in Vancouver or Toronto. “The design of the system allows it to be flexible enough to meet all the needs of the customer. Dealing with multiple warehouses, lead times and vendors has become a much more simple process. We have been able to manage our lead times much more effectively after implementing the system and we were impressed with the fact that stock-outs have reduced despite the impressive drop in inventory levels,” says Grettir Björnsson, IT manager, JYSK Canada.
Main challenges
- Increasing inventory levels
- Too many employees involved in the purchasing process
- Reduced overview due to the growing number of stores and SKU’s
Main Benefits
- Inventory levels reduced by 30%
- Increased automation for purchasing managers
- Accurate demand forecasting
- Decreased wastage
Flexible and user friendly
The Inventory Optimizer is a flexible solution and can be customized for specific users. A well-received feature is the Manage by Exceptions (MBE) module. It is an out-of-the-box solution that has enabled JYSK to generate specific reports, identifying items that do not fit predefined patterns. By categorizing top sellers and slow movers, purchasers are able to focus their efforts on the most important items, saving great amounts of time and money for the organization. JYSK Canada has used the system’s flexibility to its full extent by implementing its own customs and needs into the buying process. This is best illustrated by the impressive in-house number of custom made MBE columns and reports in daily use.
Examples include:
- Top seller reports, broken down by item category, used to predefine service levels
- Line analysis reports, to calculate quantities related to stock level and delivery time, by units and value
- Items were the number of days until stock-out is less than the lead time
- Items were the sale during the first week of the month exceeds 50% of the month’s forecast
- Items where previous days sale is more than 50% of current week’s forecast
The top seller report calculates the top 100 items in sales. Items not fitting this description are automatically assigned a 50% service level. These user-defined fields and reports are set up to reflect inventory levels for each distribution center individually or for the entire company. “The demands of the changing retail environment require new reports and new workflows almost on a weekly basis. The system has allowed us to meet those demands quicker than ever before,” says Grettir.
Increased automation
One of the system’s main goals is reducing workload through automation. By item categorization purchasers can prioritize their efforts correctly, increasing focus on fast moving items and letting the system deal with slow movers. “We have reduced the overall time spent on the purchasing process while producing more accurate forecasts and increasing our analysis of items that contribute the most to our bottom-line,” says Grettir.
Easy implementation
The system has been integrated with over 30 Microsoft Dynamics customers, which ensures a quick and efficient process. There are currently around 12 employees using Inventory Optimizer at JYSK Canada. Grettir concludes “One training day with our purchasing staff was sufficient as the system is very user-friendly and intuitive. Our employees were able to start using the system effectively in a manner of days after implementation, which made the whole process run very smoothly.”
