With the ever-increasing demand and changing landscape of the retail industry, retailers are adopting advanced digital technologies to handle complex problems with simple solutions. Artificial intelligence and machine learning (AI and ML) is a recent technological advancement that is disrupting the retail industry, and will continue to make a bigger impact in the future.
How AI/ML is changing the retail purchase process
The retail industry has become more dynamic and demanding as consumers are inclined towards omni-channel purchasing, quick checkout, and personalized shopping experiences. With different channels enabled for the consumers, it is essential to keep sufficient stock to meet the demand, and to make accurate reorders with suppliers to maintain the right inventory level.
To ensure this, there are different parameters to consider during the procurement process including current stock, past sales patterns, expected demand, stock allocation, the logistics involved, increased demand during festivals, and more. It is practically impossible to keep all these factors in mind, and make the right purchase decisions at the right time and in the correct quantity.
Even with a dedicated purchase team spending hours of time on calculations, ensuring 60–70% efficiency in reordering is difficult. This is where the role of an AI/ML-based solution comes into the picture. Automating the reordering process reduces the burden on humans, and increases efficiency.
The Eye, our autonomous reordering tool, can handle purchases accurately and efficiently for many businesses. Below are examples from a few customers who own a single retail store and have experienced the benefits of The Eye.
Case study 1: A tier-3 city supermarket operates with improved purchase efficiency even after the purchase manager resigned
Karthick is a young and dynamic entrepreneur who established Dalmans Market in southern Tamilnadu in 2019. As he is comfortable in this digital era, he has been implementing cloud solutions, mobile applications, CRM, and ecommerce products in his business.
He never in his dreams assumed that the tenure of his dedicated purchase manager was short, so he did not train other staff members on his purchase team to do the job. With around 5,000 SKUs in the business, the purchase team used to record the current stock of each item, writing down the supplier and the items to be ordered on a daily basis. The purchase process was timed as six to six-and-a-half hours every day, including one hour for perishable items. All these recordings had some degree of inaccuracy.
Around the time his purchase manager left, Karthick heard about The Eye during an event. He was eager to try the product himself immediately after the event as he was in dire need of such a solution. He implemented the product, and within two months, he was relieved from the sudden burden that fell on his shoulders.
First, he identified the items that weren’t moving in the business and eliminated 18% of those items to improve his cash flow three times over. Then, he reduced the time involved in purchase planning and execution from six hours to within one hour. To add to it, orders for perishable items are raised by The Eye automatically every day at 9 a.m to cut back on waste, expiry, or stockout.
Karthick reported that he feels relieved with more peace and time to focus on activities to build his business. He is happy he found a dedicated, permanent, and accurate purchase manager for NOW and FOREVER.
Case study 2: Specialty retail pharmacy in tier-1 city cuts expiry in half in two months with The Eye
Jayakumar has been running a generic retail pharmacy for all medical needs since 2017. He felt he had to do something unique to standout from the competition. He did a market study and decided to start a specialized pharmacy specializing in dermatology in 2022.
Being a pharmacy, expiry management and inventory control were the major concerns. They did not keep track of what items they needed to purchase, as purchasing was done randomly in different quantities through different suppliers. Sales happened for recent items, and old batches were left unsold frequently resulting in expiry, which increased purchase returns. Adding to the purchase woes, they only had one skilled purchase staff in both stores, so no purchase orders were raised when they were on leave.
Another indirect constraint of lack of inventory control was that he used to experience stock outs when he received multiple online orders, and his team used to run to the nearby suppliers to get the items quickly in order to ensure same-day delivery.
Jayakumar, being an early adopter of digital solutions and recent technologies in the market, believed The Eye could be a good digital companion to make accurate purchases. He implemented The Eye for his specialized pharmacy, becoming the first such pharmacy customer to invest in an AI/ML-based solution in the south. Being a pioneer in implementing the advanced solutions and mobile apps in his businesses, The Eye gave him quick ROI and more multifold benefits than he expected.
In the specialized pharmacy, he identified and removed non-moving items by 50% for major suppliers, and also reduced expiry by 50%. On the other hand, they also identified stock dumping worth Rs.5 lakhs. They pushed those items for sale with special offers, and sent only a small amount back to the suppliers, ensuring improved cash flow within two months of implementation.
They have set their purchases in autopilot mode for daily suppliers. For other suppliers, even untrained staff can raise purchase orders as per the recommendation of The Eye, ensuring timely purchases without dependency on specific team members.
As The Eye raises purchase orders with 100% accuracy, their staff visits their suppliers just twice a week to meet sudden demand from online orders compared to 10 visits before this. Instead, they now focus on on-time home delivery, and, thus, customer delight.
Jayakumar, who started his business with a few lakhs, now runs his business with an eight-digit turnover within six years. He noted that if he had known about The Eye before, he would have achieved quicker and higher growth in his business. The Eye has been improving his inventory capital, and he expects to reach nine-figure revenue soon.
Case study 3: Supermarket is set free from supplier salesman walk-ins to the store and makes self-reliant purchases
Rathna Home Needs, a franchise store of Nilgris, has been in business for over a decade. Located on the outskirts of Chennai, hiring employees for their store was the main challenge. They struggled without a dedicated, permanent store and purchase manager for a long time.
Purchase planning and execution was a half–day routine. Every day, 10–15 salesmen would visit the store, engage with the staff, and influence purchase decisions. This resulted in stock dumping and affected staff productivity.
Sometimes, when the stock is over for a few items, the whole supply chain process was very long, right from identifying the items at the last minute, raising the PO, to the supplier delivering them to their store would take a long time, thus ending up with losing atleast 10 sales per month on an average.
After researching solutions, they believed The Eye could solve their problems, and adopted it quickly. The Eye truly exceeded their expectations. They set 95% of their purchases on autopilot mode, and give manual purchase orders for close to 10 suppliers, within a few minutes based on The Eye’s recommendation. The Eye became the permanent, dedicated purchase manager.
No salesmen walk into their store now, and they have become self-reliant, with purchase orders going to suppliers on time, with 100% accuracy and transparency. No sale is lost due to stock outs, and there is no stock dumping by suppliers.
When they were already overwhelmed with these results, The Eye further helped them to remove non-moving items, reducing the inventory by 20%. Just within a month, they were able to move from stringent cash flow to surplus cash flow, all thanks to The Eye.
Take a small step toward extreme growth for your business
Reordering in the retail industry is a complex process that needs analysis and specific efforts to execute the right purchase decisions at the right time. It requires a deep study of past sales, agile demand planning, seasonality studies, and optimization of the current inventory. With an AI/ML-based autonomous reordering solution like The Eye, you can ensure that overall supply chain operations, from purchase planning and execution, to warehouse production planning, stock transfer, and allocation are done within no time, with complete accuracy, and without human intervention. On the other hand, your team can focus on other human touch points that help attract more customers, boost sales, increase revenue, and multiply profits. If you’re looking to implement automation to help streamline your purchasing process, take the steps to get your digital purchase companion now!