The Challenge – Improve Inventory Control and Assortment Planning
To achieve their goal of becoming the best player in a tough and competitive sector, international convenience store chain Circle K performed a comprehensive internal review to identify areas where impactful changes could be made. Through this study, the company uncovered opportunities to improve their ordering processes. In addition, while Circle K had established a good planogram planning foundation, they surfaced that product introductions were occasionally missed and there was a need to increase planogram compliance.
To address these concerns, the company sought a forecasting and replenishment solution that could be rolled out to its Scandinavian, Central European, and Eastern European divisions.
Circle K required a vendor that:
- Understood their business thoroughly.
- Offered a cloud-based, scalable, cost-efficient platform.
- Delivered a solution that was user-friendly and easy to implement.
The company set three target KPIs:
- Increase availability by a minimum of 2%
- Increase assortment loyalty by a minimum of 2%
- Reduce tobacco inventory by a minimum of 10%
The Solution – RELEX for Replenishment and Fulfillment
In 2016, Circle K selected RELEX as a vendor to deliver demand forecasting and automated replenishment. They chose RELEX in large part due to the company’s ability to implement the solution quickly and with a lean team. While other businesses required up to ten consultants and a year or more to complete implementation, RELEX was able to accomplish the same project within four months with just three consultants.
Additionally, Circle K wanted to take advantage of RELEX’s ability to track daily transactions of deliveries, sales and inventory, generating accurate calculations that improve visibility into assortment details, delivery schedules, and presentation stock. The business also appreciated RELEX’s automatic adjustments for both safety and presentation stock, a functionality critical to managing their high-turnover convenience store inventory.
The results from the initial RELEX pilot of 13 Norwegian locations were strong enough for Circle K to quickly decide to roll out the solution to all of its Norwegian, Swedish, and Danish locations. It covered all products sold but specifically highlighted Circle K’s most profitable and challenging category: tobacco and cigarettes.
The Results – Improved Availability and Inventory Turnover Simultaneously
The project was a success, generating strong results across all categories. While Circle K’s initial KPIs were to increase availability and assortment loyalty by at least 2% and reduce tobacco inventory by at least 10%, they significantly exceeded their goals in all metrics.
In particular, Circle K wanted to improve replenishment for its tobacco category—high-value products that take up essential shelf space while carrying an expiration risk. A key tobacco-related challenge was simultaneously improving availability and inventory turnover – avoiding stockouts without increasing stock – to improve category margin. RELEX’s more accurate, granular forecasts allowed Circle K to order less inventory from tobacco vendors while improving sales dramatically. In Norway, after the full rollout, the results for this category were even stronger than the all-category pilot results.
Next Steps – Unifying Operational Processes
Based on the success of the supply chain pilot and full rollout, Circle K expanded its relationship with RELEX to include space planning optimization. With the unified RELEX solution in place, Circle K was able to automatically generate forecast-based local planograms that could easily be shared with store staff. Additionally, because the RELEX planogramming execution process is unified with the replenishment application, Circle K was able to list and de-list products more effectively and accurately, with all changes reflected in real-time supply chain data.
RELEX space planning rolled out to all Circle K Norway stores in early 2018 with additional rollout to Sweden and Denmark stores over 2018 and 2019 and an expansion to Lithuania in 2020. The implementation drove considerable improvement in availability that beat initial expectations, as well as further improvements in assortment accuracy and compliance. Additionally, the introduction of automated, forecast-based planograms saved valuable time on previously manual work and reduced inconsistencies and errors.
Circle K is also taking advantage of RELEX’s mobile application, both centrally and in stores. The scalable mobile application allows the company’s store staff and central planners to collaborate within a single platform, with access on any phone, tablet, or computer. Today, Circle K stores are using this application to access and view planograms while also giving store managers insight into supply chain data and access to important replenishment parameters. The application also provides insight into KPIs, deadlines, and product information.
“The unified suite of inventory, space, and store management services that RELEX offers addressed our business needs perfectly,” said Ole Christian Remen, Head of Supply Chain Europe, Convenience at Circle K. “From our initial supply chain pilot through our space planning implementation, we have seen consistent results that improve store operations and positively impact our bottom line.”
He added, “We look forward to a continued relationship with RELEX. Their team has helped us resolve some of our most pressing issues, and the automated, unified solution has freed considerable resources to allow us to focus on delivering the best in-store experience for our customers.”