Case Suomalainen Kirjakauppa

More efficient store operations and improved shelf availability

Introduction

Suomalainen Kirjakauppa is Finland’s leading bookshop chain. It has used re-order points in its store replenishment process for over a decade. In 2007, the company launched a major overhaul of its store ordering model to free-up staff time so they could focus on customer service and sales. To do this Suomalainen Kirjakauppa needed a new store replenishment solution. The company looked at the alternatives and set up an analysis project.

After running a pilot with RELEX, Suomalainen Kirjakauppa selected RELEX as its partner and together we developed and implemented a store replenishment system that allows the chain to meet the challenges of the 21st Century.

Suomalainen Kirjakauppa at a glance

Founded in 1912
Revenue 109 M€, of which books generated 70% and other products 30%
Employees 800
Finland’s largest bookstore chain with 62 stores in 44 cities
Includes Apollo Raamatud AS, which operates in Estonia.

Challenge

Suomalainen Kirjakauppa wanted to improve its customer service. Achieving that goal meant that store employees needed to spend more time helping customers and generating sales. It also meant improving both shelf availability and the chain’s grasp of regional differences in demand. Suomalainen Kirjakauppa decided that to reach that goal it needed systematic demand forecasting, centralised ordering and increased automation.

There were additional challenges specific to the bookstore industry: the wide product range, strong variations by region, location and store size, the short product life cycle, the large number of new products, and strong seasonal fluctuations in sales.

”The old solution didn’t perform as well as we wanted, as stores would still be forced to process orders manually, especially during peak seasons and campaigns. Moreover shelf availability and inventory turnover were not good enough.”

Pekka Kuurne

Logistics Manager, Suomalainen Kirjakauppa

Solution

Suomalainen Kirjakauppa chose RELEX as their partner for the project, because RELEX’s forecasting and replenishment system had proved itself an excellent solution for products with a short life cycle, and for managing seasonal fluctuations.

A crucial factor was that it offered store and product specific demand forecasting on a day-by-day basis. In Finland bookstores just a few kilometres apart may offer a quite different product selection because of differences in demand, store size, customer demographics, and whether the area is mainly Finnish or Swedish speaking.

The joint project was launched with a three-store pilot, judged to be a very low-risk option as the upfront investment needed was small. The data from the pilot was encouraging, suggesting that the technology worked well. RELEX’s system was given historical demand data and, just four weeks after installation, began to produce automatic forecasts and optimized purchasing recommendations.

RELEX’s expertise and track record in specialty retail and its clear commitment to improving its clients’ business, gave Suomalainen Kirjakauppa confidence from the beginning. The successful pilot project gave Suomalainen Kirjakauppa’s executives the hard data they needed to make a decision, and they decided to implement RELEX’s system.

Full implementation across all 62 stores happened so rapidly that the last stage of the project was completed four months ahead of schedule. Reasons for choosing RELEX as a partner were:
 

  • RELEX offers a comprehensive and cost-efficient replenishment solution suitable for managing a large number of products and outlets
  • The company’s extensive experience of product replenishment in the specialty goods trade
  • RELEX’s culture of partnering and its commitment to its clients’ success.

Results

%

increase in inventory turnover

%

decrease in inventory value

increase in shelf availability (from 91 to 98 percent)

According to Pekka Kuurne, Suomalainen Kirjakauppa’s Logistics Manager, RELEX’s solution produced measurable and impressive results right from the beginning. The percentage of office supplies that were out-of-stock fell from 9% to 2%, a dramatic fall of almost 78% while inventory turnover saw an improvement of 16 %. At the same time, the time spent on ordering was minimized – the proportion of products from the stores’ inventory automatically ordered rapidly reached 98 %. Today, the replenishment ordering for all stores is handled by a single Logistics Coordinator who monitors the order proposals generated by the replenishment system.

Customer service has improved markedly as staff spend less time on re-ordering

Fewer marked-down overstocked items resulted in higher margins

Replenishment ordering of all 600 000 combinations of product and outlets is currently conducted by one person

”Even though we implemented a new system, this was so painless it didn’t feel like an IT-project. Implementation from the IT side was fast and easy allowing us to maintain our focus on developing our internal processes, which is as it should be. This was reflected in the excellent results we achieved during the Christmas season. It should always be this easy”

Ville Ahola

Chief Information Officer, Suomalainen Kirjakauppa

“The final decision was made much easier by the fact that RELEX’s comprehensive and logically phased service package enabled us to move forward one step at a time. RELEX’s genuine enthusiasm for developing their clients’ business operations is evident, even after the actual project active development and co-operation have continued,”

Pekka Kuurne

Logistics Manager, Suomalainen Kirjakauppa

A successful Christmas season

Christmas is the most important season for bookstores with 20% of sales in just 3 weeks of trading. The assortment changes every year and makes forecasting harder. The high season lasts just a few weeks and drops off sharply after Christmas. As a result there’s a high risk of excess inventory. RELEX developed a forecasting model for new books that made it possible to automate replenishment ordering throughout the Christmas season successfully.

Villa Ahola, Suomalainen Kirjakauppa’s Chief Information Officer, says that the efficiency gains that come from using RELEX’s technology allows the company to focus on welcome, warmth and wisdom; the aspects of traditional bookselling that can never be automated.

Read more about this in the case presentation Forecasting and replenishment of seasonal products by Timo Kauppila, Suomalainen Kirjakauppa’s Product Manager, at our RELEX seminar 2012.

A more efficient process

RELEX’s system managed the individual requirements of all 62 stores by creating separate selection categories for each one. Previously replenishment ordering had been the responsibility of staff at the stores, so centralising the process left them more time to focus on customer service and sales. Replenishment ordering is now performed by just one employee, for all 62 retail locations.

RELEX’s system also allows for far more flexibility in reporting and simulation. The database is far quicker and more scalable than Suomalainen Kirjakauppa’s ERP system. The research that’s gone into the system’s advanced design and configurability produces an impressive range of benefits including daily forecasts on a store-by-store and product-by-product level.

Read more about this in the case presentation Efficient replenishment of books and stationeries by Pekka Kuurne, Suomalainen Kirjakauppa’s Logistics Manager, at the Retail Conference 2010.

RELEX delivers measurable results in months

At RELEX we have helped businesses to master the retail and supply chain challenges they face – indeed the more complex the environment, the bigger the impact of RELEX. Working with us is easy, and you get measurable results in months. If you want to improve your company’s profitability fast, contact us to discuss more.

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