A new solution, co-developed by Celonis and Peech, enables retailers and consumer packaged goods (CPG) companies to reduce product waste and lost revenue by optimising the process of managing perishable inventory.
Adjusting, or marking down, the price of products with a limited shelf life, such as fresh produce, baked goods, or any product that can become unmarketable, is a critical aspect of inventory management. It’s also critical for reducing food waste.
Traditional inventory management systems can identify perishable products that are at risk of expiring, but they lack the ability to track adherence to standard markdown processes. Missed markdown opportunities can result in needless product disposal, which leads to inventory loss (or shrinkage) and negatively affects revenue.
“Retail and CPG’s incredibly tight margins leave no room for operational inefficiencies,” said Dean Tarpley, Industry Principal for Retail & CPG at Celonis.
“The Inventory Lifecycle Optimization app enables organisations to identify process improvement opportunities, take action to increase markdown adherence, and monitor the effectiveness of those efforts. We’re excited to partner with Peech as we work together with our customers to optimise operations and reduce unnecessary waste.”
Recaptured revenue
A leading global retailer is already using this solution from Celonis and Peech to minimise shrink in perishable inventory, improving its sell-through rate by 2% and leading to a projected $35M in recaptured revenue.
The company, which has more than $200B in annual revenue, found that its stores were not properly executing against defined processes for discounting limited shelf-life goods within bakery, meat, prepared foods, and other departments. Non-adherence was leading to lost sales opportunities, increased wastage, and compliance risks. Using the Inventory Lifecycle Optimisation app, regional managers are now able to identify products, stores, and departments falling behind regional benchmarks in program compliance. They can also get insights on a weekly basis to guide staff conversations for markdown process adherence improvement.
The solution is being scaled across 4000 stores and the company expects meaningful gains in process compliance.
Optimising markdowns adherence with process intelligence
The Celonis Inventory Lifecycle Optimization app powered by Peech identifies and quantifies missed revenue opportunities by tracking markdown adherence and highlighting areas for improvement. It provides:
- Increased visibility for data-driven improvements: Monitoring shrink prevention processes across all levels of the business, companies get in-depth insights to better identify and understand adherence improvement opportunities. Main View tracks compliance and performance at the region, market, store, department, and even associate levels, enabling targeted process interventions.
- Better tracking of intervention effectiveness: Companies can observe the impact of process changes over time, with a user-customised targeted view on the specific areas they care about most. Once interventions are made, Monitoring View lets companies track the impact of their process improvements over time, in both relative rate and recaptured revenue contexts.
- Customised reporting: Companies can use insights from the app to drive impactful process improvement conversations through built-in user-specific notifications. Customers can elect to have scheduled notifications that highlight the improvement of the stores, departments, etc. sent to managers and decision makers.
The Celonis Inventory Lifecycle Optimization app is the latest addition to the Celonis Platform Apps Program, enabling companies to quickly realise value with solutions built by Ecosystem partners on the Celonis Process Intelligence Platform.
