Top 5 brand in Household Supplies category has increased its contribution profit by 36%
Our client was able to achieve these results using Nyle.ai:
Contribution profit increase by $130,540 within 5 months
Labor сost
- 49%
Storage cost
- 42%
Shipping cost
- 24%
The Challenge
In 2024 our client was facing some serious issues with inefficient supply chain operations and lack of planning activities to avoid recurring Out of Stock problems.
Our client could not correctly estimate the future demand for most of the products, and overestimated the stock value to store on the 3PL Warehouse. At the same time, the inventory planning for the remaining products was underestimated, which was leading to serious Out of Stock problems in the busiest months of November and December, as there were no products available on 3PL, and they could not be delivered to Amazon in time.
Eliminated $135,000 lost sales
Two popular SKUs experienced “Out of Stock” events in the last 2 months of 2021, which has led to $135k lost sales, additional air shipment and marketing costs. To bring back their initial ranking spot, the client had to launch an additional marketing campaign (about $9k additional costs).
Additional expenses happened because of incorrect demand estimations. As a result, the company had to arrange frequent shipments to Amazon in an effort to keep its warehouse stocked, and send by LTL and SPD instead of FTL.
The Solution
Our Client has used Nyle.ai Supply Chain visibility solution to find the best way to make shipments more cost-effective, and improve their Amazon Inventory Performance by 30%+.
Pallet utilization
+ 21%
LTL cost
-$0.03
$0.05 per lb
SPD cost
-$0.08
$0.26 per lb
Using the Advanced AI Demand Forecasting, Nyle.ai has been able to combine the shipments for acheiving maximum savings in transportation and storage costs, increase average pallet utilization by 21%, and lower the LTL costs by half (to $0.05 per lb) and SPD costs by 28% (to $0.26 per lb) using the access to privilege shipping options.
87% reduction of SPD shipments
The amount of SPD shipments was reduced from 41.1% in 2021 to 5% in 2022, which allows shipping with FTL or LTL methods, making the shipping process more cost-effective.
Our predictive modeling system took into consideration seasonal trends and the individual trend of each product.
Because of this, it became possible to decrease the inventory levels in the 3PL and amazon warehouses with low sales velocity. However, popular products were purchased in large quantities from the suppliers, so they could always be delivered when needed, especially during peak seasons.
This allowed decreasing the warehouse storage costs by 42%
+36% contribution profit
Our client has managed to avoid lost sales and damage from ranking loss, and lower its shipping costs by 24%, which resulted in an increase in its net margin by four percent (4%) and contribution profit by 36%.
Direct shipments from the suppliers to Amazon by sea were also an important part of the success, as well as introducing a well planned mode of shipment schedules, so it became no longer necessary to ship by airplane.
With the help of our quantitative and qualitative forecasting models, we were able to predict which items would be most likely to sell out quickly. We then shipped these items directly to Amazon warehouses to minimize shipping expenses
We were able to help the client find a faster and more effective way of shipping goods by ship from Turkey, with lead time reduced from 70 to 45 days.
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