Top 10 brand in the Kitchen & Dining category has increased its contribution profit by 30%
Industry:
Kitchen & Dining
Location:
USA
Company Type:
PL Brand
Marketplace:
Amazon
With support of Nyle.ai our client has achieved the following results:
Fulfillment team productivity
+ 50%
Storage fees
- 48%
Contribution profit
+ 30%
The Challenge
The company has been having high difficulty in managing inventory from 10 various suppliers with different production cycles, as well as correctly forecast demand for a large catalog of 70 products.
As a result our client had stock on Amazon for some positions for 5 months ahead, which resulted in extremely high Amazon storage costs.
The client was also experiencing difficulties ordering their required supplies because of the varying lead times quoted for each product. These varied lead times made it difficult to schedule the production of the required goods by a specific departure day, and especially managing the process efficiently.
In 2021 our client had very high shipping cost (5% from total revenue)
5% from revenue
High storage cost (4% from total revenue)
4% from revenue
Had consistent Out Of Stock events, which led to inevitable damage
from ranking loss and lost sales (5% from revenue)
5% from revenue
The Solution
Using Nyle.ai, the client has found the best way to ship goods more efficiently, increased their Amazon inventory performance by 25%, and predicted future demand with a high degree of certainty as well as fixed supplier relationship management.
With these updates our client was able to achieve regular FTL shipments to Amazon once a month with an accurate coverage of future sales 4 weeks ahead, with dynamically updating safety stock which has helped to avoid OOS events at low cost. The shipments have started to be grouped into new batches for maximum savings in transportation, storage, and handling fees.
50% reduction of storage costs
Shipments became more regular, but with a smaller volume of SKUs that have low sales velocity. This helped to reduce the storage costs by 50%, avoid having old stock in the warehouse and fill a full truck with more popular and frequently sold SKUs.
Shipments became more regular with a lower number of SKUs that had low sales velocity. This reduced their storage costs by half, avoided keeping old inventory in the warehouse and filled a full truck with more popular and frequently bought items.
The biggest achievement is that we made a full visibility of our future supply chain needs, including future inventory levels at Amazon and 3PL Warehouses. By doing so, we've been able to simplify the procurement process and planned purchase orders so that they're ready on time from multiple suppliers and shipped together in one single container.
Eventually the client has managed to lower shipping costs by 20%, avoided lost sales, and increased the net margins by 5%.
Shipping costs
- 20%
Contribution Margin
+ 5%
Due to Nyle.ai optimizations, the cost of trucking shipments were lowered from $0.11 to $0.05 per lb. Moreover, the average pallet utilization was raised by 21%. To save on transportation and storage fees for Amazon, a new 3PL facility was proposed at a close proximity to Amazon FC.
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