Using Yellowfin Signals to manage inventory reducing opportunity loss due to stock-out to almost zero.
KYOWA is a cosmetic and health food manufacturing company based in Tokyo, Japan. Since its establishment in 1960, the company has focused on putting customer health first and supporting people with their lifestyle goals through its range of beauty and healthcare products.
KYOWA’s products are mainly delivered through mail-order systems, and many customers use regular shipping. Due to the nature of mail-order businesses, the company historically net new customers through television commercials. Over the past two years, KYOWA aimed to strengthen services for existing customers by enhancing their analytics capabilities for improved decision making. Yellowfin was identified as the best fit for their business strategy.
In January 2020, the company implemented Yellowfin’s automated business monitoring product, Yellowfin Signals, which helped eliminate previous instances of out-of-stock (OOS) events to almost zero. They are highly expecting that opportunity loss previously caused by stock-out will be as close to zero as possible in this fiscal year.
By implementing Yellowfin Signals, it enables us to make stock-out almost zero. We are highly expecting that opportunity loss previously caused by stock-out will be as close to zero as possible in this fiscal year.
Hirofumi Mukaida, Data Management Team, Team Leader, Information Strategy Group, Group Leader – KYOWA
KYOWA has been using Yellowfin since 2017 for data discovery and collaboration. Before deploying Yellowfin, most employees used different tools to check metrics with no common KPIs, making it difficult to have the same vision on what issues were raised. After having Yellowfin in place, the company consolidated employee monitoring and analysis of metrics in the one tool, and a number of helpful reports were created on a regular basis. However, it also caused a new challenge – which reports were needed to review and for who. The team then optimized their dashboards, so each group, such as executive, management, purchasing and sales promotion teams, could view each report as needed.
As the enterprise’s use of Yellowfin grew, the company wanted to further utilize it in different areas of their business. One problem retailers typically face is out-of-stock events, which KYOWA faced. The biggest reason for the stock-out is a large number of items and different lead times. ‘The shortest lead time is 30 days, and the longest is 90 days. We used spreadsheets to enter and manage the inventory count on a daily basis, but we relied on specific people to organise this task, so they sometimes missed items with a small stock, and misjudged timing to order. We wanted to improve the system of relying on such people’, said Hirofumi Mukaida, Data Management Team, Team leader and Information Strategy Group,
Group Leader, KYOWA.
The first step toward a solution was to link the data with accounting software and create a Yellowfin report to be used to manage inventory. By eliminating the task that used to be done by people, they can now take a closer look at numbers, and improve inventory management. However, the system still relied on manual processes. To address this, KYOWA used Yellowfin Signals to automatically detect and notify their users of important changes in data that they may have missed by simply viewing reports and dashboards.
Signals are especially useful when you have a large number of products, like KYOWA, each with different appropriate stock levels and lead times. If you only use threshold based alerts to manage inventory, you need to set up for each of the vast number of them, but with each item having a different selling trend, it is impossible to set appropriate thresholds for all items. Signals provide automatic detection by taking into account a specific trend with each item (moving average and confidence interval of number of shipment), allowing them to operate more closely in line with real-world product flows.
Once the parameters were set and Signals started to detect insights, the company had to educate their people on how to use Signals. To do that, the key point was not just explaining what Signals did, but also introducing it as a critical part of their operations. If they only explained the feature itself, people would not understand how they could actually leverage its automation benefits in their daily operations, so they used Yellowfin Story – blog-style storytelling feature – to describe their workflows embedded with Signals, and then explained which tasks refer to what reports, and which tasks refer to the detected signals along the way. This allowed the organization as a whole to smoothly integrate Signals data analysis into their day-to-day operation workflows.
Benefits and Future
KYOWA successfully went live with Signals in February 2020. Utilizing Yellowfin Signals, the company is now able to realize more efficient and precise inventory management. ‘We are now able to prevent any major stock-out accidents,’ noted Mukaida. They are highly expecting that opportunity loss previously caused by stock-out will be as close to zero as possible in this fiscal year, and there have been no stockouts up to June (the fiscal year in Japan starts from April and ends in March). By eliminating the risk of stockout, the company can now reduce the amount of man-hours spent on inventory management. The purchasing staff can also better support critical product development and initiatives in addition to their daily tasks.
KYOWA is now considering expanding their use of Yellowfin Signals to get more accurate trends from the purchasing behaviors of their repeat customers. They are planning to group customers based on how long they have been a customer of the company to better track purchasing trends, how many customers who buy regularly remaining, and group them by age groups to analyze customer attributes and what items are selling well at what age groups. The company is also looking at other ways to connect Yellowfin with their various data sources. One of them is connecting the survey data from telephone and web forms. ‘By analyzing personal information with Yellowfin, it would allow us to plan specific campaigns or develop new products that meet the needs of individual customers,’ said Mukaida.
KYOWA plans to replace their core operational systems this fiscal year. While carrying out these critical missions, they drive further advanced use of Yellowfin throughout the enterprise. The company’s commitment to accelerating digital transformation is just beginning to take off.
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