Finalist: 2024 Best Run SAP Next Gen Innovator
Foodstuffs South Island: Bridging the gap between suppliers and customers by implementing SAP Unified Demand Forecasting to enhance operational efficiency and customer satisfaction. Download the DocumentSAP Australia and New Zealand
Best Run Awards 2024
Best Run Awards 2024
Best Run SAP
Industry WebsiteProduct and Services Featured SAP Solutions
Retail, FMCG https://www.foodstuffs-si.co.nz/Four Square, New World,
PAK’nSAVE, Raeward Fresh, On
The Spot, Trents Wholesale
SAP Unified Demand Forecast
Foodstuffs South Island is the leading grocery retailer in New Zealand, delivering fresh and affordable food to Kiwis across the mainland. Formed in 1922,
Foodstuffs South Island (FSSI) is a co-operative focused on a central mission: to feed the South Island and create successful communities. From full-service
supermarket New World to small convenience store On the Spot, all Foodstuffs stores are individually owned and operated by locals committed to delivering
excellent service to their customers. Foodstuffs also produces its own range of private label brands including Pams and Value that New Zealanders know and love.
Looking to future-proof our systems in response to shifting market demands, FSSI decided to implement next-gen SAP technology solutions and provide a more
accurate forecasting solution to improve forecast accuracy, leveraging machine learning capabilities to further optimise and automate the forecasting process
Helping Foodstuffs South Island bridge the
gap between suppliers and customers
Next Gen Innovator
Industry WebsiteProduct and Services Featured SAP Solutions
Retail, FMCG https://www.foodstuffs-si.co.nz/Four Square, New World,
PAK’nSAVE, Raeward Fresh, On
The Spot, Trents Wholesale
SAP Unified Demand Forecast
Foodstuffs South Island is the leading grocery retailer in New Zealand, delivering fresh and affordable food to Kiwis across the mainland. Formed in 1922,
Foodstuffs South Island (FSSI) is a co-operative focused on a central mission: to feed the South Island and create successful communities. From full-service
supermarket New World to small convenience store On the Spot, all Foodstuffs stores are individually owned and operated by locals committed to delivering
excellent service to their customers. Foodstuffs also produces its own range of private label brands including Pams and Value that New Zealanders know and love.
Looking to future-proof our systems in response to shifting market demands, FSSI decided to implement next-gen SAP technology solutions and provide a more
accurate forecasting solution to improve forecast accuracy, leveraging machine learning capabilities to further optimise and automate the forecasting process
Helping Foodstuffs South Island bridge the
gap between suppliers and customers
Next Gen Innovator
Challenges
Customer challenges
We are working in a fast paced environment with large breadth and depth of SKU’s. Where the biggest challenge is
managing this volume on a daily basis to keep pace with customer demand.
Rising operational costs and an aging forecasting system impacted FSSI’s ability to deliver an efficient, reliable
customer experience. Our prior forecasting system, crucial for managing the complex journey of products from
supplier to customer, was simply not agile enough to adapt to the dynamic retail landscape or changing consumer
habits. Relying on weekly forecasts, it often resulted in overstocking or understocking – especially problematic for
fresh and short-dated items like fruits and vegetables. This affected our ability to deliver the right products at the
right time, inflating costs and impacting the customer experience.
These challenges emphasised the need for a solution that could not only boost operational performance, but also
significantly improve the experience for our customers by ensuring the right products were available at the right time.
Customer challenges
We are working in a fast paced environment with large breadth and depth of SKU’s. Where the biggest challenge is
managing this volume on a daily basis to keep pace with customer demand.
Rising operational costs and an aging forecasting system impacted FSSI’s ability to deliver an efficient, reliable
customer experience. Our prior forecasting system, crucial for managing the complex journey of products from
supplier to customer, was simply not agile enough to adapt to the dynamic retail landscape or changing consumer
habits. Relying on weekly forecasts, it often resulted in overstocking or understocking – especially problematic for
fresh and short-dated items like fruits and vegetables. This affected our ability to deliver the right products at the
right time, inflating costs and impacting the customer experience.
These challenges emphasised the need for a solution that could not only boost operational performance, but also
significantly improve the experience for our customers by ensuring the right products were available at the right time.
Solution
SAP Unified Demand Forecasting
We selected SAP Unified Demand Forecasting (UDF) for its ability to serve as a single forecasting solution across
all customer-facing systems. It combines the strengths of the forecast algorithms from SAP F&R and PMR in a
single platform, and leverages machine learning capabilities to further optimise and automate the forecasting
process. The implementation began with data cleansing to ensure accuracy and involved configuration to meet
our specific needs. By running UDF alongside our existing system, we could compare performance and fine-tune
deployment, adjusting our approach based on real-time feedback and specific category requirements.
UDF, is a cutting-edge approach to forecasting that takes into account a multitude of influencing factors. The
system empowers users to input their own unique influencing factors allowing for a tailored and precise forecast
that aligns perfectly with their specific needs and objectives, such as in-store displays, weather conditions, and
other customisable variables.
It is designed to seamlessly accommodate the diverse spectrum of customer behaviours, empowering FSSI to
stay agile and responsive to changing trends. By leveraging advanced analytics and data-driven insights, the tool
captures the intricacies of customer preferences, purchasing patterns, and market dynamics. This deep
understanding enables businesses to anticipate shifts in demand, identify emerging trends, and proactively
adjust strategies to capitalise on opportunities. With its adaptive capabilities, UDF enables FSSI to navigate
market complexities with confidence, ensuring they remain ahead of the curve and deliver exceptional customer
experiences.
SAP Unified Demand Forecasting
We selected SAP Unified Demand Forecasting (UDF) for its ability to serve as a single forecasting solution across
all customer-facing systems. It combines the strengths of the forecast algorithms from SAP F&R and PMR in a
single platform, and leverages machine learning capabilities to further optimise and automate the forecasting
process. The implementation began with data cleansing to ensure accuracy and involved configuration to meet
our specific needs. By running UDF alongside our existing system, we could compare performance and fine-tune
deployment, adjusting our approach based on real-time feedback and specific category requirements.
UDF, is a cutting-edge approach to forecasting that takes into account a multitude of influencing factors. The
system empowers users to input their own unique influencing factors allowing for a tailored and precise forecast
that aligns perfectly with their specific needs and objectives, such as in-store displays, weather conditions, and
other customisable variables.
It is designed to seamlessly accommodate the diverse spectrum of customer behaviours, empowering FSSI to
stay agile and responsive to changing trends. By leveraging advanced analytics and data-driven insights, the tool
captures the intricacies of customer preferences, purchasing patterns, and market dynamics. This deep
understanding enables businesses to anticipate shifts in demand, identify emerging trends, and proactively
adjust strategies to capitalise on opportunities. With its adaptive capabilities, UDF enables FSSI to navigate
market complexities with confidence, ensuring they remain ahead of the curve and deliver exceptional customer
experiences.
Impact
6 million product locations
50,000 unique products
120 stores
400 million sales records processed
50 million promotion entries
2.4 million user DIFs
10% more accurate than previous
forecasting system
Up to 30% more accurate during
calendar events such as Easter
SAP Unified Demand Forecasting
The implementation of SAP UDF has significantly enhanced our operational efficiency and customer satisfaction at FSSI. Key improvements
include:
- Accuracy of Forecast: Improved accuracy of forecast due to daily forecasting and machine learning.
- Reduction in total stock holdings: More accurate inventory management has lowered excess stock and associated costs.
- Decrease in out-of-stock rates: Improved forecasting accuracy has improved product availability for customers.
- Lower change rates in orders: Increased forecast accuracy has streamlined operations, benefiting suppliers through more predictable
demand.
UDF has also provided the ability to predict demand based on similar product histories and reducing manual efforts.
As a result of the transformation, its employees now have access to a single and real-time view of data from across the business that
enables them to quickly derive insights on its customer’s preferences and product prices. Machine learning capabilities enabled in SAP
United Demand Forecast (UDF) also help it to predict consumer demand for its products, including short-dated products such as fresh
produce, which has reduced food wastage and helped to prioritise shelf space for high turnover items.
Looking ahead, our next major step involves implementing intelligent replenishment technologies. This upgrade will further enhance
inventory management accuracy, ensuring we maintain our expected operational excellence and stay at the forefront of retail innovation.
6 million product locations
50,000 unique products
120 stores
400 million sales records processed
50 million promotion entries
2.4 million user DIFs
10% more accurate than previous
forecasting system
Up to 30% more accurate during
calendar events such as Easter
SAP Unified Demand Forecasting
The implementation of SAP UDF has significantly enhanced our operational efficiency and customer satisfaction at FSSI. Key improvements
include:
- Accuracy of Forecast: Improved accuracy of forecast due to daily forecasting and machine learning.
- Reduction in total stock holdings: More accurate inventory management has lowered excess stock and associated costs.
- Decrease in out-of-stock rates: Improved forecasting accuracy has improved product availability for customers.
- Lower change rates in orders: Increased forecast accuracy has streamlined operations, benefiting suppliers through more predictable
demand.
UDF has also provided the ability to predict demand based on similar product histories and reducing manual efforts.
As a result of the transformation, its employees now have access to a single and real-time view of data from across the business that
enables them to quickly derive insights on its customer’s preferences and product prices. Machine learning capabilities enabled in SAP
United Demand Forecast (UDF) also help it to predict consumer demand for its products, including short-dated products such as fresh
produce, which has reduced food wastage and helped to prioritise shelf space for high turnover items.
Looking ahead, our next major step involves implementing intelligent replenishment technologies. This upgrade will further enhance
inventory management accuracy, ensuring we maintain our expected operational excellence and stay at the forefront of retail innovation.
“”“The implementation of Unified Demand Forecasting has genuinely transformed how
we serve our customers. By integrating this solution, we’ve created a more coherent
and optimised technology platform that’s not only grown our capabilities, but also
delivered precise, actionable insights. This shift represents a critical step in our
ongoing journey to not just meet, but exceed, the evolving demands of the retail
market, ensuring we continue to innovate and serve the South Island as best as we
possibly can.”
- Shayne Tong, Chief Digital Officer at Foodstuffs South Island
we serve our customers. By integrating this solution, we’ve created a more coherent
and optimised technology platform that’s not only grown our capabilities, but also
delivered precise, actionable insights. This shift represents a critical step in our
ongoing journey to not just meet, but exceed, the evolving demands of the retail
market, ensuring we continue to innovate and serve the South Island as best as we
possibly can.”
- Shayne Tong, Chief Digital Officer at Foodstuffs South Island