Schwarz IT: Better Inventory Management Through AI

How do Schwarz IT and SAP make better sourcing and inventory management decisions at Kaufland through AI driven demand planning

Schwarz IT is the digital operation behind some of Europe’s most successful retail brands like Lidl and Kaufland. Their stores are visited by millions of customers every day, and their IT solutions are used by more than 575,000 end users.  The organisation optimises their procurement and supply chain operation with AI driven demand planning to improve their demand and replenishment management.  

The approach is resulting in improved inventory management, with less waste and intelligent procurement to meet the needs of its stores, stakeholders and customers.  Kaufland is one of its major German hypermarket chains, and operates in several countries across Europe, including Germany, Poland, the Czech Republic, Slovakia, Croatia, Romania, Bulgaria, and Lithuania. Kaufland has been expanding its presence in various markets and is considered one of the largest hypermarket chains in Europe.

AI powered demand forecasting at Kaufland 

Schwarz IT and Kaufland have followed a strategy to implement an AI powered solution to improve their supply chain and procurement programmes, to better anticipate and deliver customer demand through intelligent forecasting of the goods and services they need to source.  

The company worked alongside SAP to deliver an AI-driven demand planning solution to tackle existing challenges within their sourcing strategy.  Rapidly changing customer behaviour needed improved agility from suppliers, alongside complex short-life supply chains for perishable goods like meat, and the challenge of having a reliable system to support more than 1500 stores in eight countries.  

Kaufland Hypermarket Store (Credit: Kaufland)

SAP’s Unified Demand Forecast module in action 

SAP's Unified Demand Forecast (UDF) module is a component within SAP's suite of supply chain management solutions. The UDF module is designed to help businesses predict future demand for their products or services more accurately. It uses statistical algorithms and machine learning techniques to analyse historical sales data, market trends, and other relevant factors to generate forecasts to assist the customer in their procurement, supply chain, inventory and ultimately the satisfaction of their end users.

“With the SAP solutions implemented by Schwarz IT, Kaufland stores across Europe have improved demand forecasting and product replenishment – enabling better customer service and greater customer satisfaction,” said Michael Hahn, Managing Director, Supply Chain Management at Schwarz IT.

The strategy to introduce SAP’s Unified Demand Forecast (UDF) module is now calculating up to 35 million store and product combinations a day, and models sales history for 800 days to allow for improved supply chain decision making.  

The forecasting system intelligently calculates the expected sales for 100 upcoming days  Purchase orders to suppliers and supply to stores are then controlled by forecasts for the near future or upcoming days if needed.  

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