FLO is one of Europe’s largest footwear retailers. The business currently operates in 25 countries and across three continents, serving millions of customers every day through its wide retail network of 800+ stores. FLO’s process and growth are continuing via multi-brand e-commerce channels, and such a broad network means managing replenishment and allocation is challenging at best.
Number of stores 650+
Number of DCs 15
FLO aimed to create accurate predictions, maximize availability and optimize inventory management to improve supply chain efficiency. FLO also needed superior inventory planning capabilities through accurate demand forecasting. Better capabilities would reduce lost sales, increase sell-through and improve fulfillment efficiency.
FLO made the strategic decision to roll out the invent.ai AI-Decisioning Platform. As a result, the leading footwear retailer reduced out-of-stocks and inventory carrying costs, lowered fulfillment costs and improved gross profit.
AI algorithms create solutions to collect and process data on Amazon Web Services (AWS), leveraging its scalable infrastructure to support FLO's complex inventory planning needs.
Gross margin growth
The challenge: Making optimized allocation and replenishment decisions
As a leading footwear retail chain, FLO wanted to generate highly accurate forecasts at all levels of granularity and determine the right amount of inventory required in their stores and distribution centers (DCs).
FLO needed to replenish stores, DCs and hub stores with the right amount of inventory at the right time in anticipation of demand that could be fulfilled from every possible source, providing the competitive advantage needed to stay ahead in the game.
Gaining a full-season perspective to enable more accurate and timely allocations and making profit-optimized inventory decisions were also critical requirements for FLO.
Choosing invent.ai
After evaluating multiple vendors, FLO selected invent.ai to meet their evolving supply chain operations.
The results
Upgrading inventory decisions to a financial optimization-driving process
FLO implemented invent.ai's tailor-fit advanced AI solutions, achieved speed to value and proved the benefits of its profit-optimized operations with pre-go-live simulations and A/B testing.
Following the implementation, FLO upgraded its supply chain planning from a judgment-driven, KPI-measured process to a financial optimization-driven and measured process. As a result, FLO was able to deliver superior customer experiences while increasing margins.
Benefiting from AI-powered demand forecasting
Every day, invent.ai's demand forecast model generates forecasts at all levels of granularity using real-time data. The solution leverages our AI-Decisioning Platform and machine-learning algorithms to predict how, when and where FLO’s customers want their orders to be fulfilled.
Advanced allocation and replenishment optimization
AI-based demand forecasting facilitates allocation and replenishment optimization. The platform helps FLO manage the supply chain and send the right amount of inventory to its stores, reducing risks of left-over stock at stores and early stock-out risks at the distribution centers.
FLO achieves higher sell-through and reduces overall fulfillment costs because of the dynamic and smart positioning of inventory. Supply chain managers optimize inventory by improving forecasts and easily calculating optimal inventory levels for each SKU-store-day.
By carefully balancing lost margin from out-of-stocks and the cost of carrying inventory, FLO ultimately achieves better inventory planning.
Key innovation: Size and case pack optimization at a store level
Invent.ai's AI-Decisioning Platform further predicts FLO’s future sales and inventory needs by size and determines the profit-optimized case pack configurations to predict future demands of customers at a store level. Using agentic AI, the system identifies stores with similar-sized selling patterns to create more granular profiles. It then clusters isolated replenishment orders by size-demand ratios and matches size profiles to forecasted demand.
Invent.ai also evaluates and optimizes product packages and makes new assortment suggestions. It also determines size-level store needs and matches case packs to fulfill the demand for each store. The system helps FLO to improve operational efficiency, increase sales and reduce lost sales and markdowns at a size level, contributing to a 4.7% net profit improvement. Additional insight can be gleaned by reviewing how demand distribution and lost sales both saw meaningful improvements after implementation in the graphs below:
Optimally timed markdowns
FLO is also accelerating growth margins by optimizing markdowns throughout the product lifecycle with invent.ai.
Our platform and agentic AI capabilities follow FLO’s markdown path throughout the season, directly improving margin and end-of-season sell-through.
Increasing profitability by rebalancing inventory across locations
Using invent.ai’s Transfers optimization, FLO rebalances inventory across locations for maximum efficiency. By moving products from underperforming locations to other locations where demand is higher, FLO minimizes lost sales and markdown losses.
In 2021, FLO started its new network optimization project with invent.ai. FLO focused on knowing the network structure that best positions its supply chain to fulfill customer demand.
The footwear retailer wanted to assess how many DCs and hub stores they need to serve to which locations of stores and customers. More importantly, they wanted to see what alterations of network structure are necessary to better position their inventory to reach their online customers on time and in the most cost-effective way possible.
“With invent.ai's omni-network, we were able to move from 62 omni-store networks up to 360 omni-store networks to be able to obtain 2.7% improvement in our annual sales revenue. That also means around 17% improvement in shipment duration while obtaining 1.1% additional gross profit and 0.9% additional net profit without any additional inventory,” said Burak Ovunc, former CEO of FLO.