Founded in 2001, FLO is one of Europe’s largest footwear retailers, currently operating in 21 countries across three continents, and employing a global staff of more than 11,000. The retailer serves millions of customers every day through its retail network of more than 650 stores, as well as via its multi-brand e-commerce channels.

It faced the inescapable truth that omni-channel has emerged as the only channel for consumers, forcing retailers to move from a linear single-channel model into a network model of omni-channel flows. FLO recognized it needed a smart supply chain planning system to predict omni-demand, and position inventory across the retail network of stores and fulfillment centers. In addition, the company wanted to achieve the highest demand forecast accuracy, increase product availability, and improve fulfillment metrics. To achieve these omni-channel goals, FLO needed an integrated, profit-optimizing retail supply chain solution suite.

To start, FLO’s supply chain team asked three main questions.
•    What network structure would best position FLO’s supply chain to fulfill omni-channel customer demand?
•    How many DCs and hub stores are needed, and which ones should serve which stores and customers?
•    Which alterations of network structure would be necessary to better position FLO’s inventory to reach online customers on time and in the most cost-effective way?

FLO selected Invent Analytics, a provider of omni-channel retail supply chain solutions. With their help, the retailer began digging into the answers to its questions by first implementing inventory planning solutions, including Invent Analytics’ Omni-Aware Allocation Optimization, Replenishment Optimization, Transfer Optimization, and Markdown Optimization Solutions.

Invent Analytics quickly proved the benefits of its profit-optimal solutions with pre-go-live simulations and A/B testing — also known as split testing, which is a way to compare two versions of something to figure out which performs better.

Since the inventory planning project was a success, FLO decided to implement Invent Analytics’ Omni-Network Optimization Solution to be able to achieve omni-channel success by optimizing supply chain design and fulfillment network configuration. The goal was to evaluate and improve FLO’s existing store and DC network structure to determine the key action points to satisfy customer needs through online and offline channels. FLO also wanted to foresee the impact of DCs, fulfillment centers and hub stores on profitability, fulfillment costs and sell-through.

Given the considerable number of its stores and warehouses, spread over a wide diversity of locations, it was critical for FLO to position its fulfillment stores to satisfy omni-channel demand while maintaining profits and availability high through its entire sales network.

Using Invent Analytics tools, the retailer generated alternative networks that took into account the existing system’s logistic dynamics. The properties of existing hub stores were carefully considered, including shipment duration and delivery frequency to each store, as well as the volume of sales and the capacity of each location. Additionally, FLO was able to take product diversity into account, and that became a significant part of the process of recreating the network structure.

Invent Analytics and FLO also wanted to explore what-if scenarios, where they increased and decreased hub store numbers, and what would best enhance FLO customers’ shopping experiences while keeping profits healthy.

To do so, Invent Analytics and FLO started an extensive analysis of the impact of these potential changes on specific financial metrics, including total profits, shipment cost and duration, lost sales and total inventory changes. This included the creation of FLO Digital Twin to represent the actual FLO system in terms of sell-through, sales speed, and online sales dynamics.

Together, they employed a descriptive analysis of the impact of decisions on product portfolio and profiles, seasonality, demand and sales levels, procurement and markdowns. Altogether, they were able to dig down into a totally comprehensive analysis of FLO’s existing and potential online sales dynamics, and get hard metrics about exactly what would be the results of the different scenarios.

FLO says it has achieved remarkable results by using Invent Analytics’ technology, allowing the retailer to harness a deep understanding of omni-channel retailing to design a more profitable and faster omni-channel network structure, and exceed the expectations of its omni-channel customers.

With Invent Analytics, FLO has achieved significant business results. FLO upgraded its network and inventory decisions from a judgment-driven, KPI-measured process to a financial optimization-driven and measured process. As a result, the retailer was able to deliver superior omni-channel customer experiences while increasing margins.

With the inventory planning project, the retail giant increased product availability from 71% to 94% and reduced lost sales from 15% to 3%. With Omni-Network Optimization Project, FLO moved from an omni-store network of 62 up to 360 omni-store locations, which resulted in them gaining a 2.7% improvement in their annual sales revenue. The new system also brought a 17% improvement in shipment duration, while adding 1.1% to gross profit and 0.9% to  net profit without carrying additional inventory.

This project is a great example of how deploying smart technology and back-to-the-drawing-board thinking empowered a shoe chain retailer to win in the omni-channel retail world. Invent Analytics says it optimized FLO’s supply chain for profits, and delivered other significant financial improvements via an integrated supply chain planning system.