Induscabel use Optimact to grow their business and profit margins while reducing time and effort
Who is Induscabel?
Induscabel is a family-owned wholesaler and distributor of kitchen, bathroom and heating products and appliances, from the simplest gasket to entirely equipped shower cabins. Approximately 160 employees are working in 8 sites spread across Brussels and the provinces of Hainaut and Brabant Wallon. Together, they realized a revenue of almost 44 million in 2018 and are heading for a revenue growth towards 50 million by 2021. A growth ambition which is partly based on their 3 consecutive titles of “Gazelle de la Province de Hainaut”, earned with their sustainable and rapid growth over the past years. One of the visible signs of their rapid growth in the past few years is the expansion of their logistics center: its surface more than doubled in 2017, reaching over 13.000 m2.
Along with the organization grew the ICT infrastructure. Supported by a local ICT partner who understood their needs very well and provided them with custom solutions, they were able to manage the entire infrastructure and processes, and to keep track of the available inventory in general terms. “But if we wanted to maintain our growth targets and become even more profitable – a key requirement for us to remain competitive in this low-margin market – we needed a more precise and more reliable inventory management solution”, added Nico D’Hert, Purchasing Director at Induscabel. Induscabel needed a solution which would provide a better insight in the available stock, a more open architecture allowing them to link to the right sources and data, and with the right settings enabling them to trigger alerts in specific scenarios. “We needed a less static stock management system which would inform us of our status based on the changing requirements and presented in an insightful user-friendly way”, summarized Nico D’Hert.
This would have to lead to a situation where unpleasant surprises could be avoided, continued Nico D’Hert: “No more stock breaks, while keeping the available stock as limited as possible. No more blaming the inventory managers for out-of-stock scenarios that were created by targeted sales actions. And, ultimately, an inventory optimization that contributes significantly to the company’s bottom line.”
Inspired by earlier talks with the Optimact team in the past – in an era when Induscabel wasn’t ready for a complete rethinking of their inventory management requirements – Induscabel decided to entrust them with this project of implementing a new inventory management solution. “We were impressed with the functionality and the user-friendly interface of their solution, as well as its openness, which would result in an easy migration and integration with the existing infrastructure and data”, explained Nico D’Hert, “but we were even more impressed with their expertise and their understanding of our business. They perfectly understood our needs, our pains and our ambitions, and managed to create an environment which perfectly suited all of these.”
Equally important was the role that Xeleos Consulting, the owners of and business consultants for the Optimact solutions, played in creating the right business conditions needed to reap the full benefits of this new solution. “Xeleos helped us in raising Induscabel’s awareness of the importance of cross-divisional collaboration”, clarified Nico D’Hert, “only when all parties involved make the effort to keep all available information on supply and demand up to date will we be able to fully reap the benefits of the new environment.” This means that all shipped items, every order and every entering batch of products are accurately processed and entered in the system, but also that every expected peak or decrease in demand for specific items is entered in the system as well. Customers who indicate that they will trade one product line for another, plans of the sales and marketing team to launch a special promotion on a specific product line, a canceled order for a significant amount of products: all such major decisions impacting the needed inventory should be entered into the system and the capacity planning should be adapted accordingly.
After an implementation period of about a year, during which a lot of time was spent on customizing the software to Induscabel’s specific needs, the solution went live in March 2018. A little more than one year later the solution has proved its worth on many levels. The ease of use of the new environment is an enormous improvement compared to the previous solution. “We have freed up one of 2,5 FTE (full-Time equivalent) with this new solution, even though we have many more providers and may more product items to manage than before the implementation”, Nico D’Hert specified, “ a huge improvement which motivates everybody to take on even more products and to compete better than ever, even with larger competitors.”
The available functionality allows for a flexible order process and other inventory management settings tuned to Induscabel’s specific reality. D’Hert: “We have set the MOQ (Minimum Order Quantity) value for products to reflect our current needs in each product range. But these values can be easily modified to reflect a new business reality.” Other functions also contribute to an optimization of the inventory. The Self-function, for instance, allows the inventory manager to check if a specific product is readily available in one of the local sites before it is ordered at the vendor’s. “This has already led to a decrease of the overall stock value of all products in all sites”, commented Nico D’Hert.
Additionally, the solution features an AI (artificial intelligence) tool, which allows the inventory team to predict a rise or decrease in demand based on seasonal trends in the past. “As we are only using this system since last year, this predictive capability has only limited added value so far”, admitted Nico D’Hert, “but we know that it will become ever more valuable in the seasons and years to come.”
Overall, we can safely say that our DNA has changed with the introduction of Optimact”, concluded Nico D’Hert: “Before, we were never really worried about figures or statistics. But now we understand the value of a figure-driven approach, and we intend to become even more professional in the future.”
Induscabel is fully aware that the Optimact software features functionality that they haven’t even begun to (fully) exploit. But that will soon change, asserted Nico D’Hert: “Functionality that will send an alert when we are often ordering the same product in limited quantities, so that we can bundle these individual orders into one larger, leading to volume discounts: it is just one example of the features that we haven’ started using yet, even though we know we will benefit from them. But with the freed-up time available for training, with the easy-to-use interface leading to more users on the system, and with the rising amount of data available for better decisions, we are confident that we will benefit even more than today from the new environment.”
All of this will also lead to a more accurate reporting and consequently to an even more optimized inventory than today. It will also allow Induscabel to quantify their benefits and the effect on the net margin of their business. In other words: the ROI is guaranteed, and pretty soon Induscabel will be able to say exactly when and by how much.