Supply chain development

We manage an inventory of approximately 20,000 items comprising 5,000 core products, 5,000 accessories and 10,000 media and entertainment products. Within our uniform store concept, we can vary the sales area for different product groups according to local customer needs.

Our stores format and merchandising approach provides for allocation of most of goods on the shop floor, moving the stock’s ‘center of gravity’ to the point of sales (POS). The best solution from the efficiency and cost point of view is to concentrate the stock in a Central Distribution Center (CDC), replenishing to the stores on demand, which stipulates for ‘one level’ distribution model, and helps to ‘shorten the pipeline’. At a time we run 2 CDCs in Moscow area and 1 CDC in Nizhniy Novgorod while the stores network are being supported by 70+ Regional Distribution Platforms. Supply Chain focuses on delivering value proposition to meet customer unique demand while being effective at stock level and operational costs. We balance our stock putting more emphasis on the novelty & promotion goods availability and making our offer in store most attractive to the customer. Distribution Strategy accumulates and balances the ‘interests’ of Inventory, Transportation, and Location Strategies thus ensuring proper product distribution within the network.

In 2011 we continued to improve our Sales Plan accuracy on SKU level and to optimize our distribution and store replenishment system. This is to finalize our move to SAP Merchandising Resource Planning (MRP) and Predictix Forecasting & Replenishment solutions which were chosen as basis to optimize stock and improve stock availability across the chain.

In 2011 we focused on the following projects critical for the successful execution of our Supply Chain strategy: the implementation of the Category Management Standard Operating Procedures (S.O.P.), as well as the installation of the new SAP backboned Assortment Management and Store Replenishment module, as a key pillar to sustain our Omni-Channel initiative. We also successfully piloted SAP MRP contour within the Telecom and Small Home Appliances category business units (CBU) which is due to roll out to all CBUs in 2012.

The net benefits of the completed Supply Chain projects in 2011 are seen on the inventory level and from the sales growth. We achieved a better understanding of the sales and promotions thus allowing us to optimize the inventory and reduce the out-of-stock and safety stock. As we learn how to use the system we should be able to continue to optimize our stock.