Automate Inventory Management: Yellowfin Signals Reduce Loss

Background

KYOWA is a cosmetic and health food manufacturing company based in Tokyo, Japan. Since its establishment in 1960, the company has focused on putting customer health first and supporting people with their lifestyle goals through its range of beauty and healthcare products.

KYOWA’s products are mainly delivered through mail-order systems, and many customers use regular shipping. Due to the nature of mail-order businesses, the company has historically acquired new customers through television commercials. Over the past two years, KYOWA aimed to strengthen services for existing customers by enhancing their analytics capabilities for improved decision making. Yellowfin was identified as the best fit for their business strategy.

In January 2020, the company implemented Yellowfin’s automated business monitoring product, Yellowfin Signals, which helped eliminate previous instances of out-of-stock (OOS) events to almost zero. They are highly expecting that opportunity loss previously caused by stock-out will be as close to zero as possible in this fiscal year.

Challenge

KYOWA has been using Yellowfin since 2017 for data discovery and collaboration. Before deploying Yellowfin, most employees used different tools to check metrics with no common KPIs, making it difficult to have the same vision on what issues were raised. After having Yellowfin in place, the company consolidated employee monitoring and analysis of metrics in the one tool, and a number of helpful reports were created on a regular basis. However, it also caused a new challenge –  which reports were needed to review and for who. The team then optimized their dashboards, so each group, such as executive, management, purchasing and sales promotion teams, could view each report as needed.

As the enterprise’s use of Yellowfin grew, the company wanted to further utilize it in different areas of their business. One problem retailers typically face is out-of-stock events, which KYOWA faced. The biggest reason for the stock-out is a large number of items and different lead times. ‘The shortest lead time is 30 days, and the longest is 90 days. We used spreadsheets to enter and manage the inventory count on a daily basis, but we relied on specific people to organise this task, so they sometimes missed items with a small stock, and misjudged timing to order. We wanted to improve the system of relying on such people’, said Hirofumi Mukaida, Data Management Team, Team leader and Information Strategy Group,
Group Leader, KYOWA.

Solution

The first step toward a solution was to link the data with accounting software and create a Yellowfin report to be used to manage inventory. By eliminating the task that used to be done by people, they can now take a closer look at numbers, and improve inventory management. However, the system still relied on manual processes. To address this, KYOWA used Yellowfin Signals to automatically detect and notify their users of important changes in data that they may have missed by simply viewing reports and dashboards.

Signals are especially useful when you have a large number of products, like KYOWA, each with different appropriate stock levels and lead times. If you only use threshold based alerts to manage inventory, you need to set up for each of the vast number of them, but with each item having a different selling trend, it is impossible to set appropriate thresholds for all items. Signals provide automatic detection by taking into account a specific trend with each item (moving average and confidence interval of number of shipment), allowing them to operate more closely in line with real-world product flows.

Once the parameters were set and Signals started to detect insights, the company had to educate their people on how to use Signals. To do that, the key point was not just explaining what Signals did, but also introducing it as a critical part of their operations. If they only explained the feature itself, people would not understand how they could actually leverage its automation benefits in their daily operations, so they used Yellowfin Story – blog-style storytelling feature – to describe their workflows embedded with Signals, and then explained which tasks refer to what reports, and which tasks refer to the detected signals along the way. This allowed the organization as a whole to smoothly integrate Signals data analysis into their day-to-day operation workflows.