Case study
AI-based vision intelligence solution helped convenience store chain save $13.7 million
After struggling with stockouts and overstock situations, this convenience store chain partnered with UST to implement a vision intelligence solution using IP cameras, continuous shelf monitoring, and automated low-stock notifications. The company saved millions in operational costs and increased store profitability by 20%.
OUR CLIENT
As one of Central America's largest convenience store chains, this retailer operates more than 10,000 locations. The business is valued at nearly $1 billion.
THE CHALLENGE
Long list of inventory issues dragged down profits and customer satisfaction
The company's operations manager, supply chain director, and managers in each of the 10,000 stores struggled with a series of inventory and operational issues that negatively impacted profitability and customer satisfaction. The challenges were:
- Inadequate inventory controls- Resulting in frequent stock-outs of high-demand products, costly overstocked items, and inefficient warehouse operations.
- Lack of real-time inventory tracking- Causing stock-level blind spots, so decisions were made in a vacuum, exacerbating stock imbalances.
- Scattered inventory data- Resembling a puzzle with missing pieces, the lack of consolidated data led to poor decisions and resource allocations.
- Poor customer experience- Because shelves were either empty from stock-outs or cluttered with excess inventory.
- Disorganized warehouse operations- Resulting in missing items, order fulfillment delays, and excessive operational costs.
- Supply chain disruptions and long delivery lead times- From limited supplier insights, fragmented communications, and gaps in inventory data.
THE TRANSFORMATION
Robust vision intelligence solution provided insight to transform inventory management processes
UST implemented our vision intelligence solution to help the company improve its inventory management and operational processes. The solution included:
- Internet protocol (IP) cameras for real-time inventory monitoring- Cameras were installed on store shelves to continuously monitor stock levels. As cameras captured inventory images, artificial intelligence (AI) algorithms analyzed and accurately quantified products on shelves.
- Automated out-of-stock notifications triggered by integrated planogram- The solution automatically compared inventory levels on store shelves to ideal stock levels in the planogram application. As items on store shelves decrease, automated restock notifications are sent to store personnel.
- Continuous inventory updates to streamline notifications- After restocking, the planogram stock levels are automatically updated based on new images from the IP cameras, pausing the restock alerts.
- Person-detection to avoid inaccurate stock level readings- The vision intelligence solution was designed to detect when a shopper selects items from store shelves. This advanced capability prevents human interference in inventory monitoring.
- Competitor inventory monitoring for strategic insight- Since the retail chain sells its branded products and competitor items, the vision intelligence solution monitors inventory levels of competing products, enabling store managers to adjust inventory and pricing strategies accordingly.
- Optimization recommendations from AI-based insights- As the vision intelligence solution captured data on inventory, beverage cooler utilization, and competitive products, built-in algorithms generate actionable suggestions so company leaders can optimize inventory, replenishment schedules, and beverage cooler distribution strategies.
THE IMPACT
Optimized inventory management generated millions in savings
The data-driven solution resolved the convenience store chain’s inventory issues and helped the company achieve these impressive results:
- $13.7 million- In cost savings thanks to optimized distribution and a 20% increase in direct store delivery revenue.
- 95% accuracy- In out-of-stock detection with a 25% reduction in out-of-stock detection costs.
- 20%+ increase- In in-store profitability with a 20% improvement in product availability.
- 20% improvement- In vendor-managed inventory with a 15% improvement in retail coverage merchandising.