Digital transformation of FMCG merchandising audit in retail

MAY-Foods is one of the largest food producers in Russia, among TOP 2 of the national tea market. The company owns a number of well-known brands in the country and has a well-developed distribution network that covers all regions of the country. MAY-Foods products are distributed via eight logistics hubs in key Russian regions.

A distributed network of MAY-Foods affiliates exports the company’s products to over 40 countries all over the world. The company partners with the leading transnational retail and restaurant chains.

MAY-Foods, being a major tea and coffee supplier needs to always control goods layout and availability in retail networks. MAY-Foods employs a team of merchandisers that visit all points of sale where MAY-Foods products are sold on a daily basis.

Merchandisers have to regularly audit the goods supplied by the company and communicate with the store teams on whether the products are in stock. A MAY-Foods merchandiser has to visit about 10−15 points of sale per day, including major retailers and small privately owned shops. A comprehensive audit should be conducted on site, including product layout control, picturing the shelves, and filling out the report on a certain point of sale.

A merchandiser should note the product layout, its quantity, availability, and other shelf placement criteria. Besides, MAY-Foods auditors also function as salesmen: create new orders and communicate with store managers. A comprehensive motivation system takes into account a number of criteria: the number and complexity of trips, timeliness of such trips and quality of the reporting provided, increased number of orders received from stores, MAY-Foods product line expansion, etc.

The audit included a standard offline process with paper document management, and filling out multiple forms, surveys, and reports. The documents contained data on a dozen of brands and a great variety of products, which, naturally, slowed down work. Filling out a large number of paper documents and routine led to multiple problems:

• errors in reports;
• lacking signatures and pictures;
• delays in data provision.

The audit department management recorded violations and abuses on a regular basis: duplicated reports, false reports with no audit. The work scope was not performed in full, about half of visits and audits were false, i. e. never happened in reality. Product layout also left much to be desired, which impacted sales and new orders.

Conducting analytics was our first step, taken even before product development started. The Digex Co. team started with “field observation”, looked into functional responsibilities and real actions of MAY-Foods merchandisers during audit. Also, they surveyed merchandisers and store employees.
Digex Co. explored the process and offered an end-to-end solution including the following:

• Mobile audit application for iOS and Android;
• Audit web app duplicating the mobile app functionality;
• Administration web app to manage the system and control auditors in the field;
• Integration of the developed mobile and web apps with the central accounting system of the company.

Such an IT solution aimed to replace the existing paper workflow - long and mundane - with a transparent and easy to manage digital business process.

It took us about half a year to develop all the components, followed by a 4 month pilot in certain test districts of Moscow and St. Petersburg. The pilot was a success: the apps worked well, and accelerated merchandising audit, ensured 100 % control and transparency of the process.

The mobile app from Digex Co. became publicly available in Google Play and AppStore in 2018 and was adopted by all MAY-Goods auditors all over the country.

The system accelerated merchandising audits greatly and ensured their 100% credibility. On average, each merchandiser now audits 40% of stores more every day. Audit performance increased, and so did the earnings, in line with the growing KPIs.

Data integrity and transfer rate
In this project, Digex Co. developers achieved two goals: speedy audit report delivery and 100% integrity and credibility of data. Geographically distributed and remote location of many stores impacting connection quality was a major issue. Only a few stores boasted high-rise location and availability of 4G. Walls, basements, and concrete flooring, as well as generally poor quality of mobile Internet connection in remote locations were taken into account by the IT solution developers.

Documents and survey forms were downloaded to a local device when Internet connection was available. Pictures and filled in forms were also saved locally to be submitted to the server the moment the device got online. Digex Co. developers optimized data delivery processes to avoid lack of data even with poor Internet connection and ensure swift registration of data in the central MAY-Foods accounting system.

Abuse control
Digex Co. team actively supported and upgraded the implemented IT solution to digitalize store audit. When any issue arose, they analyzed every case that was out of the ordinary carefully: monitored the situation, established remote connections to see what the issue was, etc.

Abuse control was one of the frequent tasks they had to perform. Despite the electronic system to make work fast and easy, the human factor was still there, when filling forms and reports. Merchandisers were active gadget and smartphone user and tried to use 3d party PO to cheat:

• Used software that masked the time zone and location to meet the audit deadline;
• Tried to copy text and pictures to duplicate reports and reduce the number of trips;
• Used cracked 3d party software to automatically fill in questionnaires without actually going to a store.

Digex Co. team examined all such violations carefully and patched the apps quickly. For instance, the application constantly watched time zone and location change when data were submitted. We set up triple location monitoring: the system quickly pinged the GPS system of a mobile device three times to make sure no software was used to mask location. The system automatically warned the auditor if they were suspected of an abuse or a violation as per statistics. Different scenarios were adopted for different types of violations: from email notifications to withholding bonus payments in case of repeated failures.

POS in Russia are registered in the system

3 400

employees nationwide use the IT system on a daily basis

2 000+

types of goods in RF stores audited by MAY-Foods teams every day

10 000+

abuses of authority by MAY-Foods merchandise agents detected and remedied during the solution’s lifetime

100%

transparency of merchandising audits for the client

more audits conducted by MAY-Foods teams

We’ll give you an independent view of the task, solution options, roadmap, deadlines and budget