African Retailer Optimises Supply Chain Costs with Venn Cubed
Unlocking Cost Efficiencies and Driving Growth with an Activity-Based Costing (ABC) Model powered by IBM Planning Analytics
As one of the largest retailers in Africa, the organisation faced challenges in managing the complex costs across its extensive network of suppliers, distribution centres, and stores. Traditional costing methods struggled to accurately allocate costs, particularly in areas like promotions, distribution, and other indirect costs like head office overheads. These methods were inadequate for such a large-scale operation, where costs varied widely across different regions and activities.
“We now have a comprehensive, real-time view of our cost structures, which allows us to make more informed decisions across our entire supply chain.”
African Retailer, Supply Chain Director
Improved Decision-Making
The retailer gained enhanced visibility into cost data and operational efficiency, supporting better decision-making across the supply chain.
Streamlined Operations
With more accurate supply chain data, the retailer reduced operational costs while improving its everyday low-price (EDLP) strategy.
Scalable Innovation
A flexible and scalable foundation for future growth and continuous innovation was established, improving overall efficiency and customer satisfaction.
Solutions:
Technologies:
Partner
The lack of detailed visibility into cost drivers hindered the retailer’s ability to identify inefficiencies and make informed decisions. Hidden expenses, such as those related to promotions and misaligned supplier recoveries, distorted cost transparency, making it difficult to optimise processes and manage resources effectively.
Recognising these challenges, the retailer needed a solution that could provide granular insights into every aspect of their operations. By gaining a clearer view of cost drivers, the retailer aimed to optimise processes, reduce inefficiencies, and improve decision-making across its vast supply chain.
“We needed a model that would enable us to determine the actual services costs of all Distribution Centre processes and activities and be able to do sensitivity analysis. It had to provide functionality to do modelling and “what-if“ scenarios analysis where assumptions and drivers are easily changed to analyse the impacts throughout the operational model.” said the retailer’s Supply Chain Director.
Implementing Activity-Based Costing with Venn Cubed
To address these challenges, the retailer partnered with Venn Cubed to implement an Activity-Based Costing solution powered by IBM Planning Analytics. By integrating data from multiple key systems, including the Warehouse Management System (WMS), transport optimisation tools, and the ERP, the retailer was able to consolidate costs across both ambient and temperature-controlled supply lines into a unified view, creating one version of the truth. The solution empowered operational teams to calculate accurate service costs for every product, supplier, and store, and allowed them to model various operational scenarios. Through Integrated Planning, IBM Planning Analytics enabled users across the organisation to work seamlessly, transforming how teams managed and analysed cost data for more effective decision-making.
Unlocking Cost Efficiencies and Driving Strategic Insights
With the ABC solution in place, the retailer gained clarity on the true costs of its operations across the entire supply chain. This visibility revealed hidden inefficiencies, leading to better financial planning, particularly in areas such as supplier recoveries and promotional costs. The data-driven insights helped optimise day-to-day operations while supporting long-term strategic goals. The solution also enabled the redesign of workflows and supply chain layouts to eliminate inefficiencies. This positioned the retailer to achieve competitive pricing while maintaining profitability and enhancing customer satisfaction across its large network of stores.
By partnering with Venn Cubed and implementing an Activity-Based Costing solution, the retailer has positioned itself to continue driving long-term operational improvements and maintain its leadership in the competitive African retail market.
