Introduction

• Our client is a $40 billion global food retailer and grocery chain with 18,000 convenience stores and among the world’s top 250 retailers.
• The client approached A&M as they were facing working capital management challenges and a high number of cyclical stocks. The latter was an area where there was a reluctance to make changes given the perceived potential impact on sales. This became more critical due to increases in the cost of goods caused by worsening economic conditions (such as surging inflation, supply chain disruptions and fuel price increases), further impacting working capital. 
• The client also faced an internal conflict between internal logistics and commercial teams as they had different perspectives on how to improve working capital without limiting sales revenue.

A&M's Approach

• Using A&M’s industry retail experts and our experienced Digital data scientists, we quickly understood the business challenges of performing a rapid diagnostic. We recognized that there was a disparity of information across the business, so we went about identifying sources of data across the organization which was collated and transformed by our AI-powered tool (the Quantum Navigator) to create actionable insights. 
• We used transactional-level stock data to create a “best fit” packaging size across the entire trade chain level. We were able to help optimize excessive trading stocks through this solution, without impact on availability and sales.
• Our tool provided the intelligence and evidence to enter negotiations with suppliers on a more informed and analytical basis, which enabled the client to obtain a better negotiation position. We also supported the company by taking part in supplier negotiations to help them agree on optimal packaging sizing, which had a direct impact on working capital across the trade chain. 
• We automated our tool for speed and efficiency and integrated it into the client’s systems to improve its usability. This was embedded into the client’s processes and ways of working following our training, knowledge sharing and upskilling approach.

A&M's Impact

• We calculated a potential working capital reduction opportunity on $200 million by running the inventory data through our tool on an optimized basis, and we delivered $6 million through the project pilot phase which proved the concept.
• In addition, both the retail client and suppliers were able to identify the optimal distribution of stock to stores based on packaging sizes. 
• The tool provided a sustainable solution to optimize logistic units, maximizing sales with optimal required working capital between both the retail client and their suppliers.