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A Focus on Cost Control

Southern African Retailer PEP Relies on JDA to Keep Internal Costs Low, Creating Benefits for Shoppers

With 1,600 stores — and nearly 13,000 employees — PEP is Southern Africa's largest single-brand retailer. Founded in 1965 with one store in the Northern Cape, today PEP provides a critical service to low-income families across the southern nations of Africa.

“Our stores are in almost every community across Southern Africa, and we are often the lifeblood of these communities,” explained Bernardt van Dijk, senior systems analyst at PEP. “Our customers are remarkable people who are on a very low budget, sometimes less than $700 per month. We make it possible for these families to live with dignity and pride.”

The company prices its clothing, footwear and housewares as low as possible in order to make them attainable for consumers. “We differ from some other businesses because we are focused on creating a ‘low-cost' culture,” added van Dijk. “We always try to push down the prices for our customers. We operate at the low end of the market, where few other retailers operate, so our shoppers actually depend on us to provide them with product variety at a low price.”

PEP

PEP operates 1,600 stores across Southern Africa. Its clothing, footwear and housewares combine low cost with high quality, reflecting PEP's commitment to delivering shopper value. With nearly 13,000 employees, PEP ships 600 million products and conducts 250 million transactions every year. PEP has shown double-digit growth for the past 13 years, for both sales and operating profit.

Objective

Leverage JDA Demand and JDA Fulfillment to improve forecasting and replenishment accuracy — creating cost efficiencies that can be passed on to its consumers.

Solutions

Services

Real Results

  • Grew sales for associated products by 15 percent
  • Increased in-store availability from 89 percent to 92 percent
  • Improved gross margins significantly
  • Realized gains in store-level service performance
  • Enhanced efficiency of planning processes

Supply Chain Efficiency: A Critical Goal

Because of PEP's focus on low prices, the company strives for maximum efficiency and cost control across its supply chain. As a long-time customer of JDA Software, PEP selected JDA Demand and JDA Fulfillment to optimize its stock levels and minimize excess inventory investments.

“Our systems were becoming very outdated, and we needed to look at new solutions to improve our forecasting accuracy,” said van Dijk. “We were forecasting only at the lowest level — the store level — and were not really good at forecasting at the higher levels. We realized we needed a scientific approach to improve our planning accuracy.”

On the replenishment side, PEP struggled to keep its stores in stock with merchandise due to long lead times and inaccurate orders. “We had many stock-outs. Our ordering calculations weren't very advanced at that point, and we didn't take into account all of the constraints,” said van Dijk. “We needed technology that would help us achieve more sophisticated order calculations.”

Rapid Time to Value

According to van Dijk, the implementation of JDA Demand and JDA Fulfillment went very smoothly, thanks to assistance from the JDA Services team. “We had an extremely good experience with JDA Services,” said van Dijk. “It was the first time we had people from outside the country assisting us, and the skills they brought to the table helped to make the project successful. The JDA consultants were very hard working, willing to put in extra hours. They definitely helped us ensure the project was completed on time.”

The JDA Services team was available on-site and helped support PEP's goal of knowledge transfer. “We intended to take as much knowledge from JDA as possible, so that we could maintain the system on our own time and without too much intervention from them,” added van Dijk. “The fact that they were able to give us all of that knowledge was very important for our ongoing success.”

A Range of Lasting Benefits

Since PEP's successful implementation of JDA Demand and JDA Fulfillment, the retailer has achieved a variety of benefits. “With our old system of forecasting and replenishment, we weren't able to see all of the details that are involved in these processes. For the first time, we are able to see all of those details, and we have been able to improve all our systems and processes based on that granular demand and fulfillment knowledge,” he said.

The JDA solutions have increased the efficiency of critical processes at PEP. “Our day-to-day operations are running smoother for our business,” he continued. “Before the JDA implementation, we weren't able to run all of our product batches overnight. We needed to run them, one by one, throughout the day. Obviously, that took a lot of time. JDA brought the capability to run all of our products overnight. In the morning when our planners come in, they can just start working and complete all of their work — sometimes even before the end of the week.”

PEP has achieved a number of tangible financial benefits as well. “We increased sales for associated products by about 15 percent. We also grew the gross margin by a significant amount,” van Dijk said. “We've increased our in-store availability from 89 percent to 92 percent. Previously, we weren't able to calculate the store performance service level, but we started to calculate it after the JDA implementation. That measure has been consistently increasing over the last couple of years, and it is still improving.”

Ahead of the Competition

By implementing advanced software solutions from JDA across its supply chain, van Dijk believes PEP has achieved a significant edge over its competitors. “We're one of the first companies in Southern Africa that's really adopted JDA's demand management and replenishment solutions,” he said. “The fact that we are the first means that we have some of the most advanced tools before our competitors have them. So we definitely have an advantage there.”

PEP's commitment to continuous innovation is also a key to its competitive advantage. “Since the project inception, we have also made a commitment to really own our own solution — and to be able to adapt and change it over time,” he added. “We are a company that likes to add our own systems and processes, and continually improve. I think not many other retailers would do that, so I think that's also a very good competitive advantage for us.”

JDA solutions have helped PEP achieve its core mission of delivering consumer value. “We want to offer our customers the lowest price, and we do that by reducing our stock levels and making sure that we increase our efficiencies. Our customers get the ultimate benefit,” said van Dijk.

From software features to the JDA Services team, PEP's collaboration with JDA has been a very positive one. “Our overall experience working with JDA has been brilliant,” he said.

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