Retail Chain SPAR – Fresh Goods Thanks to Intelligent Supply Chain

SPAR promotes sustainability in retail through AI-based demand forecasting.

Knowing today what customers will buy tomorrow is the dream scenario for any retail company. This allows for sensible ordering of goods and efficient design of the supply chain. The Austrian market leader in food retail, SPAR, knows how to implement this and is breaking new ground in collaboration with paiqo through AI-based demand forecasting. SPAR relies on an intelligent supply chain using artificial intelligence (AI) in the Microsoft Azure Cloud. The benefits are manifold—not only for the company, suppliers, customers, and employees but also for the environment. Precise demand forecasts better meet customer needs, improve planning, and minimize food waste. The bottom line is: 60% cost savings per year and 90% prediction accuracy through the Data & Analytics Platform and Artificial Intelligence.

Project overview

The challenge

Retailers must offer a wide range of products while simultaneously minimizing food waste by optimizing inventory levels.

Solution

SPAR and paiqo developed an AI-based demand forecasting solution using Microsoft Azure to enable precise demand predictions for supermarket branches and optimize inventory levels.

Benefit

The solution increased prediction accuracy to over 90 percent, reduced spoilage and food waste, and led to significant cost savings. SPAR is now migrating its entire business warehouse landscape to Microsoft Azure to further enhance efficiency.

The challenge

Customers expect a wide range of products, while retailers aim to avoid food waste. The challenge lies in optimizing inventory levels and reducing spoilage to promote both customer satisfaction and sustainability, as well as saving costs and working more efficiently.

Solution

Based on Microsoft Azure, paiqo, together with SPAR’s IT unit, developed a customer-oriented AI-based demand forecasting solution to enable accurate demand predictions for all supermarket branches and items on a weekly basis. Using AI algorithms, data on sales volumes, weather conditions, special offers, marketing campaigns, seasonality, and other factors are analyzed and processed, allowing for precise forecasting of the optimal amount of fruits and vegetables per branch. The solution was integrated into the existing planning systems.

Benefit

The implementation of the demand forecasting solution has led to a prediction accuracy of over 90 percent. This reduces the amount of perishable goods, thereby minimizing food waste. At the same time, customers find the desired products at any time of day, leading to improved customer satisfaction and higher revenue for SPAR.

Die Vorhersagen sind weiterhin eine wertvolle Unterstützung für jene Mitarbeiter, die am Beschaffungsprozess beteiligt sind. KI ersetzt dabei nicht die bisherigen Prozesse, sondern ergänzt das Team als wertvolles Mitglied. Die Optimierung der Belieferung von mehr als 1.500 Filialen hat somit positive Auswirkungen auf die gesamte Lieferkette, dazu zählen auch die Einkaufs- und Logistik-Prozesse.

The Microsoft Azure Cloud provides SPAR with the necessary flexibility and scalability to efficiently process large volumes of data. Due to positive experiences, SPAR is migrating its entire business warehouse to the platform to support future innovation projects and save costs. For end users, this means faster availability and utilization of data, as well as the ability to make informed data-driven decisions in all areas. This not only allows SPAR to break out of the old technological world but also achieves significant cost savings of 60 percent per year compared to the previous solution.

In this context, the SPAR Group for Central Eastern Europe has decided that the existing solution will now be replaced by Microsoft Azure Synapse Analytics in all company areas. Currently, the cross-group reporting for executives and store managers is being rolled out not only in Austria but also in Italy, Slovenia, Croatia, and Hungary. This means that SPAR is migrating one of Europe’s largest traditional business warehouse installations, with more than 100 terabytes, to the Microsoft Cloud with the support of paiqo, in order to establish a solid foundation for the innovation pipeline in the coming years.

For more information about the project, please visit the Microsoft website: Customer Success Stories.

“The added value of the intelligent supply chain for retail is immense: It is obvious that efficiency is increased and costs are reduced. But we also learned from it: When the cloud and AI come into play, you suddenly realize what is still possible in process optimization!”,
– Stefan Edelmayer, Head of Data & Analytics at SPAR ICS