flaconi improves out-of-stock rate by 30%

With more than three million active customers, flaconi is one of the leading online shops for beauty and perfume in Germany. The online shop's extensive portfolio includes ca. 1,000 national and international brands with 50,000 products. All product segments are covered, from drugstore and natural to premium and luxury cosmetics. The company employs more than 700 people, and has its headquarters in Berlin, Germany.

SUMMARY

flaconi faced many challenges preventing them from reaching full digital connect with their suppliers resulting in business continuity challenges and out-of-stock risks. They sought a partner who could match their agile work style, offered innovative technology and would be able to deliver a superb experience for all partners involved.

By switching to Procuros, all suppliers could be connected via a single API, helping to reduce complexity with stakeholders, improve error handling and boost digital order processing.

After the first couple of months, leveraging Procuros has resulted in a supplier satisfaction score of 9.1/10. Looking forward, flaconi aims to achieve a 95% EDI message quota and plans to introduce additional message types to enhance stock predictions, consequently enabling just-in-time ordering.

‍

THE CHALLENGE: IMPROVING OUT OF STOCK LEVELS

Given flaconi’s extensive product portfolio, using digitized order-to-cash processes was a no brainer. Their tech stack already comprised different tools and providers in order to be able to digitize most of the processes given the heterogeneity of their supplier base. Their technical landscape consisted of traditional Edifact connections via X400 as well as file-based exchanges and ERP add-ons. The ERP in place is Microsoft Dynamics Business Central.

With this multitude of providers and solutions they had reached an EDI message quota of 85%. The remaining gap in the digital connectivity had several downsides:

• Challenges in business continuity within order management
• Increased out-of-stock risk and corresponding revenue loss
• Dampened supplier experience

To tackle these challenges the supply chain teams were hoping to find a new solution with a provider supporting them in making their processes more efficient based on a smooth EDI experience.

‍

THE SEARCH: FINDING A PARTNER THAT CAN DELIVER A SUPERB EXPERIENCE FOR ALL PARTIES INVOLVED

flaconi’s criteria for finding a new partner were manifold as they wanted to alleviate several pain points at once:

• Integrating all suppliers from small local brands to big international household names: The partner would need to have a broad range of integration options to be able to connect a wide variety of suppliers
• Working styles need to match: flaconi is quite agile when it comes to processes and exchanges and expects the same agility of a partner. They need to have fast response and resolution times to move forward quickly
• Focused on the supplier experience: flaconi knows that the way their provider communicates and works with the brands that supply them will reflect back on them. Therefore having a provider that can deliver on a superb supplier experience and get creative in solving challenges and improving processes is extremely important as well.

In summary, they were looking for exciting technology paired with a strong collaboration aspect. Only by combining these two aspects did they feel they might be able to finally consolidate all technical integrations and move them to one provider with calculated risk.

‍

THE SOLUTION: EXCITING TECHNOLOGY TO CONNECT ALL SUPPLIERS

With Procuros, they found a partner catering to both requirements: An innovative technology coupled with a great experience for both flaconi and their suppliers.

The new technological set-up will be based on a single API connection which gives them much more flexibility for additional use cases in the future and make the set-up significantly more maintainable.

flaconi also decided to use this switch to consolidate and innovate on their existing process logic. To mitigate any risk when switching from traditional file-based approach with the old process logic to a new API-based approach with new process logic for their largest suppliers, the team decided on a specific approach. Thereby, it was possible to start with a file-based connection and then switch over suppliers or fallback to the old integration in case of any problems with the new process logic.

“This flexible iterative approach helped a lot in expediting the project and de-risking” says Simon Berreth, Team Lead ERP and Finance.

With the API-based approach, they not only decreased the interface complexity but also simplified their approach to a more functional and automated error handling. Instead of involving the IT department in operational purchasing processes, content errors can be routed to the appropriate contacts and handled within the purchasing department in a self-service manner. This enables much faster error resolution. The IT department had to deal with only one minor error after go-live with the suppliers that was quickly resolved.

As a consequence, not only flaconi’s experience was significantly improved but also the supplier experience was addressed with user friendly and easy to use connectivity options. In addition to that, help materials and an intuitive portal for suppliers were included. This led to suppliers scoring Procuros with 9.1/10 for the experience they received across the initial connection experience, taking into consideration ease of maintenance and error resolution.

As of November 2023, the consolidation of three different EDI set-ups has been replaced with one provider in no time. flaconi has seen a significant increase in orders being sent digitally as well as an increase in automatic invoice booking. These improvements resulted in lower internal expenditures in accounting and SCM teams and improved the out-of-stock rate by 30 %.

‍

WHAT’S NEXT: TAKING ADVANTAGE OF A FLEXIBLE SET-UP

Having both a flexible technological set-up and fast and easy supplier onboarding process enables flaconi to further increase their EDI message quota (now aiming at 95%) and easily introduce additional message types such as order responses.

Transferring and leveraging additional message content along the order to cash process are now also possible with Procuros. This will help to further improve stock level predictions and avoid replenishment issues. Ultimately, this is the prerequisite to make just-in-time ordering a reality for improved cash flows. flaconi also has a strong interest to further invest in closer supplier collaboration by enabling digital and automated resolution of many more use cases.

We are grateful for their trust and are excited to support them along their future journey.