Company Name: Darier&Cleef
Country: Germany
Industry: Tobacco
Company size: 2-10 employees
VentorTech solutions: Ventor (Odoo Barcode app), Odoo – Magento connector, Odoo consulting and implementation
Goal: Routine automation in sales, purchase, logistics, and reporting

“VentorTech has been doing a lot of work for me over the last few years, which is why I now have more resources and time to focus on other new projects. One of them is our own tobacco plantation in Central America. In fact, I’m just about to head off there to get started. I wish you all the best with Odoo as well and hope you will have the same success as Darier and Cleef.”

Alexander Molter, CEO of Darier&Cleef

This story was presented at Odoo Experience 2023, featuring Alexander Molter, CEO of Darier&Cleef, and Mikhail Mishutin, the Head of the Odoo department at VentorTech.

You can watch a video interview here:

Challenges in the tobacco industry

Some challenges are more or less typical for tobacco product retailers, such as poor forecasting and purchase processes, nonoptimized warehouse processes, and lack of synchronization between the WMS system and marketplaces. They often lead to oversales complaints from end customers and, of course, affect the retailer’s reputation. 

Other problems of the tobacco business include governmental regulation, price management, high cost of returns, and specific reporting. 

Government regulations

Every country has its own rules and limitations for selling tobacco items. These regulations include restrictions on advertising, such as bans on television and radio ads, and the requirement for warning labels on packaging to inform consumers about health risks. Additionally, many countries impose high taxes on tobacco products to discourage consumption and limit access, particularly among minors.

Price management (MFRP)

As you may know, tobacco products have to be sold at a fixed price or at the manufacturer’s fixed retail price (MFRP). Selling items at a price higher than fixed is a violation, which can lead to serious consequences for the seller. 

High cost of returns

Premium cigars have a high cost of returns as they need to be stored under particular conditions. In other words, if a customer wants to return the item, by the time the product has been shipped there and back, it will likely lose its quality and won’t be resellable.

Reporting

Tobacco companies are uniquely required to submit specific reports, for which there is currently no ready solution available on the market. With customized Odoo, we were able to resolve this issue in a fast and efficient manner.

Never spend all your time muddling through reporting requirements again!

Solution for tobacco business based on Odoo ERP

Duty and Taxation

When we purchase tobacco items from international suppliers, they need to go through specific steps, such as duty payments, and taxation processes; the goods are ready for sale only after all those tasks are done. Normally, we can pay duty and taxes either for the entire inventory or only for part of it, which requires good tracking and transparent system workflow. When we purchase from local suppliers, inventory can be sold to end customers instantly, because it’s already taxed. After the duty is paid for, tax stamps must be purchased in advance and adhered to the cigar boxes. 

Purchase orders for tax stamps are created to the government, which requires around two weeks to process, so it’s better to have them prepared in advance. When you have fifteen thousand SKUs, applying specific tax stamps to specific boxes might be tricky.

Locally sourced tobacco products are highly likely to be properly stamped already; however, the same products might be sold at different prices. Such preparation is challenging because we need to know what price to display to the end customer. 

We tried to be proactive, not reactive, and do everything in advance by analyzing product consumption and creating all necessary operations. The workflow is visible in the picture below. It starts by selling one single cigar. 

For the sale to happen, we first need to find an available box with all the tax stamps attached to it. The question is: Do we have a readied box under our taxable warehouse? If not, do we have it in the duty warehouse? Do we have tax stamps at all? Should we purchase them separately, or not?

Our system is capable of providing such information automatically and creating taxation orders for unpacking and purchase orders. As a result, the sale happens immediately, and so much time is saved!

Price management

Organizing excellent tracking of our inventory and price is a must. For local supplies, the price has to be inserted manually, which sometimes leads to user mistakes and, as a result, wrong prices being displayed to end customers. For example, if the price is €60 but the employee accidentally enters only €6, the company will lose money. 

That’s why we created a solution, called Reception Wizard, which minimizes the risk of user mistakes by linking product barcodes with prices. Now the process is nearly automated and doesn’t require manual input anymore.

If and when manual entry is still needed, our solution helps to do it quicker and with a higher level of precision. 

Additionally, the price of a single cigar cannot exceed the price indicated on the tax stamp, but from another point of view, we don’t want to go below either. This problem continually happened, because the cigar boxes’ price on the website wouldn’t update on time, and a box worth €120 would sometimes sell at €100. Thanks to VentorTech, the integration between Odoo and marketplaces was implemented, and the prices would instantly update based on stock level. Now, as soon as €100 cigar boxes are sold out and there are only €120 left, the system automatically updates the price from €100 to €120. 

Notably, before Odoo implementation, about 15,000 SKUs were tracked manually and irregularly. Compared to the pre-implementation approach, the company has saved up to €12K monthly, which is a considerable improvement.

Discount management

Every country has its own rules and regulations for discounts. For example, in Germany, a 3% discount is allowed for tobacco products in full boxes only. Naturally, many companies are interested in implementing this, so we need to follow the market and automatically calculate these discounts, which are based on MFRP. Without automation, it’s all manual work with more resources spent rather than saved. 

Picking and Packing 

We had some great results with warehouse and delivery optimization for tobacco companies. Typical issues would include having to pick up paperwork orders one by one and inaccurate inventory. During inventory adjustment, many discrepancies were found. 

To provide the best possible solution, we visited the customer’s warehouse and analyzed the workflow, optimized the warehouse structure, and defined zones for cigars being sold in boxes and separately, making the necessary processes more efficient. 

Next, we implemented an advanced cluster-picking approach. 

Cigars are suitable for the type of cart we chose and for the cluster picking approach in general, because of their small size. We went from picking cigar boxes one by one to picking from 12 to 16 orders at the same time. We also built optimal routing to ensure that less time is spent looking for boxes inside the warehouse. Our application, Ventor, guides users directly to the picking point with clear instructions on where to go and what product to take. Another product, Direct Print, helps to print carrier labels, invoices, and customs declarations from the Odoo system. 

As an overall result, Odoo picking automation by VentorTech has improved Darier&Cleef’s performance by more than 2.5 times.

Shipping Integration

Tobacco items should be delivered using a special age verification service, which is not needed for non-tobacco items delivery, for example, ashtray cutters, etc. To bypass this issue, we offered the Client a custom integration with DHL. It is capable of analyzing what is being sold and choosing delivery methods independently without employee involvement.

Shipping items internationally means dealing with the customs declaration, which is a document with about 20–25 fields. Filling each of them manually for every sale is very time-consuming, which is why, thanks to Odoo integration by VentorTech, this document is now generated automatically, and then printed via the Direct Print solution – very easy and useful for our Client. 

Results in numbers

• Darier&Cleef’s picking process is 2.5 times more efficient. If we roughly translate this number to salary costs, the saved amount equals €110K annually. 
• The automatic synchronization of sales prices between Odoo and Odoo marketplace additionally generated the company up to €12K monthly, compared to the manual approach. 
• Cigar returns were reduced by 95%. 
• The adoption of Reception Wizard and linking MFRP increased the speed of reception by three times and completely removed user mistakes. 

The overall gain for Darier&Cleef equals at least  €500,000. Last but not least, the automations have allowed our Client to focus on other strategic activities and tasks that further benefit overall business operations.

Are you ready to watch your business work for you? Contact us to increase your bottom line while you see it happen in real time!

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