Community Research and Development Information Service - CORDIS

H2020

NexGenFSCM — Result In Brief

Project ID: 726825
Country: Finland
Domain: Industrial Technologies

Efficient food supply-chain management software

A Finnish company has unveiled unique supply chain management software for food retailers and wholesalers. RELEX’s advanced cloud-based system helps its customers to save money, reduce spoilage of fresh goods, optimise inventory management and increase customer satisfaction.
Efficient food supply-chain management software
In an effort to meet rising customer demands for fresh food, foodservice areas are presented with a number of opportunities to reshape the existing supply chain for competitive advantage. In fresh foods, the risk of increased spoilage or limited availability calls for minimal safety stocks and accurate day-level demand forecasts. Efficient food replenishment, effective order fulfilment and proper automated processes will clearly differentiate food retailers and wholesalers in a highly competitive market.

With EU-funding of the project NexGenFSCM, the Finnish company RELEX Solutions developed an advanced software solution for planning and optimising supply chains. The innovative system helps retail businesses to improve their competitiveness by improving forecasting and replenishment processes. Project partners showcased their new technology in three very large European grocery stores.

Managing cannibalisation

In its first pilot case, RELEX investigated techniques to make promotion planning more efficient.

Promoting the sales of a product, for example, via price discounts or advertisements often has a huge impact on profit generation. However, promotion activities can also generate a counter-effect – the cannibalisation of variant products. Selling more of one product often decreases the sales of other products in the same product category. This can put great stress on the supply chain, especially on the forecasting and replenishment of fresh foods. “A sudden drop in the sale rates of a variant product could lead to increased spoilage, which quickly eats profits of the promotion. Product cannibalisation is also important to consider when figuring out how to retain limited shelf space to best-selling products,” notes Markus Pettinen, administrative director of RELEX Solutions.

RELEX’s tools, designed specifically for retail, enable proper supply chain planning, driven by promotion forecasts to satisfy the increased demand of the promoted product without introducing spoilage or surplus stock of substitutes. Software can recognise cannibalisation relationships based on historical sales and promotional data.

Some days are special

RELEX’s software also helps to build better understanding of how consumers make shopping decisions as external impacts can greatly change their spending patterns. This is especially relevant when it comes to managing the supply chain on special days. For example, pay dates or public holidays can put great pressure on supply chain managers to ensure products are available.

“We found clear evidence of a sales volume variance during typical payday weeks,” notes Pettinen. As he further outlines, “At first, the root cause was not clear, but it was identified by combining expert judgment and hypothesis testing, which is a key process in generalising measurement of external variables. Optimising forecasting for each store and item was at the core of our efforts.”

Ahead of the curve

Combining outstanding computational power, intelligent algorithms and machine learning, RELEX’s software allows for optimised demand forecasting. The software is offered as a service and differentiates itself from the competition as it taps into the power of in-memory computing technology that includes a database specially created for supply chain applications. As a result, it is faster than traditional disc-based solutions.

Results from the pilot tests in three grocery stores exceeded expectations. Project partners reported that they achieved very high on-shelf availability, improved inventory turnover and reduced spoilage, and staff in the stores can spend more time on customer care due to more efficient processes.

Keywords

NexGenFSCM, supply chain, RELEX, spoilage, forecast, cannibalisation, fresh food, inventory, food retailers, grocery store, in-memory computing
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