At the inaugural National Retail Federation (NRF) 2024: Retail’s Big Show Asia Pacific held in Singapore earlier this month, RELEX Solutions showcased a unified solution for the region’s retailers, covering the value chain end-to-end.
RELEX helps retailers grasp the essence of how a unified solution bolsters supply chain optimisation from accurate demand forecasting to the spot-on pricing strategy, and to space planning that can be customised to each individual store.
On the back of NRF 2024, RELEX Solutions co-founder and CEO, Mikko Kärkkäinen shared insights into the trends and challenges impacting grocery and the broader retail sector.
“This year we continue to see market volatility, as rapidly shifting consumer behaviour means supply chains struggle to keep pace. To overcome this, retailers and technology innovators such as RELEX Solutions drive unprecedented agility, visibility and precision across reimagined processes,” he told Retailbiz in a recent interview.
“Evolving shopper needs and market shifts mean business as usual no longer suffices. Precision has become imperative, and not just stocking shelves, but having the right products available in the right spots at the right times.”
In a recent survey conducted by RELEX, ‘The state of supply chain 2024’, the top three most essential capabilities for retailers to manage consumer demand and inventory levels are real-time inventory visibility (45%), customer demand sensing (45%), and inventory optimisation tools (43%).
“To achieve such insight, visibility into demand forecasts is critical, so is agile automation enabling swift delivery. Rather than stuffed warehouses or wasted inventory, retailers should seek to work with technology partners to optimise costs while balancing volatile factors which are out of the retailer’s control.”
An omnichannel approach that doesn’t compromise on profit
The first step for retailers working to improve their omnichannel operations’ efficiency and accuracy should be to stop using in-store forecasts to predict online demand, according to Kärkkäinen.
“This may have been a necessary short-term fix for some retailers. However, reliance on an in-store forecast for digital channels increases the likelihood of inventory issues, including overstocks and out-of-stocks.”
Retailers must develop a new strategy that considers the differences between online and in-store shopping, including unique demand patterns of online consumers, the system’s capacity for order fulfillment and the technical requirements for the digital channels.
“Retailers must then look to automation to relieve the burden on planners who otherwise would need to manually manage multiple channels, suppliers, and delivery patterns. While human intervention will always be necessary for inventory management, an automated system can handle day-to-day issues while allowing planners to focus on exception management and unique situations.”
How AI will transform the role of the store
Over the next five to 10 years, Kärkkäinen believes AI-enabled solutions will become vital for retailers to quickly analyse vast amounts of data at bricks and mortar stores and gain a comprehensive understanding of shifts in shopper preferences and demand patterns.
There are three primary challenges that AI and machine learning can help with:
- Limited flexibility in rule-based pricing: Strategies built on multiple dependent variables, such as competitor pricing, seasonality, and promotions, have a higher likelihood of yielding strong top-line improvement. AI-based pricing software that offers scenario testing capabilities and visibility across business functions can further increase strategic effectiveness.
- Inaccurate inventory planning: Overstocking or understocking leads to unplanned markdowns or unwanted price hikes. AI-driven forecasting helps retailers better understand consumer demand across channels and stores to improve product availability and implement a more robust overall pricing strategy.
- Increasing costs: Volatility in input costs such as labour, raw materials, and shipping directly impacts margins. AI-based pricing software facilitates dynamic real-time product pricing adjustments to adapt to rising costs and maintain profitability.
An increasing focus on sustainability
Every year, approximately one-third of the world’s food supply goes to waste making it critical for companies to begin identifying and tackling the causes of food waste across the supply chain to reduce C02 emissions and spoilage.
“Through advanced demand forecasting and supply chain planning, RELEX has helped customers drastically reduce the volume of perishable goods left unsold and destined for waste, effectively preventing the emissions of 950,000 tons of C02 equivalents. This achievement aligns with the United Nations Sustainable Development Goal to halve food waste by 2030,” Kärkkäinen said.
“Additionally, as approximately 70% to 90% of RELEX customers’ emissions stem from purchased goods, RELEX is enhancing its platform to enable businesses to assess and understand the CO2 emissions associated with these goods.
“By incorporating greenhouse gas metrics into planning and optimisation solutions, and through improved distribution planning that considers emissions data, RELEX empowers customers to make informed, sustainable decisions that reduce their environmental impact.”
What’s next for RELEX?
RELEX has recently undergone a supply chain transformation project with Snackbrands, one of Australia’s largest suppliers of snack foods, which produces more than 200 million packets per year.
“Back in 2014, Snack Brands was starting to feel the squeeze, as the existing spreadsheet-based planning approach was showing its limitations. Planning was simply too time-consuming and didn’t offer any real decision-making support,” Kärkkäinen said.
“Dealing with new product introductions, frequent updates to flavours and packaging, and regular product deletions were constant challenges. Additionally, the short order lead times, often around 48 hours, added significant pressure to their operations.”
From the start of the pilot to the go-live, the whole process took one year and now RELEX provides up-to-date optimised production plans every week, covering two factories and 12 separate resource operations.
“Snack Brands also uses RELEX to sequence like products, and products that use the same equipment. The software optimises production around shutdowns and planned maintenance to ensure the right amount of stock is built to service customers while these essential works take place. This represented a fundamental shift from the company’s previous reliance on spreadsheet-based approaches, offering a more advanced and efficient solution for planning and analysis.”