RELEX Solutions Acquires Optimity for Unified Upstream Supply Chain Planning and Optimization Capabilities

RELEX Solutions, provider of unified supply chain and retail planning solutions, has announced that it has acquired Optimity, a supply chain planning and optimization provider. The acquisition will bolster the RELEX retail and supply chain platform with daily production planning, optimization, and production scheduling capabilities which are crucial for the end-to-end consumer goods value chain. 

 

“The consumer goods industry is incredibly dynamic and complex. Acquiring Optimity will seamlessly link downstream demand with upstream planning, so consumer goods companies can more accurately predict consumer demand, optimize production plans and schedules, adjust inventory levels, and respond quickly to market changes or unexpected disruptions,” said Mikko Kärkkäinen, co-founder and group CEO, RELEX.“This acquisition also further accelerates our vision towards an adaptive, autonomous and synchronized supply chain unifying demand and supply planning decisions in one platform to minimize all wasted cost and product. We warmly welcome the Optimity team to RELEX.”

Optimity, with global headquarters in Sweden and offices around the world, offers a broad supply chain planning and optimization solution specifically for manufacturers and distributors. Optimity enables customers to make optimal supply chain decisions from strategic levels to detailed production scheduling. Their offerings include demand planning, production planning and scheduling, supply planning, distribution planning, inventory optimization, and S&OP. With 80+ customers across the food and beverage, and complex manufacturing industries, Optimity’s experience augments RELEX’s expertise across retail and consumer goods markets.

 

The acquisition brings together a highly complementary offering between the two organizations, enabling RELEX to extend and deepen its production planning and supply chain optimization capabilities, such as synchronized daily production planning, optimization and scheduling in the food & beverage and manufacturing sector. 

 

New or expanded capabilities within the RELEX unified retail and supply chain planning platform from Optimity include:

●     Production planning: Create optimized production plans from up-to-date forecasts to balance operational costs and flexibility while considering production restrictions, material constraints and business priorities.

●     Production scheduling: Generate and manage optimized production schedules built around constraints to reduce changeover time and bolster manufacturing efficiency.  

●     Network balancing: Rectify imbalances in complex distribution networks to minimize risks, reduce costs, and boost operational efficiency.

●     Distribution planning: Gain complete distribution network visibility to make smarter, proactive decisions aligned with business objectives and customer service goals.

●     Purchase planning: Balance supply-side complexity with end-to-end visibility to pinpoint the most efficient and profitable way to fulfill demand plans and customer obligations.

 

“Our depth in some of the most complex consumer goods industries like bakery, ready-made meals, protein production and industrial manufacturing complements the vast understanding of consumer demand that RELEX has, based on their impressive expertise managing more than $700 billion of demand in grocery alone,” said Christer Liden, CEO, Optimity. “We are thrilled to join the RELEX team and further optimize the consumer goods value chain together.”

 

To learn more about the acquisition, please visit this page.

RELEX Solutions is able to provide insights to diminish disruptions to business operations

As the Philippines continue to experience high inflation, recording 8.6% in February 2023, Filipinos are expected to adjust their budgets and prioritize essential goods and services. While this poses an opportunity for grocery retailers to increase sales, the ongoing global supply chain disruptions have also made it difficult to keep inventory high and prices low. 

 

According to the World Economic Forum, the invasion of Ukraine is a primary cause of much of the energy and food price inflation in many countries and is fueling a global food crisis. Extreme weather also continues to disrupt the global supply chain by impacting major shipping routes and crop yields. In the Philippines, storms in the 2021-22 crop year caused sugar shortages, resulting in skyrocketing price increases from Php 54.5 to Php 89.5 per kilo for refined sugar.

 

As inflation is expected to remain high in 2023, economists anticipate a recession in major economies, which will certainly affect the developing world. It is also likely this will have a significant impact on grocery retailers. Fortunately, machine learning and AI (artificial intelligence) technology,  like the technology used by global supply chain leader RELEX Solutions, is able to provide insights to diminish disruptions to business operations. 

Automated demand forecasting reduces operational costs 

 

Amid rising costs of goods and services, Filipinos are becoming more price sensitive, seeking sales and markdowns and assessing which shops or channels offer the most competitive prices. Following recent gas price hikes, many online delivery platforms increased their fees resulting in  changes to customer shopping patterns, who are now opting for in-store shopping. With more foot traffic expected in groceries and supermarkets, keeping a high inventory at a low price becomes essential. 

 

In order to adapt quickly to these and other changes, retailers should leverage automation and artificial intelligence-driven insights to cut down operational costs and lower the cost of goods and services. AI helps predict the impact of demand drivers such as promotions, prices, product displays, and weather data to accurately forecast demand and optimize replenishment. For retail operations, this means that they can better allocate their manpower and avoid losses. 

 

AI allows more efficient inventory management for omnichannel 

 

While retailers are expected to have an increase in foot traffic, online channels will continue to be prevalent due to the convenience and savings they offer through digital promotions. According to a report by Meta and Bain & Company, the Filipino digital consumer population is the second largest in Southeast Asia at 69 million and is expected to continue growing its gross merchandise value by 20% by 2027. 

 

With the increased demand for omnichannel, retailers should focus on removing silos within their e-commerce and brick-and-mortar businesses and start managing both as a single, unified business. This transformation is a laborious task that requires accurate, real-time reporting to adequately manage customer expectations, making it essential for retail brands to integrate solutions powered by AI. The right tools ensure fulfillment of online orders from stores, customer backorders, and online orders are correctly accounted for in forecasting and inventory planning, even as products are redirected from one fulfillment center to another.

 

AI enables a better customer experience

 

When retailers are out of stock, they’re losing sales and possibly customers. The efficiency of a retailer’s replenishment operation is critical to maintaining customer satisfaction and business profitability. However, a recent study by RELEX Solutions found that close to 50% of retailers don’t know how much stock they have in each store, revealing a gap in the strategic approach to accurate and effective store ordering among these companies.

 

To stay on the consumers’ radar, retailers need to prioritize efficient replenishment systems that address customer needs without burdening resources. With consumers being able to shop anytime and anywhere, AI and machine learning technology help brands keep the right amount of inventory, forecast changes in demand, and adjust replenishment orders, driving improvements to service, sales, and customer satisfaction. 

 

“The evolution of artificial intelligence in retail is very timely due to the need for businesses to save up money as current economic conditions push customers and partners to minimize expenses,” said Kristie Davison, Vice President for APAC at RELEX Solutions. “AI helps retailers eliminate excess costs and manage their cash flow for better business sustainability.”

 

The Common Challenges of a Filipino Retailer

 

A recent study by the World Remit found that Filipinos spend 100% of their salary on gifts for family and friends during the holiday season — creating sales opportunities for retailers recovering from the pandemic or starting new ventures. As consumers increasingly become more comfortable going to shopping malls, shop owners need to use strategic in-store and online promotions to effectively cut through the noise and catch customer attention. 

 

RELEX Solutions, a global leader in supply chain and retail planning, breaks down retailers’ most common promotions questions and shares a few tips to generate sales during the holiday season. 

Question #1: How can I test the effectiveness of my promotion? 

 

Filipinos enjoy indulging during the holidays, but the Philippines is a very price-sensitive market when it comes to consumer goods., This makes it crucial to identify proper price points for products sold. In fact, recent research from IPSOS shows that Filipinos are even more concerned about rising commodity prices than the effects of the pandemic. These concerns put pressure on local retailers to continue to run promotions and keep their prices low to attract more customers and increase sales. 

 

But how does one test the effectiveness of these promotions? 

 

A good place to start is running an A/B test.  Retailers can set up experiments across select stores and timeframes to collect data that will be used in analyzing the potential sales impact. Another more challenging solution involves building detailed models that compare baseline and promotional demand for each item and store. Brands can then observe alternative scenarios and measure the effects of running or not running a specific promotion. In turn, consumers can decide on purchases based on their budget, which translates to sales for brands. Regardless of the approach, what remains crucial is the ability to calibrate terms as needed. 

 

Question #2: How can I convert first-time customers into loyal customers? 

 

Consumers are exposed to endless promotions as the holiday shopping season comes into full swing. Alongside competitor brands, promos within the same brand also divide a customer’s attention. This results in low sales uplift that is often barely enough to compensate for the price reductions, eventually leading to a loss. 

 

Retailers must ensure their omnichannel promotions complement each other to hit maximum profitability with minimal strain on resources — all while delivering the best experience for customers. Data analysis from past promotions can also be studied to understand which practices should already be stopped or started. This includes assessments on price, tactics, and other features that could generate the best results. 

 

Question 3: How do I know if I’m running too many promotions?

 

Only data can tell. When products with weak promo potential are advertised too often, it can threaten profits and margins. Insights from previous promotions help, but there are also several factors that could make manual analysis tricky. Such factors include sales comparisons across the different seasons of the year, as well as the frequencies of discounts given during the pandemic. 

 

Retailers need to keep a rapid pace to contend with their competitors, so running complex, cumbersome manual experiments can be a waste of valuable time and resources.  This is why digitization has played a crucial role in trying to optimize sales and promotions for retailers.

 

“Promotions, as tough as they are, play a considerable role in increasing sales and store traffic,” shared Kristie Davison, Vice President of Sales for APAC at RELEX Solutions. “That’s why retailers need to embrace promotions despite the competition and market challenges. While the strategies listed above will help, integrating a dedicated promotions tool will unlock even more potential and provide a wealth of insight and analysis to position relevance and engage customers seamlessly.”

 

How retailers can beat inflation this Christmas

 

Christmas season is always a business growth opportunity for many retailers due to a sure spike in consumer spending. In fact, Filipinos were found to spend 331% of their monthly income during the holidays in 2021. Yet, a successful season for many retailers this year is threatened by the continuing impact of COVID-19 on the supply chain, along with the current economic challenges such as soaring inflation, increasing price of petroleum products, and weakening consumer confidence. 

 

“Similar to retailers globally, Filipino businesses also grapple with the increased supply chain challenges from both the pandemic and the ongoing conflict between Ukraine and Russia. What’s more, consumers are equally experiencing the brunt of this situation, making the climate harsher for many enterprises,” shared Kristie Davison, Vice President Sales Asia Pacific at RELEX Solutions. “The most efficient way for retailers to navigate these uncertainties would be to plan how to maximize sales while minimizing loss.”

Seasonal inventory management is often difficult due to advanced purchasing before the season and a high risk of the residual post-season stock. Christmas, in particular, means that there’s a high turnover of product lines from one season to the next. Think about how a lot of smartphones are sold during the holidays but the selection is always different per year. Furthermore, brands also often launch new products that are systematically pushed throughout the -ber months as seen in 11.11 and 12.12 promotions, requiring retailers to assess demand for each. These situations highlight how crucial demand forecasting is in order to get the right amount of stock-keeping units (SKUs) and ensure a return on investment. Unfortunately, many retailers manually forecast demand, posing high risks of inaccuracy that can lead to over- or understocking. 

 

Automating demand forecasting helps businesses achieve optimal outcomes by improving the on-shelf availability of seasonal products and reducing residual stocks when the season ends. A good forecasting model for seasonal planning includes a reference product that can be specified against seasonal or event-specific indices to calculate data-backed forecasts for new items. Empowering businesses to search the historical assortment for items with similarities to those being introduced and build a forecast can potentially drive significant improvements to availability and inventory values while considerably reducing markdowns.

 

With Christmas spanning four months in the Philippines, smart replenishment also contributes to improving a brand’s responsiveness to consumer demands. A good solution is to deliver only a part of the forecast demand to stores at the beginning of the season to avoid moving goods among shops. Once holiday shopping starts, SKUs at individual stores can be replenished through pull control that is based on the latest sales, store-specific forecasts, and actual inventory. This enables retailers to effectively respond to local conditions with respect to external factors such as weather or a change in competition for an individual store. When products are bought in advance, push control should be used toward the end of the season to ensure that seasonal products don’t pile up unnoticed in the central warehouse. An ideal management system allows allocations to be directed to the stores with the best chances of selling the products such as those with the highest sales and no excess inventory.

 

“It is important to remember that a model of operations is not necessarily the best one simply because it has been used for years,” added Davison. “Digitizing seasonal inventory management helps retailers make seasonal sales sustainable, achieve better results, and prepare well for such events.”

 

RELEX Solutions is a market-leading supply chain & retail planning platform that helps retailers and consumer brands unify their planning, from demand and merchandise to supply chain and operations, for maximum customer satisfaction at the lowest operating cost.