No-touch supply chain is still a long way off

Artificial intelligence (AI) offers limitless possibilities, it seems. Not so long ago, we appeared to be moving rapidly towards a supply chain where smart machines would completely take care of planning. In practice, it seems we are still a long way from that. Especially in these uncertain and unpredictable times, human intervention is indispensable. For now, that smart machine appears to be nothing more than a handy assistant.

Realco is a cooperative of supermarket owners with 180 stores and three warehouses in northern Italy. For determining stock levels and placing purchase orders, the company could only use its Enterprise Resource Planning system (ERP) and Warehouse Management System (WMS) for many years. “Planning was largely a manual process,” says Elena Bassoli, Logistics Manager at Realco. “To establish purchase orders, the planners used historical sales data, supplemented by information on upcoming promotions. But because information on, for example, delivery schedules and promotions was not always in the ERP system, they also had to extract information from spreadsheets, loose notes and memo sheets on their screens.”

During the pandemic, this modus operandi no longer proved adequate. Realco saw some items running out of stock unexpectedly quickly, while at the same time distribution centres (DCs) were bulging as other stock levels were rising rapidly. Bassoli: “It was clear that we needed a more sophisticated and thought-out solution that would allow us to generate a more accurate forecast. We decided to immediately look for a state-of-the-art solution with AI. We found that at Relex Solutions.”

Realco deploys the Relex solution to replenish stock in its distribution centres. Using machine learning (ML), the tool generates a forecast, which uses external data on, for example, the weather in addition to internal data. This forecast is then automatically translated into a purchasing proposal. “We forward as many as 91% of the purchasing proposals directly to our suppliers without a single adjustment. As a result, stock availability has improved by 4 to 5%, while at the same time inventory has decreased by 10% in volume,” Bassoli states. “And in terms of sustainability, it is worth mentioning that we are now throwing away 8% less food.” … … …

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