Case Derome: Ensuring a Successful Implementation and Change Management During Rapid Growth

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Since being founded in 1946, Derome Byggvaror, a Swedish trade builders’ merchant, has been growing exceptionally fast. During 2017, the company almost doubled its store count, from 20 to 39, increasing its revenue by 29%.

In 2015, Derome set out to improve its supply chain processes knowing it needed an agile solution to support its growth as keeping track of stock levels without an inventory management system was difficult.

Derome and RELEX began working together in January 2016 to improve purchasing and replenishment for stores and DCs. At the outset, Derome wanted to maintain high availability and good presentation stock, however, its processes were labor intensive and based on average sales and inventory balances.

Feeling too dependent on the expertise of individual staff, Derome moved to centralize its processes, gather all its data and business knowledge in one place, and improve information sharing between all its stores and the DC. The retailer chose to automate routine replenishment with a central team managing order proposals, while still giving store managers the ability to influence the process.

Derome Byggvaror at a Glance

A Swedish trade builders’ merchant

  • Owners: The Derome Group, a family-owned timber company
  • Stores: 40
  • DCs: One central DC and three regional DCs doubling as stores
  • Employees: 1,100
  • Turnover: €270m

www.deromebyggvaror.se

“The RELEX team’s skills and experience in implementations, project management and planning were of the high standard we expect at Derome. In fact, I’ve never worked with a better supplier.”

– Torkel Martinsson, Project lead, Derome

Dealing with Experts

The first workshops were held in February 2016. Derome remained in the driving seat throughout and the joint team focused on those areas where optimization could deliver the greatest benefits. Only the essential functionalities were implemented, with the team adding further functionalities only when needed.

Having worked with RELEX’s senior experts at the outset to lay out the project requirements, Derome was surprised to learn that RELEX sent a new team that hadn’t taken part in the initial discussions during the sales phase.

“I must confess I wondered if we’d have to start all discussions again from scratch,” Torkel Martinsson, Project lead at Derome says. “But we quickly realized we were dealing with true experts at every level of the organization. Yes, the project team had to get familiar with our challenges and the fine details, but they did it very fast and made sure they knew exactly what we wanted.”

“The RELEX team’s skills and experience in implementations, project management and planning were of the high standard we expect at Derome. In fact, I’ve never worked with a better supplier.”

If an issue arose during the project, it was flagged immediately to make sure there were no surprises later on.

Breaking down silos

Derome wanted to involve its entire organization knowing that the project would extend beyond its supply chain operation.

“We’re very proud of being a family-owned company so we wanted to make sure our culture wasn’t jeopardized when implementing a new system,” says Martinsson. “RELEX has a similar culture, they understood our concerns and supported us all the way through the change.”

To ensure a smooth transition Derome selected store managers to be advocates for RELEX. “It’s often better when colleagues can discuss directly with their peers working in the areas that see the most changes, rather than just sending people from the HQ,” says Martinsson.

Derome put the emphasis on getting things right rather than rushing the project. First, when piloting the system, it included a limited number of stores with a subset of their suppliers. Then more suppliers were added gradually and product lines optimized, until the entire inventory was included. This was repeated across the remaining stores until the rollout was successfully completed.

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Availability

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Average inventory value

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Inventory turnover

Results

Derome achieved its primary goal – taking control of its supply chain as it expanded from 20 to 40 stores (as of April 2018). The company is using RELEX in various aspects of its new store planning, smoothing the path for its rapid roll out of new stores and business growth.

Prior to RELEX the company reallocated stock between stores to maintain good availability. Even though it was not a major goal, RELEX improved availability by almost 6%, inventory turnover by almost 15% and saved over €100,000 p.a. at the DC by optimizing stock allocation to stores.

Supply chain management has been centralized, the replenishment process has been largely automated, and there’s much better visibility of the inventory. All order proposals are now generated in RELEX, minimizing the risk of orders being missed.

Store staff have more time for customers, planning promotions and optimizing store space. Supply chain staff meanwhile can focus more on areas like sourcing and negotiations that generate far more value than manual tasks.

“Working with Derome has been a textbook example of how a retailer and its solution provider can work together to implement a system successfully,” says Lars Sandin, Project Manager at RELEX Solutions.

Derome employees

The Results

  • Availability increased by 5,79% (now 94,4%)
  • Average inventory value decreased by 11,64%
  • Inventory turnover increased by 14,59%
  • Store-to-store reallocation logistics savings at DC: over €100,000 p.a.
  • ~50% decrease in time spent on purchasing
  • No purchases missed because of staff absences
  • Much better control of late deliveries and products with best-before dates

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