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Case Rossmann
Flexibility and Adaptability Key to Successful Supply Chain Management

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30%

reduction in inventory of promotional items

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10%

reduction of out-of-stocks during promotions

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85%

reduction of in-store availability issues within three months of implementation

Dirk Rossmann GmbH is Germany’s second-largest drugstore chain and operates over 4,000 stores in eight countries. Measured by turnover, the company ranks among Germany’s ten most important grocery retailers.

Rossmann had been relying on outdated supply chain planning software with multiple disconnected modules as well as add-ons developed in-house for promotions and seasonal management. This resulted in disjointed supply chain processes and created a challenge around consistency, with negative impacts on decision-making across all of their German stores.

Rossmann eventually reached a point where their existing solution could no longer be configured to satisfy their complex needs. The company initiated a vendor search process to identify a supply chain system that could bring their critical planning processes—from multi-echelon inventory management and replenishment to promotional and seasonal planning—into a single, centralized system. They also wanted a system that would provide a great deal of flexibility without needing extensive reprogramming or coding.

Rossmann established four initial requirements for the new solution:

  1. Drive higher availability
  2. Lower the inventory balance
  3. Improve management of promotional goods
  4. Deliver a single centralized system to manage both promotional and continuous delivery flows

Fast Roll Out, Fast Results

In 2015, after evaluating multiple vendors, Rossmann selected RELEX and became RELEX’s first large German customer. The system was chosen for its flexible and customizable forecasting, replenishment, and promotion planning features. RELEX began rolling out to all of Rossmann’s German stores and DCs in February 2017 and completed the process by September 2017. The initial project scope included RELEX’s integrated supply chain planning and promotion forecasting, as well as advanced features like inventory projections, capacity alerts, dynamic delivery schedules for warehouse ordering, and the ability to automatically consider supply network changes in capacity planning and replenishment processes.

RELEX began calculating orders for Rossmann’s full active assortment (approximately 35 million product-locations). This enabled the Rossmann team to fine-tune their configurations and review the ordering processes in all categories before moving forward. Not only did this give the Rossmann team assurance of calculation quality before each go-live but they also were able to avoid any deterioration of system performance with each update.

The RELEX system’s integrated forecasting and replenishment delivered almost immediate availability benefits. During the first December holiday shopping season after implementation, Rossmann was able to reduce stock-outs by 17%, and by the first Easter shopping period after implementation, stock-outs were reduced by 25%. Similarly, the number of stores experiencing availability issues was reduced by 85% within three months of implementation. All of these availability improvements were achieved with slightly lower inventories than before the RELEX go-live.

Additionally, Rossmann had requirements that were specific to their business model and established processes. Because Rossmann relies heavily on promotional campaigns, they had established separate delivery flows for promotional vs general assortment inventory and required the ability to individually control each.

The RELEX system provided increased visibility into both upcoming capacity bottlenecks and demand forecasts, allowing the Rossmann team to improve the timing and prioritization of promotional ordering and deliveries. The system also incorporated shelf capacity information for both promotional and continuous items into the automated replenishment system. These RELEX features enabled Rossmann to increase efficiency, cut back on in-store shelving work, and relieve some of the pressure on logistics while reducing inventory of promotional items by 30% and cutting promotional out-of-stocks by 10% year over year.

The RELEX Advantage: A Flexible, Adaptable Solution

After roll-out was complete, Rossmann determined that RELEX’s greatest business benefit is the ability to “configure, not code” the system.

“Unlike our old inventory management software, RELEX gives us the ability to react quickly to new circumstances and requirements—and we don’t even need programming skills to do so,” says Jürgen Mattulke, Director of Supply Chain at Rossmann.

The RELEX system gives users the ability to configure the system for their business’s specific needs without significant reprogramming. By taking advantage of this feature, the company’s internal teams were able to create Rossmann-specific configurations with minimal RELEX involvement or even, in many cases, no RELEX involvement at all.

By keeping the specification, implementation, and testing processes mainly in-house, Rossmann not only was able to significantly reduce development costs but also enforce an internal culture of innovation, where ideas could be rapidly moved into production within days rather than months. The quality of the process changes was also improved. As a result, the company saved thousands of consulting days as well as valuable time that would otherwise have been spent in external meetings.

This level of control over the system freed Rossmann to experiment with RELEX’s functionality, run scenario testing with ease, and explore new concepts that could improve their supply chain processes. Rossmann was also able to continuously develop their business processes over time, creating hundreds of individualized configurations and control logics within the adaptable RELEX platform.

Mattulke notes, “RELEX’s greatest advantage is that we can easily adapt it for our business’s needs. It doesn’t force us to adapt our processes to the software like other systems do. Instead, we’re adapting the system to our processes.”

Successful Coronavirus Crisis Management Due to Flexible Updates

As it did for most retailers around the world, the coronavirus pandemic presented a significant challenge for Rossmann. To ensure essential products could reach their customers during the high-demand period, Mattulke’s supply chain team needed to rapidly adapt their automated processes. They developed a process that allowed them to manage order positions and deprioritize both nonessential items and items that were not an out-of-stock risk, which helped them manage their most critical product groups and secure availability with their suppliers. It took the team just two days from coming up with the idea to putting it into practice with new configurations in the system—as a result, they were able to react quickly to demand changes and minimize shortages and out-of-stocks during the acute phase of the pandemic.

The crisis also brought a massive shift in customer volume. When lockdowns were implemented, high-revenue stores in city centers saw an atypical 50% reduction in traffic, while suburban stores saw a similar increase in volume. Rossmann handled this shift by using RELEX to add forecasts at the store level, which enabled them to address each store’s needs by increasing or decreasing inventory to meet local demand.

“With RELEX in place across the business, we were able to successfully navigate the coronavirus crisis, support individual stores, and meet our customers’ needs with a high level of service during this unique time of shifting demand,” Mattulke explains. “This would have been impossible with our old system. The RELEX system enables us to react quickly to new requirements and circumstances. Its flexibility has given us opportunities to change and implement processes in ways that we hadn’t thought of before. This was particularly important when we needed to pivot quickly to meet changes in consumer demand that we hadn’t anticipated.”

The results

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Maintenance of 100% store automation

Simultaneously Rossmann achieved 95% distribution center automation.

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Reduction in stock-outs

Rossmann achieved 17% reduction in stock-outs during the first December shopping season and 25% reduction in stock-outs during the first Easter shopping season after implementation.