Managing a Complex DC Replenishment Operation
Tuko Logistics is a Finnish grocery wholesaler and supply chain service provider. It deals with some 1,600 suppliers, and receives 325 truckloads per day into a busy DC run by a staff of 600, 7 days a week.
Tuko supplies some 25,000 SKUs to nine major retail chains, comprising some 1,000 stores and additionally to around 5,000 enterprise customers (HoReCa + wholesale).
Tuko Logistics is a Finnish food wholesale and supply chain service operator providing purchasing and logistics services for retail outlets.
Serves 1,000 outlets and approx. 4,500 foodservice, hotel, restaurant and catering clients
Delivers approx. 25,000 products from 1,600 suppliers
Overall the company processes around 45.5 million order rows per year ranging from fresh food to more ambient products. The high volumes, short delivery times and shelf lives of the fresh food items, demanding service levels and high product quality, are a challenge for the replenishment team.
“Our challenge was to manage upstream and downstream simultaneously,” says Tuomas Brunou, Planning Manager at Tuko Logistics Cooperative. “Our suppliers were guessing or forecasting our needs and our customers’ needs without proper data. By integrating the whole supply chain and sharing data each way it helps everyone plan better and sell more.”
Tuko needed a system that allowed it to:
- Plan its capacity and workforce
- Handle the purchasing process and optimize purchasing costs
- Optimize inventory and stock values
RELEX offered that and greater scope for automation, more optimization of the replenishment process, reduced working capital, process flexibility, multi-level supply chain integration and, critically batch-level monitoring of spoilage, key to improving freshness throughout the chain. Data could also be shared more easily with suppliers – a key objective.
“Our suppliers were guessing or forecasting our needs and our customers’ needs without proper data. By integrating the whole supply chain and sharing data each way it helps everyone plan better and sell more.”Tuomas Brunou
In 2012 Tuko Logistics decided to implement the RELEX system to increase automation of its own central warehouse replenishment. Previously inventory levels, sell-by dates and other replenishment information were held in separate systems; combining and analyzing this data manually was time consuming.
“We wanted to integrate and synchronize our daily operations tightly with our customers’ business processes,” says Tuomas Brunou. “We needed our central warehouse replenishment to reflect customer-specific forecasts that factored in their promotions and activities.”
RELEX’s solution uses over 3,000 forecast model combinations and numerous parameters including historic sales patterns, seasonal effects, supply days, minimum order quantities, freight-free limits etc.
In early 2014, Tuko extended its collaboration with customers Wihuri, Stockmann and Suomen Lähikauppa; all three are also shareholders in Tuko and use RELEX systems. Forecasts calculated by these individual customer chain systems are now fed directly into a central RELEX system. There they are combined with historical sales data, which allows highly reliable forecasts to be provided.
The resulting store-level order forecasts are fed into Tuko’s central warehouse as delivery plans. Combined with other central location information, these then form the basis of Tuko’s own purchases and are used to enhance collaboration with suppliers. “Tuko Logistics is a forerunner in fully integrating supply chain management from supplier to POS,” says RELEX COO Tuomo Pesonen.
improvement in forecast accuracy
decrease in inventory
Purchase order automation levels were pushed to between 80% and 90% while availability stayed at over 99%, and spoilage was cut by around 40%.
Inventory has fallen 8-10% (capital cut 3.1%), forecast accuracy has improved significantly 2-3 weeks ahead.
Peak-time picking and goods-in capacity has been optimized. The planning team has slimmed down by 50% (from over 20 to under 10 with RELEX) through natural turnover.
Some suppliers now contribute to costs in exchange for access to forecasts because they’re so accurate it helps them plan and save money.
“RELEX has delivered measurable value. It’s easy to demonstrate its contribution to the bottom line; ours, our suppliers’ and our customers’. It has paid for itself many times over. It’s that simple.”Tuomas Brunou
RELEX delivers measurable results in months
At RELEX we have helped businesses to master the retail and supply chain challenges they face – indeed the more complex the environment, the bigger the impact of RELEX. Working with us is easy, and you get measurable results in months. If you want to improve your company’s profitability fast, contact us to discuss more.