INCREASING THE EFFICIENCY OF EUROPEAN FOOD SUPPLY CHAIN THROUGH IN-MEMORY SUPPLY CHAIN PLANNING
Acronym: Spoilage Down
Type of the action: SME Instrument Phase 1
Start date of the project: 1.2.2015
Duration of the project: 4 months
Summary of the action context and objectives
RELEX has built an innovative supply chain management solution for the demand forecasting and inventory optimisation of retailers and wholesalers. Unlike traditional supply chain management solutions, RELEX’s is built on a unique columnar in-memory database and uses optimisation algorithms based on the supply chain research of the company founder. As a result, it is less costly, more flexible and much faster than traditional disc-based solutions.
RELEX’s main future challenge is to develop the solution’s functionalities and scalability to better serve food retail and wholesale sectors, where the business benefits are the greatest, and develop a marketing and deployment process and organisation to support rapid internationalisation. The project enhances RELEX’s capabilities to address the whole European food supply chain market.
The objectives of the project were to:
1) prioritize product development requirements for maximum market impact by listing development options and rating them with (prospective) customers,
2) generate a market entry plan based on macro level data on numbers and company sizes of food retailers and wholesalers in EU countries,
3) select the best way for scaling up the processing capacity by evaluating product development needs for using clustered servers or public cloud server capacity and comparing cost structures of these options, and
4) generate a feasibility study with a business plan.
Work performed during the reporting period and main results achieved so far
The project was divided into six tasks.
In Task 1 a market study was conducted to build an accurate picture of the EU market. The market study consisted of market potential analysis of 28 EU countries, review of competitive situation and a survey where prospective customers were interviewed. As a result, France, Italy, Spain, the Netherlands and Poland were identified as the most attractive new markets for RELEX with a combined calculated market potential of approximately 400 M€. From competitive perspective, RELEX is able to differentiate with its in-memory-based solution and offering that focuses on food retailers and wholesalers.
In Task 2 a market entry plan based on the market study results was created. The market entries were prioritized based on the competitive situation, market maturity and market potential in the most attractive five countries. The Netherlands, Italy and Poland were chosen to be the first markets to enter and also a market entry strategy and business plans for each new market were formulated.
Task 3 product functionality development areas were prioritized based on identified customer needs in conducted customer surveys. Development areas were mainly identified within existing forecasting and replenishment modules. For example hourly forecasting or real-time ordering were identified as new possible functionalities.
In Task 4 scalability methods of acquiring more capacity or developing clustered calculation for private or public cloud were compared. Current server capacity is considered sufficient at the moment, but some of the development plans would mean even more granular level calculation operations, which would increase capacity requirements in the future.
Task 5 consisted of compiling a report of feasibility study results and creating a business plan to commercialize the innovation. Created business plan takes into account corporate finance questions based on which the larger main project can be realized.
Task 6 consisted of dissemination and project management of the project. The project was delivered in 4 months.
The study improved RELEX’s understanding of market potential, competitive environment and customers’ needs. As a result of the study RELEX now has a prioritized product development roadmap and business plan for the new markets.
Expected final results and their potential impact and use
When launched, the solution will enable food retailers and wholesalers throughout the EU to decrease spoilage, increase profits and improve customer service. In the EU scope, spoilage reduction would amount to 11–30 million tonnes p.a. This would reduce CO2 emissions by 22–60 million tonnes.
For RELEX, the market potential identified in the food retail and wholesale sector enables the company to continue at its current exponential growth
This project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No 662454.