RELEX has taken part in a study carried out by one of the leading universities in the field of logistics research, Aalto University School of technology, during spring 2014. The study focused on the use of automatic replenishment systems in the wholesale sector in the UK, Sweden, Norway and Denmark. Researchers interviewed supply chain, logistics, purchasing and IT managers from 40 companies in industries such as pharmaceuticals, food, construction and consumer goods. The results of the research indicate that although automatic replenishment is relatively common amongst wholesalers in the Nordics and the UK, many wholesalers face similar challenges when dealing with special situations.
According to the findings, the majority of companies (60%) with only a single warehouse are not yet using fully integrated forecasting and inventory management systems. In contrast, 68% of the companies that have multiple warehouses have a centralized replenishment system in place. Thus, the results suggest that companies with multiple warehouses are more likely to integrate their forecasting and replenishment activities. Approximately half of the wholesalers use their back-end ERP system for replenishment, as opposed to using a specialized system.
The research indicates that companies have encountered several mutual challenges with their systems. The main problems were related to campaign management (32.5%), seasonal product management (32.5%) and new product introductions (27.5%). Suppliers’ various delivery terms and conditions were generally perceived as a challenge as well. In addition, almost every wholesaler dealing with product spoilage felt that their system’s shelf life and batch balance management was inadequate. Earlier studies of the Nordic retail sector have indicated similar challenges. Even though they are very different from one another, retail and wholesale sectors are interlinked. Thus it can be assumed that some of the challenges are common.
Even though automatic replenishment systems are widely in use in the Nordic and British wholesale sectors, the results of the study suggest that there still is much room for improvement. At RELEX we believe that the performance of automatic replenishment in wholesale companies can be drastically improved. In particular special situations (e.g. campaigns and novelties) can be managed more efficiently, and that process flow and accuracy can be improved by deploying a specialised, user configurable system.
New technology in the form of faster, more powerful systems, promise to address many of the problems wholesalers face by allowing closer control over supply chain parameters (product/location/supplier/customer) and by giving near instantaneous analysis of any issue. RELEX is currently running a campaign looking at the supply chain challenges faced by companies in the wholesale sector and what the latest technology can do for them.