The online grocery business of Swiss Migros saw a 40 percent increase in customer orders in the second quarter of 2020 compared to the same period last year. “We were consistently booked up more than three weeks in advance,” reported Beat Marending, Head of Goods Procurement, Migros Online, at this week’s German-language “ECR Tag”, which was hold as online-only conference hosted by GS1 Germany with more than 800 participants.
What troubled Migros Online the most were the very high order peaks on Fridays and Mondays. Since, thanks to the optimisation and automation of orders with the AI-based solution from Relex, the delivery of goods also increased exorbitantly on the days when the goods were needed – namely on Fridays and Mondays. Migros Online did not struggle with a shortage of goods, but of staff: “Since the same employees do the receiving of delivered goods and carry out the picking of customer orders, we always had too few staff on these days, but too little capacity utilisation between Tuesday and Thursday,” reports Beat Marending.
At this week’s ECR conference, he and Dr Timo Ala-Risku from Relex showed how Migros Online tackled the problem together with the Finnish optimisation specialist. The use of Relex in the online area of Migros is not new: Migros had already opted for automated forecasting and replenishment with Relex in 2016 for its online unit, which was then still called LeShop. Since Migros does not take a best-of-breed approach to IT, but often gives SAP the edge if feasible, the decision was a little sensation in retail technology at the time.
Supply cleverly decoupled from demand
Until now, Relex was used at Migros Online in such a way that delivery was optimally coordinated with expected demand – just in time. However, in order to allocate the workload of the employees more evenly over the week, Relex worked together with Migros on an assortment-based delivery pattern.
“We don’t want to compromise on fresh goods, so we haven’t changed anything here,” explains Beat Marending. The customer will continue to get the fresh food as fresh as possible. The situation is different, however, with various assortment components of the dry goods range. Here, the partners not only parameterised the software so that these are now delivered on the weekdays Tuesday, Wednesday and Thursday, but also less frequently and in larger quantities. And this still exactly follows the reliable forecasts from the Relex platform – but now in a more cumulative way.
“Now, for example, sweets are only delivered once a week, muesli three times a week and bread continues to be delivered daily,” explains Timo Ala-Risku from Relex. By bundling demand according to product range, the situation at Migros Online has improved considerably. “We now have significantly fewer staff bottlenecks,” Beat Marending reports happily.