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Ahold Delhaize USA eyes smarter supply chain

Retail Business Services arm to deploy AI-powered replenishment system

Ahold Delhaize USA’s Retail Business Services (RBS) plans to roll out a new forecasting and replenishment system across the company’s Food Lion, Hannaford, Giant Food, Giant/Martin’s, Stop & Shop and Peapod grocery banners.

RBS said Wednesday that the technology, from Helsinki, Finland-based Relex Solutions, will enable a holistic view of sales and inventory data and empower real-time decision-making across the Ahold Delhaize USA supply chain. That will mean a shorter time frame for food to get from suppliers to stores, more consistent in-stock levels and fresher product for customers shopping in stores or ordering groceries online for delivery or pickup.

Food Lion and Hannaford have been using a Relex solution for fresh distribution centers (DCs) — produce, meat, deli, seafood and bakery — since early last year. Now Salisbury, N.C.-based RBS aims to scale the system to support each of Ahold Delhaize USA’s retail brands across perishable and center-store categories.

“We’ve piloted this forecasting and replenishment tool from Relex and had great success at Hannaford and Food Lion in their fresh departments. The plan is, over the next three years, to move our whole business to this tool, which will drive one logical view of inventory — whether it’s a store, a wareroom, a distribution center or a product in transit — and tying that to our commercial plans,” said Chris Lewis, executive vice president of supply chain at RBS.

“So on the fresh side, for example, it can provide added days of life for produce when customers get home,” he explained. “And on the non-perishables side, it can optimize inventory to improve availability and reduce any excess inventory in the system.”

RBS said Relex’s system delivers integrated, end-to-end forecasting and replenishment for fresh and packaged groceries using a flexible rules engine, which allows the local retail brands to cater to their customer base. Incorporating artificial intelligence, the technology learns patterns and is able to make increasingly sophisticated forecasting decisions.

“What we piloted was really the first phase of what will be the full rollout. We focused just on the DC forecasting and replenishment, getting products into the distribution center,” said Andre Shaw, senior vice president of demand management at RBS. “That went very well, but it was kind of just dipping our toe in the water. What we really want to get to is one logical view of inventory. Now we will be coming back to Hannaford and Food Lion, starting with the customer first. We’re going to replace our F&R systems in retail and drive that back through the entire supply chain, all the way to our manufacturers and farmers.”

In deploying Relex to other Ahold Delhaize USA supermarkets and online grocer Peapod, RBS will start at the customer level and then expand across product categories and the supply chain, whereas the pilot with Hannaford and Food Lion focused just on fresh at the DC level, Shaw noted.

“We’ll have one forecast that is all driven by expected customer demand at the store-item level and aggregate that through the whole supply chain,” he said. “We started with fresh at Hannaford and Food Lion, and then we’ll start to cascade to other brands in both fresh and center store.”

One impetus for single-view forecasting and replenishment was the coming together of two different supply chains after Royal Ahold and Delhaize Group completed their merger in July 2016.

 “We’ve always talked about having consumer demand-driven replenishment and the supply chain being driven by a store item-level forecast. We just hadn’t been able to find the technology,” explained Shaw. “Now we’ve finally found something that we think could do it.”

Ahold Delhaize USA is the first major U.S. retailer to adopt the Relex system, which has primarily been used by European companies. 

“Relex is pleased to be the provider for Retail Business Services, as the company transforms supply chain operations to the benefit of Ahold Delhaize USA’s local brands and their customers,” said Michael Falck, president of North America for Relex, which has its U.S. office in Atlanta. “Together, we share a common mission to optimize inventory levels and ultimately improve the shopping experience for consumers, no matter how they shop.”

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