For shoppers, out of stock items are frustrating. For supermarkets, an empty shelf often leads to a reduction in sales and consumer loyalty. On the other hand, too much fresh produce results in vast quantities of unprocessed, healthy food wasted each year. Combatting this problem, Blue Yonder has implemented a fully automated ordering system across a number of Morrisons supermarkets. With the software generating up to 30% reduction in shelf gaps, the food and grocery industry has now recognised this remarkable achievement by awarding Blue Yonder the prestigious IGD Award for Supply Chain Innovation.
The challenge of fresh food replenishment has long been a problem for the industry, with supermarkets throwing away or donating over 200,000 tons of surplus food each year.
Until now, most supermarket replenishment software has been based on fixed rules, which often fail to accommodate unknown influences on consumer behaviour. For example, the "The Bake-Off" effect, where stores see a massive spike in sales of baking ingredients as customers attempt to replicate the bakes seen on the show at home. Indeed, with a plethora of external factors likely to impact when and why people buy specific products, and a limited shelf-life for fresh food, a new approach was urgently needed to prevent both empty shelves and unnecessary waste.
Artificial Intelligence (AI) fresh food replenishment model
Tackling this issue head on, Blue Yonder partnered with Morrisons to implement an innovative supply chain solution using AI and cloud technology. Optimising stock control decisions, the groundbreaking Replenishment Optimization software enables the interpretation of multiple data sets, based on what is actually happening at that point in time, and then intelligently converts this into decisions about how much stock to buy, in what location, and how often.
Placing customer needs at the heart of the model, working across 26,000 SKUs in 491 stores, the new system has generated up to 30% reduction in shelf gaps and two to three days’ decrease in stockholding in-store.
Recognising this achievement, the IDG - an education and training charity for the food and grocery industry - selected Blue Yonder and Morrisons as the winner of the Supply Chain Innovation category in this year’s hotly contested annual awards.
"We are very pleased that Morrisons and Blue Yonder’s work on the Morrison’s Ordering system has been recognised for the way it has improved availability and the customer offer, as well as reducing costs and stock levels."
Stuart Smith, Operations Director for Morrisons
The winners of the IGD Awards were selected by a panel of industry experts, including representatives from IGD and companies from across the food and grocery supply chain.
“The solution was developed with the customer firmly at the heart and the judges were particularly impressed by the boldness of the timelines. Having identified the business need, Morrisons’ innovative approach has helped it move from design to implementation very quickly, delivering impressive results for the business.”
Susan McGeorge, Supply Chain Director, UK & Western Europe at Kimberly-Clark
Blue Yonder’s Replenishment Optimization software doesn’t just enable grocery retailers to process vast volumes of data quickly, it also becomes even more effective over time. Indeed, through AI and machine learning the software can detect and respond to changing customer demand patterns. As a result, the project has been so successful that Morrisons will soon be introducing Replenishment Optimization across all product groups.
With the Replenishment Optimization software, Blue Yonder and Morrisons have been able to save staff time, cut stock issues and manage this all from a simple to use platform. Just as important, the work to create an automated system has made a pioneering change for the food and grocery sector.