Supply chain software house Relex raises €500M

One man's trash is another man's treasure. Global supply chains may be bending to the point of breaking as the folly of just-in-time manufacturing is exposed by the pandemic, but it's also a great time to raise money to solve the problem.

Helsinki based Relex Solutions today announced the successful closure of a €500M funding round led by Blackstone Growth (BXG), Blackstone’s growth equity investing business.

Mikko Kärkkäinen, Group CEO and co-founder of Relex Solutions told Digital Nation Australia, the business specialises in optimising the finished goods supply chain of consumer goods.

"In practice, we work with over 300 retailers and consumer goods producers globally – for example in Australia we work with Coles and Baby Bunting. We have 16 offices globally and recently also launched an office in Melbourne to serve the Australian market better. Now a lot of our work has focussed on building supply chains that allow companies to better operate profitability within the growing complexity with increasing omnichannel retail."

Kärkkäinen said COVID-19 has had major impacts on both demand and supply in most retail sectors. "I have been impressed by the adaptability and resilience of our customers – on how quickly they have been able to understand the demand shifts."

"Baby Bunting is a great example of having a Relex roll-out during the Pandemic and being able to increase product availability and reduce stock even in extremely difficult conditions. The shift and Baby Bunting success are also shown in their recent results release presenting increased sales even though having 60 percent of stores closed, which signifies quite a successful shift online."

The money Relex has raised will be used to hire hundreds of developers and subject matter experts to grow its technical team which currently stands at about 400 people out of a total workforce of 1300. 

The company says its AI-driven, cloud-based platform helps retailers and brands and brands automate and optimise their demand planning, merchandising, supply chain, and workforce planning.

The solutions deploy AI-driven demand forecasts to automate data-based decisions across core processes in stores and distribution and fulfilment centres, from allocations and replenishment to planograms and workforce planning.

“Retail and supply chain planning used to be dominated by incumbents and their legacy technologies, but Relex's growth into a market leader shows that the industry is ready for a change,” said Kärkkäinen. 

“Consumers are changing their behaviour and preferences at an unprecedented pace. With the power of smart automation and algorithms, we want to help our customers adapt their offering to their customers’ changing needs – what we call “living retail.”

He said customers value technology that enables them to respond quickly to external disruptions and drive rapid innovations in sales and fulfilment channels, product offering, and store formats without compromising supply chain, merchandising, and operational planning.

“Blackstone has spent significant time in the retail and supply chain planning market and have closely followed Relex growth into a market-leading position."

The support of Blackstone’s capital, expertise, and global network will help Relex to cement its position as a market leader and to expand the number of products it can offer its customers, according to Paul Morrissey, who leads European investing for Blackstone Growth.

Food waste

Estimates suggest food waste accounts for 8-10 percent of all global greenhouse gas emissions, and of the 931 million tonnes of food wasted each year globally, 13 percent is generated by retailers. With the rise of both regulations and corporate initiatives to reduce waste and drive social, economic, and environmental benefits, Relex is positioning itself for an era of sustainability-driven transformation.  

It is important to impact every stage of the supply chain to get the best result according to the company which claims retailers and brands can achieve up to 30 percent reductions in inventory, and approximately 40 percent less fresh spoilage. For consumers that means higher availability, more appealing store displays—and fresher food products, reducing the risk of household food waste as well.

“The system has given us more versatile and effective methods to ensure daily product availability and optimise stock and waste levels," said Tuulia Wennerkoski, Vice President, Supply Chain Management of SOK’s grocery trade.

She said her company now had the tools to handle exceptional situations, such as sudden changes in demand or temporary disruptions in the supply chain. "And their solutions play an integral role in managing the flow of goods during seasons and bank holidays.” 

Supply chain innovation

According to Kärkkäinen the possibility to hold and analyse unprecedented amounts of data is enabling both using more advanced artificial intelligence to support many challenges – as well as building optimisation to wider parts of the process.

"It is exciting to be involved in moving from optimising operations of single points in the supply chain – for example an individual warehouse – to focussing on running the whole network in a most optimal way."