1 00:00:03,450 --> 00:00:07,020 Sean Aylmer: Welcome to the Fear And Greed Daily Interview. I'm Sean Aylmer. The 2 00:00:07,020 --> 00:00:11,170 Sean Aylmer: pandemic has really shown how fragile supply chains can be. 3 00:00:11,610 --> 00:00:15,380 Sean Aylmer: Around the world, supply chain challenges have seen empty shelves 4 00:00:15,380 --> 00:00:18,660 Sean Aylmer: in shops and customers waiting far longer than usual for 5 00:00:18,660 --> 00:00:23,640 Sean Aylmer: major purchases like cars. Increasingly companies are turning to technology 6 00:00:23,650 --> 00:00:27,250 Sean Aylmer: for the answer and are looking to future-proof their supply chains. 7 00:00:27,860 --> 00:00:31,730 Sean Aylmer: RELEX Solutions is a supply chain technology company founded in 8 00:00:31,730 --> 00:00:37,170 Sean Aylmer: Finland in 2005. RELEX is now making waves globally, including Australia, 9 00:00:37,170 --> 00:00:40,769 Sean Aylmer: where they recently signed an agreement with Coles to automate 10 00:00:40,770 --> 00:00:45,420 Sean Aylmer: reordering of fresh produce. Johanna Småros is the co-founder and 11 00:00:45,420 --> 00:00:49,710 Sean Aylmer: CMO (Chief Marketing Officer) of RELEX and joins me this morning from Finland. Johanna, 12 00:00:50,060 --> 00:00:51,360 Sean Aylmer: welcome to Fear And Greed. 13 00:00:51,940 --> 00:00:52,300 Johanna Småros: Thank you, Sean. 14 00:00:52,790 --> 00:00:55,580 Sean Aylmer: How is Helsinki? I've never been there. Going into winter, 15 00:00:55,590 --> 00:00:56,070 Sean Aylmer: I suppose. 16 00:00:56,330 --> 00:01:00,740 Johanna Småros: Yeah. Helsinki is fantastic. So it's actually not all that 17 00:01:00,740 --> 00:01:05,160 Johanna Småros: different from, for example, Sydney, you can go to places 18 00:01:05,160 --> 00:01:09,399 Johanna Småros: using ferries. It's slightly different from a climate perspective- 19 00:01:09,760 --> 00:01:09,971 Sean Aylmer: Slightly different. 20 00:01:09,970 --> 00:01:11,810 Johanna Småros: ... but I think it would be a nice change for many Australians. 21 00:01:12,970 --> 00:01:15,760 Sean Aylmer: Okay. So how did you get, a company in Finland 22 00:01:15,760 --> 00:01:18,970 Sean Aylmer: get involved in one of our biggest supermarkets, Coles? Where 23 00:01:18,970 --> 00:01:21,010 Sean Aylmer: did that introduction come? 24 00:01:21,650 --> 00:01:26,140 Johanna Småros: Yeah, I think it's based on many years of hard 25 00:01:26,140 --> 00:01:31,050 Johanna Småros: work and making a name for ourselves, especially in the 26 00:01:31,050 --> 00:01:37,209 Johanna Småros: retail supply chain business. So it wasn't an overnight success 27 00:01:37,209 --> 00:01:41,429 Johanna Småros: as most things aren't, but I'm really happy that we 28 00:01:41,430 --> 00:01:44,870 Johanna Småros: are now making waves in Australia as you said. 29 00:01:45,060 --> 00:01:45,350 Sean Aylmer: Okay. So how does your technology work? 30 00:01:47,760 --> 00:01:54,550 Johanna Småros: So basically we do demand forecasting at the core. So 31 00:01:55,070 --> 00:02:01,220 Johanna Småros: we use machine learning to capture the impact of seasons, 32 00:02:01,220 --> 00:02:08,210 Johanna Småros: trends, weekdays, holidays, promotions, price changes, even local weather. So 33 00:02:08,210 --> 00:02:10,970 Johanna Småros: for example, for a big home improvement retailer that we 34 00:02:10,970 --> 00:02:14,730 Johanna Småros: work with, this means that we continuously keep more than 35 00:02:14,730 --> 00:02:19,690 Johanna Småros: 4 billion forecasts updated. And then we use this demand 36 00:02:19,690 --> 00:02:23,040 Johanna Småros: forecast to figure out what stock they will need in 37 00:02:23,040 --> 00:02:27,750 Johanna Småros: each part of their supply chain at any given day, typically 38 00:02:27,750 --> 00:02:32,429 Johanna Småros: more than a year ahead, and automate reordering. So for 39 00:02:32,430 --> 00:02:36,750 Johanna Småros: example, a German drugstore retailer, a client of ours that 40 00:02:36,750 --> 00:02:42,381 Johanna Småros: has about 2000 stores has managed to fully automate store replenishment. 41 00:02:42,381 --> 00:02:43,451 Sean Aylmer: Wow. 42 00:02:43,840 --> 00:02:48,340 Johanna Småros: So no human intervention needed to keep the stores stocked. 43 00:02:48,639 --> 00:02:51,299 Johanna Småros: And at the same time, they managed to reduce stockouts 44 00:02:51,300 --> 00:02:54,370 Johanna Småros: by 85%. So, that's pretty fantastic. 45 00:02:54,620 --> 00:02:57,140 Sean Aylmer: Yeah. So it's artificial intelligence based. 46 00:02:57,550 --> 00:03:01,410 Johanna Småros: Yeah. We use lots of different kinds of AI, but 47 00:03:01,410 --> 00:03:04,989 Johanna Småros: the machine learning we use for demand forecasting is a 48 00:03:04,990 --> 00:03:06,030 Johanna Småros: good example of that. 49 00:03:06,530 --> 00:03:09,600 Sean Aylmer: Okay. So let's take an example. At Coles you're using 50 00:03:09,600 --> 00:03:13,440 Sean Aylmer: fresh produce, let's say it's apples. The number of apples 51 00:03:13,440 --> 00:03:18,900 Sean Aylmer: sold presumably depends on everything from promotions to the weather, 52 00:03:18,900 --> 00:03:22,240 Sean Aylmer: to what other fresh produce is available, sitting next to 53 00:03:22,240 --> 00:03:25,090 Sean Aylmer: the apples, whether it's strawberries, or oranges, or whatever, it's 54 00:03:25,090 --> 00:03:27,230 Sean Aylmer: all those sorts of things that you can combine into 55 00:03:27,230 --> 00:03:30,850 Sean Aylmer: an algorithm to actually know in three months time or 56 00:03:30,850 --> 00:03:32,910 Sean Aylmer: a month's time or whatever, how many apples will be 57 00:03:32,910 --> 00:03:34,459 Sean Aylmer: sold at Coles, that sort of thing. 58 00:03:34,950 --> 00:03:37,810 Johanna Småros: Yeah. That sort of thing. And for example, when we talk 59 00:03:37,810 --> 00:03:40,530 Johanna Småros: about produce, you also have to look at the supply 60 00:03:40,530 --> 00:03:45,270 Johanna Småros: side of things. So you may not necessarily get exactly 61 00:03:45,330 --> 00:03:49,530 Johanna Småros: the same product throughout the year because there's growing seasons, 62 00:03:49,530 --> 00:03:54,580 Johanna Småros: there's quality differences, there's size differences. So there's also quite a lot 63 00:03:54,920 --> 00:03:59,240 Johanna Småros: of work in making sure that you get the proper 64 00:03:59,240 --> 00:04:02,330 Johanna Småros: product in the proper store and a proper mix of, for 65 00:04:02,330 --> 00:04:06,140 Johanna Småros: example, green, yellow bananas in different stores. 66 00:04:06,430 --> 00:04:09,290 Sean Aylmer: Yep. Yep. Now, I don't think the world has ever, 67 00:04:09,290 --> 00:04:11,760 Sean Aylmer: certainly in Australia we have never focused on supply chain 68 00:04:11,760 --> 00:04:15,110 Sean Aylmer: issues as much as we are right now. From semiconductor 69 00:04:15,110 --> 00:04:19,089 Sean Aylmer: chips to new cars, to just stocking everyday goods on 70 00:04:19,089 --> 00:04:22,170 Sean Aylmer: the shelves because of the pandemic, because of transport costs, 71 00:04:22,220 --> 00:04:27,650 Sean Aylmer: all sorts of things. Really broadly, this automated supply chain, 72 00:04:27,650 --> 00:04:31,089 Sean Aylmer: what are the really big benefits in an environment like today? 73 00:04:31,089 --> 00:04:36,729 Johanna Småros: Yeah. So even in a stable situation, there's quite a 74 00:04:36,730 --> 00:04:41,469 Johanna Småros: lot of benefits to be had. So better on-shelf availability, 75 00:04:41,930 --> 00:04:49,190 Johanna Småros: less waste, less obsolescence cost, more efficient transportation, basically just 76 00:04:49,190 --> 00:04:55,020 Johanna Småros: increased efficiency in the whole supply chain. But now the 77 00:04:55,290 --> 00:05:00,850 Johanna Småros: pandemic has really hammered in how important automation is when 78 00:05:00,850 --> 00:05:04,350 Johanna Småros: there's shocks to the system. So when you have visibility 79 00:05:04,350 --> 00:05:08,150 Johanna Småros: and control over the supply chain, it's a lot easier 80 00:05:08,150 --> 00:05:11,830 Johanna Småros: to adjust to changes effectively. So for example, we have 81 00:05:12,630 --> 00:05:17,550 Johanna Småros: a Swiss online grocery client that was just running out 82 00:05:17,550 --> 00:05:21,350 Johanna Småros: of capacity as online orders surged. And they were able 83 00:05:21,350 --> 00:05:25,380 Johanna Småros: to use the system to level out the inbound and 84 00:05:25,380 --> 00:05:30,839 Johanna Småros: outbound goods flows from their warehouse to be able to fulfill more customer orders. 85 00:05:32,000 --> 00:05:33,880 Sean Aylmer: Okay. And in many ways, it doesn't matter where the 86 00:05:33,880 --> 00:05:38,500 Sean Aylmer: produce comes in terms of using the RELEX IP (Intellectual Property). Certainly, 87 00:05:38,500 --> 00:05:42,219 Sean Aylmer: in Australia, there's a push away from just-in-time to ensuring you 88 00:05:42,220 --> 00:05:46,470 Sean Aylmer: have stock available. So you could use that software in any case. 89 00:05:46,560 --> 00:05:49,529 Sean Aylmer: Has it changed much given that most, I mean, many 90 00:05:49,529 --> 00:05:51,919 Sean Aylmer: companies in Australia are certainly pushing away from just-in-time? 91 00:05:52,800 --> 00:05:58,580 Johanna Småros: I think there is a definite need for just-in-time. So when we talk about short- shelf 92 00:05:58,580 --> 00:06:03,480 Johanna Småros: life products, freshness is an important goal and that's something 93 00:06:03,520 --> 00:06:07,560 Johanna Småros: we value as consumers. But then in other parts of 94 00:06:07,560 --> 00:06:13,609 Johanna Småros: the supply chain, it's more sensible to go for stocking 95 00:06:13,970 --> 00:06:17,320 Johanna Småros: at the right locations to give you a bit of buffer, 96 00:06:17,320 --> 00:06:20,540 Johanna Småros: to be able to react to changes, but also to 97 00:06:20,920 --> 00:06:25,360 Johanna Småros: increase how well you can, for example, fill your trucks 98 00:06:25,550 --> 00:06:27,130 Johanna Småros: to make it more sustainable. 99 00:06:27,370 --> 00:06:30,159 Sean Aylmer: Okay. Stay with me, Johanna. We'll be back in a 100 00:06:30,160 --> 00:06:30,470 Sean Aylmer: minute. 101 00:06:35,570 --> 00:06:40,830 Sean Aylmer: I'm talking to Johanna Småros, co-founder of RELEX Solutions. One 102 00:06:40,830 --> 00:06:42,430 Sean Aylmer: of the trends that we're talking a lot about here 103 00:06:42,430 --> 00:06:45,180 Sean Aylmer: is quick commerce. The idea that households are shifting away 104 00:06:45,180 --> 00:06:48,320 Sean Aylmer: from doing one big weekly grocery shop to doing many 105 00:06:48,320 --> 00:06:51,599 Sean Aylmer: small ones. Certainly in my household, I would go to 106 00:06:51,600 --> 00:06:54,140 Sean Aylmer: the grocery store three or four times a week, minimum. 107 00:06:54,140 --> 00:06:56,170 Sean Aylmer: Mind you, we're in lockdown. So maybe it's just a 108 00:06:56,170 --> 00:06:58,910 Sean Aylmer: trip out of the house, but the idea that we 109 00:06:58,910 --> 00:07:01,490 Sean Aylmer: are doing sort of more smaller shops rather than a 110 00:07:01,490 --> 00:07:04,440 Sean Aylmer: weekly or fortnightly big shop, are you seeing this trend 111 00:07:04,710 --> 00:07:07,530 Sean Aylmer: anywhere else? Are you seeing that as a trend globally? 112 00:07:07,920 --> 00:07:11,980 Johanna Småros: Yeah, very definitely seeing this in Europe, in the Americas, 113 00:07:11,980 --> 00:07:16,090 Johanna Småros: also in Asia. And I'd say quick commerce is more 114 00:07:16,150 --> 00:07:19,610 Johanna Småros: than a trend. So the leading companies, like for example, our 115 00:07:19,610 --> 00:07:24,630 Johanna Småros: client Delivery Hero are already generating billion dollar revenues while 116 00:07:24,630 --> 00:07:26,560 Johanna Småros: continuing to grow fast. 117 00:07:28,900 --> 00:07:31,230 Sean Aylmer: Okay. Were you seeing that in the supermarket space I suppose, is what I'm wondering? 118 00:07:31,550 --> 00:07:35,350 Johanna Småros: Yeah. So there's both the kind of pure play quick 119 00:07:35,400 --> 00:07:40,310 Johanna Småros: commerce players that are establishing their own dark stores, or 120 00:07:40,630 --> 00:07:47,120 Johanna Småros: delivery only supermarkets. But then there are also established supermarket 121 00:07:47,120 --> 00:07:51,680 Johanna Småros: chains that are partnering with other companies or sometimes putting 122 00:07:51,680 --> 00:07:56,990 Johanna Småros: up their own kind of network of dark stores to serve clients faster. 123 00:07:57,260 --> 00:08:00,040 Sean Aylmer: Okay. So supply chains, I mean, I think just supply 124 00:08:00,040 --> 00:08:02,900 Sean Aylmer: chains are really interesting. I used to work in one of the big publishers here 125 00:08:02,900 --> 00:08:05,560 Sean Aylmer: and the whole supply chain of getting a newspaper back 126 00:08:05,560 --> 00:08:08,670 Sean Aylmer: then, the hardest part was that last mile actually getting 127 00:08:08,670 --> 00:08:12,120 Sean Aylmer: it from the printing press to the front yard was 128 00:08:12,120 --> 00:08:14,850 Sean Aylmer: always the supply chain. That was the choke point, I 129 00:08:14,850 --> 00:08:20,020 Sean Aylmer: suppose. Are certain supply chains a lot more complex than others? 130 00:08:20,580 --> 00:08:23,370 Johanna Småros: I would say all supply chain have their own intricacies. 131 00:08:24,400 --> 00:08:28,300 Johanna Småros: So for example, long lead times, when you have, for example, 132 00:08:28,300 --> 00:08:34,690 Johanna Småros: international supply chains are always vulnerable that things change in between 133 00:08:34,809 --> 00:08:37,449 Johanna Småros: when you place the order and when you actually get it. 134 00:08:37,840 --> 00:08:40,750 Johanna Småros: But then on the other hand, for example, one of our U.S. 135 00:08:40,929 --> 00:08:46,240 Johanna Småros: home improvement clients needs to plan and react to hurricane damage. 136 00:08:46,350 --> 00:08:46,370 Sean Aylmer: Wow. 137 00:08:46,590 --> 00:08:50,300 Johanna Småros: So that's an interesting known unknown. 138 00:08:50,309 --> 00:08:50,329 Sean Aylmer: Yeah. 139 00:08:50,630 --> 00:08:53,420 Johanna Småros: And then, for example, we have a bookstore client that 140 00:08:53,420 --> 00:08:58,230 Johanna Småros: makes about a fourth of their annual revenue in sales 141 00:08:58,460 --> 00:09:01,280 Johanna Småros: in three weeks leading up to Christmas. So, they really 142 00:09:01,280 --> 00:09:05,840 Johanna Småros: need to nail their holiday inventory. So there's just lots 143 00:09:05,840 --> 00:09:08,640 Johanna Småros: of things to consider in supply chains. 144 00:09:08,970 --> 00:09:12,140 Sean Aylmer: Johanna, you've used a bunch of examples. Whereabouts do you 145 00:09:12,140 --> 00:09:15,359 Sean Aylmer: operate? It sounds like RELEX is a very international company. 146 00:09:15,600 --> 00:09:20,010 Johanna Småros: Yeah. We are indeed a global company nowadays. And the 147 00:09:20,010 --> 00:09:24,870 Johanna Småros: interesting thing is that there are local challenges, but also 148 00:09:25,200 --> 00:09:30,270 Johanna Småros: pretty similar global challenges. And for example, in the pandemic 149 00:09:30,270 --> 00:09:34,420 Johanna Småros: when we saw panic buying by consumers in lots of 150 00:09:34,420 --> 00:09:39,200 Johanna Småros: different markets, everyone was rushing for the same items. So 151 00:09:39,200 --> 00:09:42,569 Johanna Småros: toilet paper was a big hit across the world. 152 00:09:42,840 --> 00:09:44,730 Sean Aylmer: So that wasn't just in Australia, that was around the 153 00:09:44,730 --> 00:09:46,860 Sean Aylmer: world, everyone seemed to stock up on toilet paper. 154 00:09:47,179 --> 00:09:48,609 Johanna Småros: Indeed. Yes. 155 00:09:48,650 --> 00:09:52,720 Sean Aylmer: Right. Okay. So is Coles your first client in Australia? 156 00:09:53,490 --> 00:09:56,890 Johanna Småros: It's not our first client in Australia. I think it's 157 00:09:56,890 --> 00:10:00,530 Johanna Småros: the one that made the headlines because just the sheer 158 00:10:00,530 --> 00:10:04,719 Johanna Småros: size of the operation. We also work with companies like for 159 00:10:04,720 --> 00:10:06,069 Johanna Småros: example, Baby Bunting. 160 00:10:06,080 --> 00:10:06,760 Sean Aylmer: Oh yeah. 161 00:10:06,760 --> 00:10:07,699 Johanna Småros: In Australia. 162 00:10:07,850 --> 00:10:11,360 Sean Aylmer: Okay. And so do you plan to expand into this 163 00:10:11,360 --> 00:10:13,840 Sean Aylmer: region, Australia, Asia Pacific region? 164 00:10:14,270 --> 00:10:19,170 Johanna Småros: Yeah. Well, actually Asia Pacific is currently our fastest growing market 165 00:10:19,340 --> 00:10:22,329 Johanna Småros: and I'm happy to say that we opened an office 166 00:10:22,330 --> 00:10:25,309 Johanna Småros: in Melbourne this year. And I have to tell you, 167 00:10:25,309 --> 00:10:29,439 Johanna Småros: Australia has such a fantastic brand. So when we announced that 168 00:10:29,760 --> 00:10:33,760 Johanna Småros: there was an opportunity for very skilled employees to relocate 169 00:10:33,760 --> 00:10:38,030 Johanna Småros: to Australia, there was huge excitement. So now we have a 170 00:10:38,030 --> 00:10:42,170 Johanna Småros: stellar team of seasoned RELEXions and knowledgeable locals on the ground. 171 00:10:43,760 --> 00:10:44,569 Sean Aylmer: RELEXions, is that what you call yourselves? 172 00:10:44,860 --> 00:10:45,170 Johanna Småros: Yep. 173 00:10:47,250 --> 00:10:48,470 Sean Aylmer: That is very high-tech. 174 00:10:49,100 --> 00:10:50,590 Johanna Småros: Yeah. Very relaxed, RELEXions. 175 00:10:52,170 --> 00:10:55,309 Sean Aylmer: Exactly. Johanna, thank you for talking to Fear and Greed 176 00:10:55,309 --> 00:10:57,100 Sean Aylmer: all the way from Helsinki this morning. 177 00:10:57,410 --> 00:10:58,250 Johanna Småros: Thank you, Sean. 178 00:10:58,550 --> 00:11:02,990 Sean Aylmer: That was Johanna Småros, co-founder of RELEX Solutions. This is 179 00:11:02,990 --> 00:11:05,270 Sean Aylmer: a Fear And Greed Daily Interview. Join me every morning 180 00:11:05,270 --> 00:11:07,640 Sean Aylmer: for the full Fear and Greed Podcast with all the 181 00:11:07,640 --> 00:11:10,840 Sean Aylmer: business news you need to know. I'm Sean Aylmer. Enjoy 182 00:11:10,840 --> 00:11:11,190 Sean Aylmer: your day.