To generate dramatic results, Morrisons focused on six priorities to turnaround its business, including an initiative to serve customers better. One of the biggest customer satisfaction barriers that Morrisons identified was product availability. Up until that point, the supermarket chain had relied on traditional systems to replenish its stores – mostly through manual orders made by in-store teams. This proved time consuming, created inconsistencies between stores, and was not always accurate.
To improve availability, Morrisons needed a solution that could solve its two biggest challenges: understocking and overstocking.
The Solution
Morrisons decided to look for a software expert that could provide a best-in-class solution in a rapid timeframe, that was capital light, to integrate with existing IT system infrastructure whilst facilitating removal of legacy systems, and provided a high level of automation to reduce manual intervention and free up Morrisons colleagues’ time to focus on serving customers.
Crucially, the system needed to offer highly accurate customer demand predictions at an individual store/product/day basis to increase product availability and reduce lost sales, utilising self-learning technology to ‘leapfrog’ Morrisons against the rest of the market and futureproof its replenishment capabilities.
Morrisons immediately identified Blue Yonder as the industry leader in AI and Machine Learning innovation, and Blue Yonder Replenishment Optimization solution as the ideal technology to significantly enhance its demand planning and replenishment capabilities.
“The system is capital light, utilising cloud technology and store specific historic sales data to forecast stock requirements. It is reducing costs and stock levels, while also saving time for colleagues, and providing a better offer for customers.” David Potts, CEO at Morrisons.
In just 12 months, Blue Yonder optimised ambient and long-life replenishment among 26,000 SKUs across 130 categories in all of Morrisons’ 491 stores. In fact, Blue Yonder launched the deployment with a successful three-month pilot project in the run-up to Christmas; Morrisons’ busiest and most critical trading period.
Why AI?
Morrisons’ dramatic improvement in replenishment capabilities is down to the fact that Blue Yonder Replenishment Optimization solution uses cutting-edge AI technology. Not only can AI automatically forecast orders daily per store and per SKU to meet customer demand, its self-adjusting capabilities mean demand can be optimised down to product level – factoring in influences including store demand patterns, seasonality, weather, and promotions.
In this way, AI delivers much more than just transforming daily ordering from a highly resource-intensive task to full automation; the more data the Blue Yonder Replenishment Optimization solution processes, the more intelligent it becomes. Decision making becomes based on being able to model what is going to happen, not just what has happened previously.
And because Blue Yonder Replenishment Optimization is a cloud-based solution, it is scalable. For Morrisons, this means the grocer can respond quickly to changes in customer demand, and in the wider market. AI technology has also enabled Morrisons to close the execution gap, optimising availability while reducing wastage, enhancing shelf presentation and meeting stockholding targets.
The Results
By deploying Blue Yonder Replenishment Optimization, Morrisons can now make 430 million calculations and 13 million automatic decisions every single day – at far greater scale, and more accurately and consistently than previously.
In addition, the granularity of information available is enabling Morrisons to enhance the customer experience down to store level; incorporating factors like shelf sizes and consumer buying patterns, rather than taking a ‘clustered’ approach to planning and replenishment. The Blue Yonder technology has already improved shelf gaps by up to 30% and reduced stockholding in store by two to three days.
The project has been so successful that Morrisons will soon be introducing Blue Yonder Replenishment Optimization across all product groups, except fashion. The next milestone will be Fresh, following a successful trial before Christmas. And because the solution is built using AI, as Blue Yonder Replenishment Optimization processes more data for Morrisons its demand planning and forecasting capabilities will become even more effective over time, being able to detect and respond to changing consumer demand patterns.
“Results so far have been encouraging. It’s simple to use, saves colleagues time, stock levels are down and availability is improving all the time. It will be introduced across all product groups this year. Great news all round.” David Potts CEO, Morrisons
