Food Lion, Other Grocers Will Use AI for Food Suppliers
Date: Wednesday, March 27, 2019
Source: The Wall Street Journal
System rolling out for Ahold-owned U.S. supermarkets is aimed at giving a single ‘view of inventory across the brands’
Food Lion and five sister U.S. grocery chains are turning to artificial intelligence to overhaul the way they order food from suppliers.
The new system being rolled out at U.S. chains owned by Dutch retailer Koninklijke Ahold Delhaize NV is intended to improve how buyers predict demand and get perishables and other products to store shelves faster.
The technology provides “one logical view of inventory across the brands,” allowing buyers to aggregate demand across thousands of stores, said Chris Lewis, executive vice president of supply chain at Retail Business Services LLC, Ahold’s U.S. business services company.
The system, built by supply-chain software firm Relex Solutions, was piloted last year at Ahold’s Food Lion and Hannaford chains and will be rolled out over the next three years across all six U.S. brands, including its Peapod online delivery service. The company plans to start expanding use of the new purchasing system to non-perishable products this year.
The other Ahold chains adding the AI forecasting tool are Stop & Shop, Giant Food and Giant/Martin’s.
Supermarkets are bringing more technology to their procurement and inventory management as the growth of online grocery offerings such as in-store pickup of online orders puts more pressure on supply chains. Retailers such as Walmart Inc. are pushing suppliers to deliver more goods on time as they pare back inventory levels while trying to keep shelves stocked.
Ahold’s new forecasting and replenishment system has improved inventory precision and cut down on the amount of extra stock kept on hand in case items sell more quickly than anticipated, the company said.
The technology incorporates functions that had been spread across multiple systems and automates some steps, such as checking inventory levels at stores and distribution centers, that can take workers several hours to perform. Algorithms update recommended order quantities daily, factoring in variables like “if product gets refused at the warehouse, or if sales in particular regions are up because of weather,” Mr. Lewis said.
In pilots the technology moved product faster through distribution centers and reduced the amount of food nearing the end of its shelf life that gets sent out to stores for quick sale. Such unplanned shipments were down 51% for fish and 44% for pork, a spokeswoman said, so customers get fresher products at the store.