Dive Brief:

• Ahold Delhaize USA plans to more efficiently stock its store shelves and distribution centers using an artificial-intelligence-driven supply chain solution, according to a company release. The end-to-end forecasting and replenishment system is developed by software firm Relex Solutions and implemented by the retailer’s Retail Business Services arm.
• The grocery company piloted the supply chain solution at Food Lion and Hannaford stores beginning early last year. Following the successful trial, Ahold Delhaize aims to roll the AI-powered system out across its Hannaford, Food Lion, Giant, Giant/Martin’s, Stop & Shop and Peapod brands over the next three years.
• The system currently applies to the distribution of perishables and will expand into non-perishables this year. The self-learning technology is customizable to individual stores and retail brands, Ahold Delhaize said. The Wall Street Journal reported that the system automates tasks such as inventory checks and streamlines functions that were previously spread across company systems.

Dive Insight:

With retailers under pressure to improve margins and sync up their supply chains to meet both in-store and online demand, automated systems are one way to help take the guesswork out of fulfillment and to ensure a fresher assortment for shoppers.

Ahold Delhaize's new system promises to better forecast demand and move products rapidly through distribution. This means fresher products in crucial perishables categories where customer loyalty is won and lost. It also means fewer truck miles and less food going to waste. A spokesperson told The Wall Street Journal that during pilots, rush shipments to get soon-to-expire items onto shelves were down 51% in fish and 44% in pork.  

The system, according to Chris Lewis, executive vice president of supply chain for Retail Business Services, will "enable a complete supply chain transformation at a time when customer expectations are rapidly changing the way groceries are bought, sold and delivered."

Ahold Delhaize has been razor-focused on efficiency and developing automated solutions since its marquee merger in 2016. Last year, it opened an artificial intelligence research lab where scientists are diligently developing algorithms that can be applied to the company's operations. In January, Ahold Delhaize announced it would put 500 shelf-scanning robots inside Giant/Martin's and Stop & Shop stores.

This year, Ahold Delhaize hopes to achieve nearly $1 billion in cost synergies. 

Competing retailers have introduced AI solutions in everything from supply chain management to store circulars and shopping carts. Whole Foods and Target are among the retailers that have used order-to-shelf fulfillment models to unclutter backrooms and bring just the right amount of products to shelves.

Supply chain innovation is important for Ahold Delhaize, which operates conventional grocery stores that are under pressure from a range of food providers. And it becomes increasingly important as e-commerce, which introduces all new demand and fulfillment dynamics to the equation, grows in popularity.