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- [00:00]
A
Hello and welcome to the Leaders in Tech and E Commerce podcast. I am your host, Andrei Palamari. Our mission is to connect the tech in supply chain and e commerce ecosystem in Asia and globally by bringing forward some of the most interesting stories about success and failure from leaders in the industry. Hello and welcome, Johanna. It's been a while. We were just talking. It's been almost three years plus since our last podcast, last conversation and it's very good to have you here.
- [00:27]
B
Thank you so much for having me. Yeah, so my name is Johanna Smorhos. I'm one of the three co founders of Relex Solutions. And basically what we are here to do is to help retailers, wholesale companies, consumer goods manufacturers, drive profitable growth by maximizing customer satisfaction and minimizing operative costs. And more concretely, that means that we help our clients optimize and connect demand planning, merchandising, supply chain planning and operations planning across their supply chains.
- [01:04]
A
That's excellent. And I think you already mentioned a few things that are progressed since our last chat. I know last time we spoke a lot about retail, but now there's a lot changing and you included consumer and wholesalers as well. Let's start with the company mission. How has this been evolving in the last three years?
- [01:26]
B
Well, funnily enough, lots of things have changed, but this is one that has remained the same since the beginning. So we have basically two kind of overarching ambitions. One is more about the what so what we aim to do. And that's basically minimizing cost and waste. So wasted products waste, wasted time, wasted capacity in the consumer goods value chain. And that's basically built into the solutions that we offer our clients. And the second part is how we do it. So we want to be a good company to work with and work for and kind of set an example in the enterprise software business for treating customers and colleagues and partners fairly and with respect and being a good corporate citizen. So that's something we documented actually already years ago, and we stick with it still today and believe that when we accomplish these two things, it will lead to, as we internally say, humble world domination in supply chain and retail planning.
- [02:42]
A
That's excellent. And I think you're right. The North Star has been the same. And it sounds like you're keeping the same North Star, which makes a lot of sense. And now if you think about milestones in general, right, how things have progressed, terms of the number of team members, maybe clients, geographic expansion. I know funding wise, there was a big round of funding, I think it was last year. But yeah, just share what comes to mind here.
- [03:11]
B
Yeah, so as you mentioned, we closed 500 million euro funding round and that was early 2022, so with Blackstone Growth as the lead investor, and that's then allowed us to further accelerate our investment, especially in R and D, but of course also in sales and marketing. So last year we invested more than 30% of revenues back in into R and D and also, for example, acquired a promotion, planning and optimization company to kind of strengthen the merchandising part of our offering. And of course the company has grown quite, quite significantly. To be honest, I can't even remember how many people we were three years ago, but currently I think there are almost 2,000 in the company. And then of course we've grown within kind of the existing regions. We are of course especially big in Europe and the US where we've been present for the longest, but we see super big growth in for example, Asia Pacific. So that's a very, very interesting region for us. And then on a more personal note, linked to the founding round, the Relex co founders, together with one of our key long term team members, managed to set up the Relex foundation for a Better Future. And we donated 10 million euros in cash and almost 100 million in shares to the foundation with the aim to mitigate climate change and biodiversity loss and reduce inequality and poverty and support early intervention to reduce young people's risk of marginalization. So that's of course, personally a pretty big milestone.
- [05:16]
A
I just wanted to ask you after this, what are you most, most proud of? But I think that the last point is very interesting is the first time I hear, well, I don't think Relex can still be considered a startup, but you're still there just because of, you know, the nature of technology and how fast things are moving. But I haven't heard about many mature startups doing this type of charity focused type of work. So that's definitely, I salute that effort. I'm sure it brings a lot of joy to you and the team.
- [05:45]
B
Yes. And we actually decided the reason why we decided to name it the Relax foundation, although it's not kind of is not really part of the company, it's its own entity and it's going to be independent from Relex. Of course there's a big chunk of Relex shares, hopefully gaining a lot of value, enabling good stuff going forward. But we also wanted to kind of pay tribute to all the elections. So the current ones, the past ones and the future ones who have been building this opportunity. So that was kind of important to us to make sure that people can feel that they've not just built, been building Redux, the company, but they've also enabled this pretty beautiful thing and that will hopefully last longer than any of the co founders on this planet.
- [06:40]
A
That's excellent. I'm quite impressed. I haven't. I just read a few one article on this, but it sounds like this will be to pass on from generation to generation and it's only about positive impact without any strings attached. So that's major. Maybe we talk about the major challenges that Relex has had in the last few years and we almost forgot about the COVID times. That's how much everybody wanted to put that behind us. But I'm just wondering, other than that, business wise, even team management wise, have there been some big challenges that you had to fix? And what were they?
- [07:18]
B
I think we went into the pandemic from kind of good position in that sense that we were used to working remotely and having team members across the world, so we didn't kind of need to suddenly change everything. So that made the transitioning easier. Then of course, the whole, you know, retail and consumer goods market has been through such volatility that I don't think we've seen anything like that before. So there's been new challenges, of course, mostly fac our clients. So first you go into the boom of everyone needing toilet paper, obviously, because that's the most important thing when you're in a crisis. And then, you know, some demand just went through the roof. And then of course, staying home. Then you had DIY and things like that going up. And now we're coming down in many parts and there's inflationary pressure and things just aren't stable. And that's of course a huge pain for all the companies that we work with. But it's also been kind of, from our perspective, something that's really highlighted the need for being able to really see what happens across the company or the whole supply chain also be able to react to things a lot faster. So. So I do think that the value of solutions like ours, it's a lot easier to understand now when you kind of felt the pain of trying to deal with these rapid changes. So it's been super painful for our clients and of course we've tried our best to help them out. But from our perspective, from a kind of market perspective, there's more demand for solutions like ours than ever before.
- [09:21]
A
This is an interesting point, Johanna, because there's quite a few solutions out there. They are tackling the idea of supply chain planning, demand forecasting, demand sensing. And we've also been paying more attention in the tech space of supply chain. But this being said, none of them, or maybe a few of them, I don't know exactly, but none of them have had such a big growth and success as you guys managed to do in, in the last few years. And I was wondering, because I wanted to ask you about the product roadmap as well. And you mentioned R and D investments. Right. What do you think makes you different? One, from a product perspective, and second, it might be from a client relationship perspective as well.
- [10:03]
B
There are actually several key differentiators. But I do think that everything goes back to really kind of being passionate about the client's problems. So our backgrounds are in solving problems. We used to do research back in the day, and then we got kind of frustrated that it was so slow way to change the world. So we felt that maybe we need to go out there and start building things ourselves. And that's kind of stayed with the company that we probably even are a bit weaker in hyping what we do. But we are laser focused on really understanding what moves the needle for our clients. So sometimes we are not able to even explain the cool things we do because we are very geeky and we love to go into the details. And it's just super important for us to solve relevant problems and solve them in a solid way. So we've kind of been at this since 2005 already, and there's still so much that we kind of keep discovering that, ooh, now that we've managed to, let's say, forecast the resource needs super accurately, hey, now we can actually start shifting that resource need and level out the need for resources. It's going to be much easier from a staffing perspective. And we can level out the goods flow so that we don't face these bottlenecks in, for example, distribution. So it feels like every time you solve one problem that kind of unlocks new opportunities and then you just keep going. And of course, another big area for us is to link these different planning processes, because what we are seeing is that a lot of money, a lot of waste is, you know, generated in between those silos. So you have merchandising trying to attain their goals, then you have supply chain trying to attain their goals, and then you have operations trying to attain their goals. But when you can start linking these to each other, you can actually unlock so much value. So a simple example in supply chain Maybe you have KPIs like the efficiency of your DC, how much order lines can you pick, for example, per hour or something like that. And then you have a huge cost base in, for example, retail stores in just handling those good stuff come in. Then if you start optimizing everything together, you can create a flow of goods that goes with a minimum amount of touches straight to the shelf. And that kind of falls between the cracks. It's operations gain, but they can't impact it because the decisions are made in merchandising with the, you know, space allocation in stores and in supply chain. But when you get all of these together, you can suddenly release millions in saved cost and nobody needs to work any harder. You just create a smarter process. And that's super exciting because there's so much potential in bridging those silos. And it's super hard to do manually in meetings because it goes down to very kind of nitty gritty details to make sure everything works together.
- [13:52]
A
You're right. And I've heard this problem across the supply chain function from A to B to Z. You know, everybody has their own KPIs and silos and sometimes those KPIs don't necessarily pull in the same direction and there is some tension there. And if they don't speak or see the same language, the same platform, then those are the wasted, you know, time, money, energy and. And you can add to the list.
- [14:17]
B
Yes, and very much so. From a supply chain perspective, I think Pandemic has really raised the topic of supply chain collaboration. So that was actually one thing I did my PhD on back in the day, supply chain collaboration. And it was something that everyone was kind of seeing as a good thing and nobody was really investing in. And now I feel that we are finally there. People are finally seeing the value of sharing, for example, forecasts and availability information with each other. And the technology is finally there to make this something that's easy and manageable and doesn't require a lot of time and effort for everyone involved. So that's an area we see kind of rising now, that the supply chain just needs to deal with so much more uncertainty.
- [15:16]
A
When you get burned, you're trying your best not to do it in the next near future. You know, there is a way that people repeat mistakes, but hopefully this time supply chain stays in the relevant position. It needs to be like you said, and people are investing, you know, like you said, you invest in R D and then clients invest in solutions. So the cycle helps to put it even, you know, Even, you know, pro or to progress even more on tech supply chain. You mentioned a few things interesting on how you are helping clients remove waste from the system. And waste can take many aspects. But is there, I don't know if you can name names, but I'm wondering is there some customer success stories that have happened in the last months that are really impressive that you've seen? Okay, they were doing this before and after they started using Radix and the teams knowledge, things have changed significantly.
- [16:12]
B
There's so many success stories that it feels a bit unfair to just pick out a few. I think it comes in many shapes and forms and I think that's also a very key aspect to being successful in this field is to understand that although, you know, let's say consumer goods supply chains, they kind of look similar, but they all have different cost structures and kind of, let's say risk profiles. So what's most important for one might not be as important for another. So it's not like one size fits all. You need to have that business acumen to be able to implement systems in the right way. It's not copy paste, but of course the biggest impacts are of course with the biggest clients. So if you take a Lidl or an whole Delhi USA or a family dollar, then you'll just get bigger absolute numbers. That's kind of a given. But then of course we have some very kind of smaller clients that are doing very interesting things. So for example in Spain, Amatier Origen is kind of focused on sustainable organic groceries and they've been able to integrate their supply chain basically from field to store using this kind of supply chain visibility. So sharing availability information, sharing demand information, making sure that you find the right balance and don't generate waste, but also get fresher products to the clients. And then of course kind of a different topic, but with S Group in Finland, we've done some innovative AI driven swarm intelligence optimization to really kind of boost the efficiency of store operations. So leveraging floor plan and planogram, data feeding that into how stores are replenished and then using that to minimize the time spent on walking around in stores restocking shelves. And it's not like a super sexy topic, but the cool thing about it is that the financial implications of course are huge because for retailers, store staff is a huge cost center. And it's also an area where it can be very hard to find good people. So rather than putting people to spend time on silly things, we try to take out those silly things so that they can focus their efforts where it really matters. And then a final one. We have invested very heavily in machine learning and demand forecasting and completed kind of a complete rehaul of our forecast engine some years back. And now that's kind of the standard approach to forecasting that we have. But we've seen that it's massively impactful. So for example, one of our packaged meat manufacturers has attained a weekly forecast accuracy of higher than 98%. And that's spectacular. And that has huge implications because, you know, packaged meat from a sustainability perspective is super important to get that demand profile right. And then with machine learning, of course, we see that having that as the foundation, it also makes it so much easier to plug in all kinds of new data sources. So for example, if you think about manufacturers, if they get point of sale data from their retail clients or if they get assortment data from their retail clients, they can anticipate changes so much faster and again make sure that they have the availability, but then take out all the ways that usually happen in these kind of change situations. So a few examples, but there are plenty more and many, many different angles that have been very, very cool to see.
- [20:38]
A
That's excellent examples, Johanna. And I was wondering, there is a direct correlation because of course again we talk about waste, right? If you do your demand forecasting right and you have 98 accuracy, that's, it's a, it's a huge number in, in our times and world you can like you said, food waste, you can reduce it any types of ways. But even the, the very clear one that you can touch, right, that the food waste is, is a big KPI that's increasing in the sense of your food waste is very low. And I was reading somewhere, I don't have the number now, but I think you were saying that relax with all the clients that you've been helping me with the demand forecasting and with other operations and make it more efficient. The food waste overall has been I don't know how many tons. Maybe you can tell me more about that.
- [21:30]
B
Yeah, so food waste is one of the most tangible things that we can see the impact in. And for last year, so 2022, we estimated that we helped our clients reduce food waste by 11 million kilos. So that's like a thousand trucks. And that's just mind boggling because of course it has huge impact from a sustainability perspective. It, we throw food away, it's, it's such a stupid thing to do, but it's also very valuable for the clients. So producing food waste is like Shoveling money into the garbage bin. So there's a huge win win there. So that's something we are monitoring quite closely and that's something we feel that Navi can impact very directly. And that's of course super motivating as well, because, you know, our employees see that if they can optimize this part better, then the results are just very important for the whole planet.
- [22:51]
A
Exactly. It's tangible. And you're right, nobody wants to do food waste. And the retailers themselves, I'm sure before having a solution like relax there they were trying to minimize it, but they couldn't because of many reasons. And then by making sure everybody talks to each other, there's a platform involved, there's a better forecast involved. And yeah, this is, this is a huge number and I'm sure it's only going to go up. And the help that you offer both the retailers and the planet is huge in terms of culture, Johanna, and how things have gone, I think, I don't know if my memory serves me right, but I think last time we spoke you had under a thousand. I think it was maybe closer to 800 people. Now you said it's closer to 2000. How are things in the culture department?
- [23:36]
B
Yeah, culture is never static, so it's something that keeps developing. And I don't believe that you ever have like a completely uniform culture across all regions and teams. There will always be different variations and that's completely fine. We don't want to have a company full of clones. That would not be exciting and that would not be good for innovation. However, we've kind of established or documented the core values. That's something that we always come back to. And that's also kind of an expectation towards people who want to work for Relex. So we have our five core values. One customer is a friend. So meaning that we want to build relationships that are based on respect and trust and also being, you know, deservant of that respect and trust. And it of course goes both ways. And then colleague is a friend. So similar thing in the workplace. You don't need to be best friends with everyone, but you have to respect the other party's expertise and knowledge and what they bring to the table and treat everyone with respect. And then we provide measurable value. This is super important. And that's kind of the beacon for R and D as well. We don't want to do vanity projects. We don't want to tick boxes and say that we have this fancy pants technology just to be able to say it we want to be able to deliver measurable value. And that's how we choose where we invest. We invest where we see that there's a relevant problem that we can solve in a good way. Fourth, we stop stupid things. This is very important as we grow as a company because we need to change a lot of things. And, you know, something that worked well, maybe where a thousand people may not work at all when the scale is double that. So we kind of constantly need to take stock of what we're doing and leave some old stuff behind to be able to adapt some new things. And that's something you sometimes get a bit blind to. You know, we've always done this. So, you know, why change when something is working? But that's why it's so important to also get new people on board, because then they can look at things with fresh eyes and perhaps have a different perspective on what good looks like. And the fifth one is life is supposed to be fun. So, yes, parties are nice, but I think it's more important that you have excitement about what you do at work because we do spend quite a number of hours working, and that should be rewarding. You should feel that you have an impact and you're learning things and you are accomplishing things. And then of course, you know, work life balance. So this comes with an understanding that work is part of life, but it's not your full life. And life changes, which means that work also needs to change. So, for example, new parents need to be able to change the work life balance because it's just gonna, you know, babies demand a lot of time and attention. So. So that's, for example, something I've been speaking quite a lot about. I think it's super important that not just the mothers, but also the fathers take time off and spend time with their families because that's an investment that they will enjoy for the rest of their lives.
- [27:49]
A
That's refreshing to hear. Again, I don't hear a lot of companies speaking this way. Especially, like you said, work life balance is important and work is part of life. It's not everything. I think most companies would want to think it the other way around, but of course, the happier the person coming to work overall, the better their work will be. So you're exactly right there. And you mentioned at the beginning, I think it was something along the lines of humbling or being humble in changing the world. Or did I remember correctly, was that
- [28:24]
B
kind of like humble world domination?
- [28:26]
A
Oh, even. Even more double clicking on that. But that's, that's A good one, humble world domination. But as long as that means, you know, reducing food waste, reducing waste in general, having, you know, the charity do their work, I think that's, that's a very good mission to have. And maybe as a last question, Johanna, I was wondering, what's next? What do you see in the horizon? What excites you? Because I'm sure there's a lot of milestone coming up in the future that you're working towards.
- [28:56]
B
Again, this would be like a super long podcast if I went into detail, but you know, I'm still the same geek I was when we founded Relex, so I'm most excited about all the features and functions that are coming. So as I mentioned, we acquired promotion planning and optimization company last year and you know, last year we focused on making it an integral part of our planning platform and now of course we're moving full speed ahead with it and the results we're seeing are pretty incredible, like 30% sales uplift and 80% profit uplift from promotions. So that's clearly an area where more data science is needed. So super exciting. That's also actually a big driver of waste, poorly planned promotions. And then of course I already mentioned machine learning, demand forecasting. So I just see that as a gift that keeps giving. So, you know, new data sources become available and then you can plug it in to the machine learning without changing anything. Basically you just add it and see where it adds value and that's super exciting. So with the kind of lift of supply chain collaboration, we do see that there's so much potential for especially like the manufacturers to really start leveraging that retail data that's been, you know, it's collected every single day. And many of the manufacturers even have access to this data. But all of the studies show that it's so underutilized and you know, it's almost like somebody is offering you a crystal ball. You know, here you could see like a month into the future and then you go like, nah, I have better things to do, I need to optimize my production. I can't be bothered. So just so much still to be had in that area. And then of course, you know, being a geek, everyone's excited about the large language models at the moment. And you know, I've been doing my playing around with ChatGPT and it's, it's, it's fun, it's super fun. But of course it has a lot of use also in the real life, not just writing supply chain high course, which was my first use case for my new toy. So we basically set up our own Relax GPT that we have now been using internally. It's kind of fed with all kinds of product documentation, best practice, process descriptions and all those things. And now we're soon going to launch it to clients to use as well. So I think that's super exciting and something that's really well suited for a kind of geeky engineer company that has a lot of high quality documentation. So I think documentation will actually increase in value so much going forward and that's good news for all of us. Like process documentation, master data geeks out there.
- [32:29]
A
Correct. There's a long list of things to be excited about there, Johanna, and you're right, if you have proper documentation and master data and then you have a chatgpt on top of that, then you are unlocking treasure chest to be internally and externally. So I'm curious to find out more once you do it with the clients as well. And I think like you mentioned, right, you are so close to the retail space. You've done so well on the demand sensing demand forecasting there, which connects directly with the vendors or you know, the vendors of the retailers who are the manufacturers. Like you said, most of them are focusing on the manufacturing and production KPIs but they don't want to look closer at okay, what's needed and everybody's asking what's needed now so I can figure it out, how should I do my production? So it's a bit of a mixed bag there, but I think we'll, we're doing some progress in that space as well.
- [33:27]
B
Globally, I think there's a lot of progress. So it's not like companies are stupid. They know that these issues are there, but of course they also have a long list of priorities. And of course, you know, after the turbulence of the last couple of years, there's been a lot of emphasis on sourcing and making sure you have different sources for products. So that's been kind of painfully important to understand where your goods are actually coming from and if you need to have a plan B. But I do think that the next step now is then when you have sourcing in control to make sure that you also really invest in having that demand visibility because that's going to serve everyone really well in turbulent markets.
- [34:22]
A
Correct. It's no longer just in time, just in case, but maybe just in case with a good forecast is the best option if you can choose. Johanna, thank you very much. I really appreciate the time. I wish you and the Relex team. All the best. I'm sure we'll hear more about what you've been doing and what you will be doing. So yeah, all the best to you.
- [34:44]
B
Thank you so much.
- [34:46]
A
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