Case study: Musti Group
Thriving in a Complex, Multinational, Supply Chain Environment

Background

Musti Group Nordic is the leading pet supplies and accessories retailer in the Nordics, with 121 Musti & Mirri stores in Finland, 127 Arken Zoo and Djurmagazinet pet stores in Sweden, and also 18 Musti stores in Norway. The stores are replenished from two distribution centers (DCs), main DC in Sweden and other one in Finland. They also have a DC in Riihimäki which serves e-commerce customers and two DCs for frozen food.

Musti’s supply chain challenges are common to many fast-growing companies. Its complex and ever-changing supply chain was not integrated and its users were struggling to cope. For instance, when the project started, the main DC was in Finland. By the time it was complete, the number of stores and DCs had grown sharply and the main DC was now in Sweden. Musti foresaw that their existing system would not be able to adapt to these fast and significant changes in their supply chain. Maintaining and updating order parameters had to be done manually. It was a time-consuming distraction for Musti’s buyers who needed to focus on managing stock values and availability.

Goals

In order to control its multi-layered, pan-Nordic supply chain more tightly Musti looked for a reliable supply chain solution with the flexibility to encompass its multinational operations and with the scalability to adapt easily to Musti’s rapid expansion. On these and other criteria the company chose RELEX.

Musti knew it could improve its forecasting, replenishment, campaign management and, allocation. It wanted to integrate store and DC ordering and be able to deal with each category individually so inventory and availability levels could be adjusted according to category-specific criteria such as margins or the importance of keeping certain brands in the assortment.

Musti’s major challenge was the speed at which it was growing. It knew it needed to take control of its inventory levels while ensuring good availability, good product displays and a good breadth of assortment. The company also realized that both operation efficiency and visibility across its supply chain would benefit from centralizing its ordering and replenishment processes.

The stores also run a magazine-driven promotional campaign week once a month. Because Musti’s pre-existing system hadn’t supported seasonal products, stores had tended to over-order stock to ensure they wouldn’t run out of promoted lines.

Implementation

Musti Group Nordic originally set out to bring its Finnish stores and DC onto RELEX. Project specifications were drawn up in mid-2015 and the implementation began in July. By October 2015 the technical implementation was complete. Roll-out began in November with the first pilot stores being added to the RELEX system. Gradually all Musti’s other stores and its DCs were added in a controlled and systematic manner. The entire project to bring the Finnish stores and DC onto the system took just 11 months from specification and green light, to completion of the full roll-out. Once that was done it seemed an obvious next step to start adding its Swedish and Norwegian stores and DCs. Musti aims to eventually have its entire supply chain handled by its RELEX system.

Achieving Organizational Efficiency

Musti’s ordering process was already centralised, but pre-RELEX there was considerable scope for store and DC managers to make suggestions and adjust order proposals. As this was done manually it was time consuming and further added to the workload of buyers.

However RELEX’s excellent forecast accuracy means that staff now leave ordering entirely to the central team with routine ordering and replenishment automated, so buyers can focus on exceptions. Goods come straight to the stores and their flow is optimized so that deliveries are typically scheduled for quieter days. This frees frontline staff to concentrate on helping customers when they visit the stores.

Meanwhile Musti’s complex supply chain is now managed by a single super-user. The DC buying team focuses on stock value and availability of the products that go into the DCs while the replenishment team takes care of the stores.

“The integrated system allows the buyers to base the central warehouse forecasts on the stores’ replenishment needs. This is really useful and makes controlling the turbulent environment a lot easier,” says Matti Salmi, Purchasing Director at Musti Group Nordic.

The super-user optimizes inventory levels so the right balance is struck between availability and merchandising requirements on the one hand and the need to prevent overstocking on the other. Guided by Musti’s business strategy it’s a simple task for the super-user to adjust minimum fill parameters on any level (brand, product etc.) so particularly profitable lines or items that play a key role in the assortment over and above the revenue they generate get priority.

Thanks to RELEX, Musti has tools for campaign control, forecasting and replenishment. Campaign products are pulled into the DC based on campaign forecasts and pushed out to stores in batches. It means that products promoted during the monthly campaign week are available until the end of the event.

Previously optimizing ordering around free-freight requirement or transport units had meant manually adjusting almost all order rows. Now RELEX calculates DC ordering bottom up from the aggregated requirements of the group’s stores and optimizes transport units.

“We’re delighted,” adds Musti Group Nordic’s Katariina Haimi, Nordic Store Service Manager. “Our Christmas and campaign projections have improved, as has replenishment and the system responds and adapts automatically as our business evolves.”