AO talks up its supply chain technology capability

Using flexible back-end systems has been a key factor in electricals e-tailer AO's European growth story, according to the company's director of supply chain, Vicky Kay.

AO established a presence in the German market in 2015 and has recently started trading in the Netherlands, and Kay says the growing business and its constantly evolving inventory dictates that agile retail supply chain technology is a necessary investment.

The household goods retailer develops much of its technology in-house but adding on Finnish tech company Relex's supply chain platform has apparently supported its forecasting, replenishment, promotions and product lifecycle management decisions.

"Its in-memory computing technology, offers the agility and fast decision making needed to respond to challenges," Kay stated.

"Relex's SaaS model eliminated the need for us to invest upfront in hardware and license fees and its transparent pricing structure meant reduced risk with no additional fees further along the implementation journey."

She added that the Relex system works with a retailer's existing data, as opposed to requiring "huge amounts of master data in new territories".

AO has a product range of approximately 4,000 items ranging across a variety of categories, all with diverse behaviours and replenishment models. The e-tailer also operates a fluctuating stock base with frequent phasing out or introduction of new products, as well as promotions, so sought a back-end system offering the business a single view of stock across all territories.

In a pre-close trading update released in March, covering the 12 months to 31 March 2016, AO said fourth-quarter revenue and EBITDA for its core UK business were ahead of company expectations. It also said full-year UK revenue growth is expected to be around 18.5%, with revenue growth from the group to be circa 27% and UK adjusted EBITDA to hit £17 million.

Later this year, AO will open a new regional distribution centre in Bergheim, Germany, where it will look to ramp up its sales volumes across its European arm.

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