This Entrepreneur Raised Over $800 Million To Automate Supply Chains And Minimize Wastage

In the bustling world of technology and entrepreneurship, few stories resonate as deeply as those of RELEX Solutions. Founded by Johanna Småros and her co-founders, this Finnish company has not only revolutionized supply chain and retail planning but also embodies the power of resilience, innovation, and teamwork.

In an exclusive interview with Johanna Småros, we delve into the personal experiences, inspirations, and challenges that have shaped RELEX Solutions into the remarkable success story it is today.

Listen to the full podcast episode and review the transcript here.

A Journey Shaped by Childhood and Engineering

Johanna Småros, born and raised in the Helsinki region in Finland, reflects on her upbringing in a small town outside the city. Despite facing personal loss at a young age with the passing of her mother, she found strength and inspiration in her single-parenting father, an engineer.

His influence instilled in her a love for problem-solving and a natural inclination towards engineering, eventually leading her to pursue studies at the Helsinki University of Technology.

Johanna remembers how her father encouraged her and her brother to make their own decisions and took a keen interest in how well they did in mathematics and physics.

The inclination to dive deeper into science, biology, animals, the planet, and other interesting things is something Johanna got from her father and is now trying to inculcate in her daughter as well.

From Research to Entrepreneurship

Following her academic journey, Johanna delved into research, exploring cutting-edge technologies and solutions. She talks about how she landed a summer job in a research group and then went on to write her Master’s thesis as part of the research.

Having secured some funding, the group offered her the opportunity to stay on and do her Ph.D. Since Johanna had already written a few research papers, she accepted the offer and joined in developing new things.

Their shared passion for problem-solving and a drive to see their innovations implemented in practice laid the foundation for RELEX Solutions.

Johanna’s supervisor was 10 years ahead of his time, and in the early 2000s, he was excited about many things that came later. Like the Internet of Things, 3D printing, and e-grocery.

Most Finnish PhD students complete their dissertations in the standard four and a half years. Accordingly, having spent four years on the research, Johanna was ready to wrap it up and look forward to other things.

However, it was her collaboration with like-minded individuals, including her co-founders, that sparked the transition from academia to entrepreneurship.

Some companies that were piloting different solutions gave the trio access to their data. Using this data, they were able to create simulations to automate fresh products, promotions, and such things.

The Birth of RELEX Solutions: Solving Real-World Problems

Johanna knew Mikko Kärkkäinen and Michael Falck from the research group and connected through a common love for problem-solving. They all loved the prospect of picking apart an interesting problem to solve it.

Thus, RELEX Solutions emerged from a simple yet powerful idea: to automate and optimize supply chain processes, particularly in the retail sector.

Recognizing the inefficiencies and challenges faced by businesses in managing inventory, promotions, and demand forecasting, Johanna and her team set out to develop solutions that would not only streamline operations but also drive tangible results for their clients.

Johanna remembers being excited about implementing their ideas, from writing research papers to actually building processes. She enjoyed arriving at solutions and working out how to improve on them.

The RELEX Solutions Business Model

As Johanna explains, back in the day, ordering products in stores was a manual task, with store staff walking around, looking at the shelves, and placing orders on a hand-held.

Companies were looking at automating ordering as manual ordering is very time-consuming as each store carries up to tens of thousands of products.

Manual ordering is also quite error-prone, as it’s hard to keep track of demand patterns, such as shopping patterns on different days of the week, seasons, holidays, and promotional campaigns, often leading to poor on-shelf availability as well as excess stock and waste.

Shelf availability is key to sales, especially in physical stores. They must maintain adequate inventory, remove waste, and account for obsoletes and spoilage, which is unavoidable when stores maintain too much stock.

Recognizing this significant problem, Johanna and her co-founders got started with researching solutions. They developed a SaaS solution that started out doing store replenishment, for starters.

However, they have now expanded across the whole supply chain, from consumer demand, across retail and distribution, all the way to manufacturing and purchasing of raw materials.

As many other decisions impact both demand and supply, RELEX has also expanded into adjacent areas, such as space optimization in stores, which has a huge impact on store replenishment efficiency, as well as price and promotion planning.

Navigating Growth and Investment

While RELEX Solutions initially operated on a bootstrap model, the decision to expand into the US market necessitated additional resources. Up until 2015, RELEX expanded across Europe, which was easily done because of the limited time zones and distances.

Having centralized support and serving multiple markets wasn’t much of a challenge until the decision to expand further. Strategic fundraising rounds followed, supported by investors who recognized the company’s track record of consistent growth, profitability, and commitment to innovation.

RELEX has raised more than $800M, as reported by Crunchbase, and key investors include TCV and Blackstone Growth.

These investments propelled RELEX Solutions to new heights, allowing them to scale their operations and continue pushing the boundaries of technology and sustainability.

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Johanna talks about the motivation and satisfaction of delivering solutions that are meaningful and have a high impact.

Faster and more accurate planning and execution across the consumer goods supply chain combines great financial impact with a great sustainability impact from reduced emissions and waste, which is incredibly motivating.

Embracing AI for a Sustainable Future

Central to RELEX Solutions’ success is its embrace of artificial intelligence (AI).

Leveraging these technologies, the company has developed advanced machine-learning-based forecasting algorithms, AI-based recommendations on what products to promote and how, swarm-intelligence-based algorithms for more efficient store replenishment, and generative AI-based virtual assistants to empower its clients and drive sustainability across the supply chain.

Johanna emphasizes the importance of AI not as a singular entity but as a diverse set of tools and capabilities that enable meaningful innovation and impact.

RELEX is a fairly documentation-oriented company and prefers to have things written down to enable the documentation of knowledge to be made available to clients.

Johanna reveals how they recently launched their RELEX Rebot, which replies to client questions like how a specific order parameter impacts order proposals. RELEX has reached a stage where clients have direct access to consultants’ brains.

Lessons Learned and Advice for Aspiring Entrepreneurs

Reflecting on her journey, Johanna shares valuable insights for aspiring entrepreneurs. She emphasizes the importance of resilience, learning from mistakes, and maintaining integrity in all endeavors.

She encourages individuals to embrace challenges, think critically, and never shy away from pursuing their passions, even in the face of uncertainty.

Conclusion: A Vision for the Future

As RELEX Solutions continues to evolve and innovate, Johanna Småros remains committed to her vision of a world with zero-waste supply chains powered by technology and sustainability.

Through relentless dedication, collaboration, and a steadfast belief in the transformative power of innovation, she and her team are shaping the future of global commerce, one solution at a time.

In the dynamic landscape of entrepreneurship, RELEX Solutions stands as a beacon of inspiration, demonstrating the profound impact that a shared vision, perseverance, and innovation can have on shaping industries and driving positive change.

As Johanna Småros and her team continue to push the boundaries of possibility, the story of RELEX Solutions serves as a testament to the limitless potential of human creativity and ingenuity in building a better, more sustainable future for all.

Listen to the full podcast episode to know more, including:

• Johanna Småros’ journey exemplifies the power of perseverance and creativity in overcoming challenges.
• RELEX Solutions’ founding team’s synergy underscores the importance of collaboration in driving innovation and impact.
• Transitioning from research to business, RELEX Solutions transforms cutting-edge ideas into practical solutions for real-world challenges.
• Strategic fundraising rounds propel RELEX Solutions’ expansion into new markets and the development of advanced technologies.
• Leveraging artificial intelligence and machine learning, RELEX Solutions optimizes demand forecasting, supply chain planning, and commercial decision-making, driving both improved profitability and sustainability across the consumer goods value chain.
• Johanna’s advice emphasizes the importance of resilience, learning from mistakes, and upholding integrity in the entrepreneurial journey.
• RELEX Solutions’ commitment to a sustainable future underscores the transformative power of innovation in shaping industries and driving positive change globally.

 

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