Challenges
One of the largest food and drug retailers in the U.S., operating thousands of stores and more than 50 distribution centers with over 400,000 items and 900 buyers, was grappling with significant financial risk stemming from outdated and decentralized procurement systems. Their legacy green-and-black screen systems from the 1990s relied heavily on manual, Excel-based decisions and simplistic mathematical models, which lacked visibility, scalability, and responsiveness to dynamic retail conditions. This resulted in challenges such as excessive perishables wastage (up to 20%), missed tiered pricing opportunities, poor truckload utilization, inefficient inventory placement, suboptimal EOQ modeling, and disjointed demand forecasts from actual purchasing decisions.
To address these issues and enable system-wide optimization, the retailer partnered with Trinamix to implement Investment Buy, an AI-driven procurement optimization engine tightly integrated with Oracle Supply Planning Cloud and Procurement Cloud. Leveraging stochastic modeling and NSGA-II (a non-dominated sorting genetic algorithm), the solution optimizes purchases based on multiple constraints—shelf life, storage capacity, cumulative tiered pricing, and multi-unit truckload optimization (volume, weight, pallet space). It also factors in supplier commitments, buyback clauses, and opportunity buys from internal tools like E-Deals.
This transformation empowers the retailer to simulate scenarios, evaluate working capital tradeoffs, and automate optimal purchasing decisions with visibility across the network. Initial runs on 5% of data have shown potential inventory optimization of up to 10%, representing tens of millions in savings, with full-scale rollout expected to dramatically enhance procurement efficiency, working capital, and service levels. The solution’s flexibility and scalability not only improve cost savings but also provide resilience in scenarios like COVID-era supply disruptions—marking a paradigm shift in modern retail procurement.
About the Company
- Industry: CPG/Retail
- Employees: Over 200,000
- Number of Stores: 2000+ retail food and drug stores
- Market Share: Estimated at 9.4% in the U.S. grocery sector
Approach
Trinamix team delivered a unified, self-service procurement platform that empowers suppliers to manage and monitor their activities seamlessly within a single, intuitive interface. By consolidating diverse data sources—including historical forecasts, vendor pricing tiers, order agreements, and distribution center inventory—the solution establishes a comprehensive, contextual foundation for smarter, strategic procurement decisions.
At the heart of this innovation lies Trinamix’s advanced Investment Buy solution, powered by AI-driven models and an intelligent simulation engine that enables smarter, data-backed purchasing decisions. This solution optimizes key procurement parameters such as economic order quantities, fixed lot multipliers, and minimum order quantities, while dynamically considering constraints like warehouse capacity, demand variability, shelf-life limitations, and vendor-specific restrictions. The platform also proactively identifies forward-buy opportunities across a complex supplier network, significantly enhancing purchasing precision and agility.
This solution integrates with Oracle Procurement and Supply Planning Cloud, bridging strategic recommendations with real-time operational execution. Complementing this, a custom Oracle APEX interface equips planners with powerful scenario analysis capabilities, allowing them to evaluate multiple buying strategies, compare cost impacts, and make investment decisions aligned with broader business objectives.
Despite an expanded project scope to include demand management features, the implementation adhered strictly to the planned timeline. Integration with Oracle Cloud ERP modules progressed smoothly, with minimal deviations and no compromise on quality.
Extensive user acceptance testing confirmed the solution’s usability and functional robustness, with minimal post-launch adjustments required—underscoring the stability of the design. Early pilot results forecast an 8–10% inventory reduction, translating into substantial cost savings and improved working capital efficiency.
This solution currently supports a growing user base of planners and buyers, positioning the organization for scalable adoption across similar industries facing complex procurement challenges. The disciplined, agile approach exemplifies Trinamix’s commitment to delivering AI-driven procurement excellence, on time, and with measurable business impact.
Project Objectives
- Data-Driven Procurement Decisions: Leverage data from ERP, Supply Planning, Pricing Terms, Shelf-Life, DC Inventory, and Promotions to enable holistic, data-driven procurement decisions.
- Enhanced Visibility and Supplier Collaboration: Improve transparency and responsiveness across the entire Purchase Order (PO) lifecycle—from PO generation through acknowledgments, ASN submissions, and in-transit tracking—to ensure timely material receipt.
- Strategic Investment Buying: Utilize Trinamix’s industry solution, Investment Buy, to execute forward-looking purchases that secure optimal pricing and mitigate future cost increases.
- AI-Driven Optimization: Apply simulation and AI-based algorithms to dynamically calculate EOQ (Economic Order Quantity), MOQ (Minimum Order Quantity), and FLM (Forward Looking Minimums) for each SKU-DC pairing.
- Operational Constraints Modeling: Integrate complex constraints such as vendor packaging requirements, truckload capacity, and warehouse storage limitations to drive feasible procurement decisions.
- Working Capital Optimization: Identify and act on smart buying opportunities to reduce excess inventory and optimize capital utilization.
- Scenario Planning and Simulation tools: Empower procurement teams with the ability to evaluate multiple investment scenarios and make informed, AI-guided buying decisions through advanced simulation capabilities.
- Supplier Self-Service Portal: Enable suppliers to access a unified platform for viewing and managing procurement activities, fostering self-sufficiency and efficiency.
- Collaborative Procurement Ecosystem: Establish a shared collaboration platform between the supplier network and internal procurement teams to streamline communication and decision-making.
Project Highlights
- Seamless Data Unification: Integrated internal and external data sources into Oracle Cloud, enabling a holistic view of supply and demand signals.
- Investment Buy Optimization Engine: Customized and deployed Trinamix's Investment Buy solution using stochastic modeling (NSGA-II algorithm) to recommend optimal buy quantities, factoring in EOQ, shelf-life, demand variability, and cost structures.
- Advanced Simulation Capabilities: Developed a simulation workbench allowing planners to test changes in capacity, opportunity mix, and demand inputs—enabling visibility into SKU-level impact, PO cancellations, and cost implications.
- Tiered Pricing and Opportunity Modeling: Enabled optimization of complex tiered supplier offers across multiple items, leveraging weight, volume, and dollar thresholds to maximize supplier discounts and ROI.
- Supplier Forecast Collaboration: Facilitated collaboration with suppliers on forecast sharing and commitment planning across time horizons, including constraints like lead times and cycle times.
- Truckload and Logistics Optimization: Introduced supplier clustering and truckload consolidation logic to minimize logistics costs while honoring vendor min/max constraints and maximizing vehicle utilization.
- Integration Across Oracle cloud Modules: Achieved tight integration with Oracle Supply Planning Cloud and Procurement Cloud; enabled automated requisition creation based on optimized buy plans.
- Advanced Stochastic Modeling: Applied advanced stochastic techniques using demand error patterns, plan orders, and real-time constraints to simulate and optimize investment buying decisions.
- User-Controlled Scenario Planning: Provided planners with manual overrides and what-if simulations (e.g., changing working capital or item quantities) to assess financial and operational impacts.
- Cross-System Integration: Integrated with WMS for storage constraints, E-Deals for supplier opportunities, and Oracle Procurement Cloud for BPA and tiered pricing data.
- Targeted Inventory Reduction: Solution aimed at optimizing over $700 million in inventory with an expected reduction of ~10%, significantly improving working capital and reducing wastage of perishables.
- Support for Multi-Unit Constraints: Handled buying and logistics decisions based on volume, weight, pallets, and dollar-value—accounting for various unit-of-measure constraints across the supply chain.
- Industry Relevant Innovation: Designed with grocers and food distributors in mind, but adaptable for logistics-intensive industries, such as furniture and general distribution.
Results
- 40–70% waste reduction: By optimizing EOQ for perishables based on their declining purchase likelihood over time, retailers have reduced waste by up to 70%, unlocking $30 million in working capital savings.
- 18–24% productivity gains: Improved buying decision workflows validated through UAT have increased productivity by up to 24%, paving the way for resource reallocation and potential reduction in buyer headcount (currently at 900).
- $28–60 million cost savings via AI-Driven Promotions: Using advanced stochastic AI models, the solution identifies optimal promotion opportunities within budget constraints—leading to substantial savings.
- $12–18 million in logistics cost reduction: Enhanced truckload consolidation has the potential to significantly reduce logistics spend for retailers, with the added benefit of lower CO2 emissions.
Solution Architecture
How Trinamix Investment Buy Works
Extensive user acceptance testing confirmed the solution’s usability and functional robustness, with minimal post-launch adjustments required—underscoring the stability of the design. Early pilot results forecast an 8–10% inventory reduction, translating into substantial cost savings and improved working capital efficiency.
Here’s how it works, in simple terms:
- Understands Shelf Life: Prevents overbuying products that will expire before you can sell them.
- Checks Budget Limits: Ensures your funds are spread smartly across essential items — not just bulk discounts.
- Accounts for Warehouse Space: Doesn’t suggest buying more than you can store.
- Plans for Price Increases: Recommends early buys before known supplier price hikes.
- Handles Tiered Discounts: Suggests the right quantity where the discount is worth it — without overstocking.
- Targets Volume Bonuses: Helps you meet lump sum thresholds (like “spend X to get Y% off”) by optimizing your overall mix.
- Optimizes Truckloads: Groups purchases to fill transport vehicles efficiently, reducing shipping costs.
Let’s take an example: Imagine you own a dairy shop, milk parlor, or local dairy store — and a supplier approaches you with an offer you:
- 20% Discount: If you buy 1,000 packets of milk
- 30% Discount: If you buy 2,000 packets of milk
Sounds great, right? But milk has a short shelf life — just a few days. If you only sell 1,200 packets before it expires, the remaining 800 will go to waste. Even though the discount was bigger, you lost money. Buying in bulk often means getting attractive discounts from suppliers. But what seems like a great deal on paper can turn into a loss if not managed smartly.
Then what’s the Problem?
Let’s say you’re offered a bigger discount if you buy more of a product. Tempting, right? But what if:
The product expires quickly.
You don’t have enough warehouse space.
Your budget is limited.
Future demand is uncertain.
Buying too much might lead to spoilage, stockpiling, or budget issues — and end up costing more than you save. That’s where Trinamix Investment Buy steps in — helping businesses make smarter, data-driven purchase decisions.
Trinamix Investment Buy considers this real-world challenge. It calculates how much milk you can sell within the shelf life and recommends buying only what makes sense — balancing discounts with real demand and storage capacity.
On the other hand, let’s take another example of a grocery store, a retail food store, or a general store, where a supplier offers you:
- 40% discount if you buy 1 truckload of flour bags
- 50% discount if you buy 2 truckloads
Sounds tempting, right?
But here’s the reality check:
- Warehouse Limitation: You only have space for half a truckload.
- Budget Constraint: You need to purchase other essentials too — not just flour bags.
- Product Stability: Though flour bags have a longer shelf life than milk, it still needs to move quickly to prevent backlog or infestation.
So, what do you do?
This is where Trinamix Investment Buy comes in.
It evaluates your storage limits, budget spread, and historical demand, and suggests:
- Buying only half a truckload, even if it means skipping the 50% discount — because you avoid overbuying, preserve budget for other products, and eliminate the risk of unused inventory.
The outcome
You buy just the right quantity, at the right time, at the best price — all while staying within budget, using available space, and meeting demand. It’s not about buying more. It’s about buying smarter.
Proven Results – Step-by-Step Progress with Tangible Outcomes
5% – Executive Briefing
Gain detailed insights into Trinamix's capabilities, Investment Buy best practices, and highest-value use cases.
10% – Technology Assessment
Dive into the Trinamix platform's capabilities, its model-driven architecture, and test it against your company's sample data set.
35% – Product Trial
Identify a high-impact business problem and collaborate with the Trinamix team to rapidly build an application that solves it.
50% – Application Development in Production
Scale and deploy a tested Trinamix application into production. Incorporate user feedback and optimize algorithms to drive maximum economic value.
