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Connected washing machines and a robot delivering gin. These were just two of the unexpected things I experienced at last week’s IGD Digital Commerce event.

I attended the second day of this visionary event, and I took away quite a few insights and reflections from the day. You’ll be aware that the IGD Supply Chain Summit is coming soon, and I’m sure that will be just as insightful a day – if you haven’t booked, we still have tickets left!

Disruptive technology

As you’d expect at an event entitled Digital Commerce, there were plenty of new developments being showcased. Yuguang Han, Senior Product Manager with JD.com highlighted Retail-as-a-Service, which involves the retailer making their technology and infrastructure available to partners. JD.com is increasingly renowned for being one of the most advanced retailers in the world, so this seems like an amazing opportunity for other businesses to leapfrog forward. The speaker described JD.com’s role as follows:

  • Co-create value
  • Empower partners
  • Open ecosystem

Chris Conway, Head of Digital at the Co-op made the very clear point that digital is much more than just ecommerce. He showed how store security cameras are now helping them visualise and analyse shelf layouts, and how their digital team has developed an shift management app to help store managers and staff. We took away that his digital development team is increasingly multi-disciplinary, and focused on delivering a range of small but noticeable improvements for Co-op’s people and customers.

This “test, learn and iteratively improve” approach was echoed by Beth Marchant from Sainsbury’s Instore Digital team. We heard how her team are working to improve shopper experiences offline and online. They are testing an app for customers to use instore to scan, pay and walk out, eliminating the need to queue up. But it was the agile and customer-centred approach which most hit home for me from the session.

Transparency and sustainability

Businesses are working hard to keep up with and lead shoppers’ expectations of more ethical, sustainable and transparent operations. Tom Pickford from P&G described an example of rethinking product formats to reduce emissions and shipping costs. In this case he referred to a fascinating new product called DS3 that P&G has “incubated”. DS3 is a range of 8 different home and body care products sold as small solid single-use swatches which have had all the water removed. Compared to standard liquid-based versions of the products, DS3 removes 80% of the weight and 70% of the space, and they are activated by water when used.

We heard from Rachel Jeans of Amazon about their Frustration-Free Packaging programme, partnering with manufacturers to optimise packaging for ecommerce delivery. The most impactful example was a razor shipped to Amazon in theft-resistant (consumer-resistant?) plastic. The manufacturer redesigned the packaging to use a box which could simply be labelled and shipped by Amazon, reducing the amount of air shipped by 82%. Overall, the programme reduced packaging waste by 16% in 2017, avoiding the need for over 300 million Amazon outer boxes.

Yuguang Han from JD.com outlining how it is using blockchain to increase transparency and confidence in the provenance of its food. JD.com is offering consumers the chance to see key shipping, storage and purchasing information. Beef was highlighted in the presentation but it will no doubt be rolled out to other products before long, and JD.com’s influential role in China and worldwide will help build confidence in the technology.

Last mile fulfilment

My final set of reflections look at the changing ways that products will get delivered, starting with JD.com again. We heard about its programme to develop drone technology. The current roll-out is focused on hard-to-reach rural areas, but our speaker also highlighted some research into drones carrying heavier loads. When the payloads are approaching a tonne in weight, you can tell that it is more likely to be part of their logistics operation rather than a last-mile solution.

Tom Pickford from P&G explored the world of gadgets that reorder supplies without you even clicking “Buy Now”. Smart washing machines – who knew? But they make up 10% of the machines sold in the UK last year, and Miele’s latest range have space for bottles of detergent to be connected up and added to each load as needed. So when it runs out, the washing machine just orders more!

We also heard about the hypermarket which fits into a 50m2 city centre space. Thomas Pocher, owner of two Leclerc hypermarkets in Lille described his newest ecommerce offering, called “Drive Piéton” or Pedestrian Drive. Thomas wanted to bring Leclerc’s low prices and wide choice to the urban population, and with these tiny counters in the downtown area, he has done that. Inventory is stored and picked in his edge-of-town warehouses, then small, frequent deliveries are made to the city centre units.

Towards the end of the day, we were treated to a real-life demonstration from Chris Conway, who had an autonomous delivery robot on standby to deliver a prize to the lucky winner at her seat! These small units can be seen in Milton Keynes, UK as part of a trial with Starship Technologies, but it was fun to see one in operation in the hall.

Final thoughts

Overall, the event demonstrated to me again the extent to which supply chain is at the heart of leading business strategies. Much of what we heard combined the best of online and offline retailing, and it is getting harder to separate off “pure ecommerce” from shopping more generally. So this flexible omnichannel approach needs to be central to the ongoing development of our supply chains.

Alistair Balderson

Alistair Balderson

Head of Supply Chain Insight

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Alex outlines Co-op’s supply chain priorities for the year ahead.

Co-op held its supplier conference in Manchester on 6th June 2018. The retailer provided an update on its business and supply chain strategies and initiatives for the next three years. The conference was an opportunity for Co-op to address the following objectives:

  • Share an understanding of the previous year’s business performance
  • Demonstrate some of the actions Co-op is taking to improve supplier relationships
  • Create a conversation with suppliers, to help identify joint opportunities

Trading update and working with Nisa

Co-op’s Retail Chief Commercial Officer, Michael Fletcher, began with a trading update, beginning with an overview of some of the external factors impacting Co-op’s business. Michael outlined that the convenience sector would be the second fastest growing area behind the discount sector in the next five years with online continuing to grow steadily. Following 17 successive quarters of growth ahead of the market, the outlook remains positive for Co-op.

The Co-op has recently begun to test the online convenience market by offering its goods through the Deliveroo platform in selected Manchester postcodes, a relatively low risk way to enter the market. The NISA partnership offers potential for up to 5000 ‘mini hubs’ to be available for online shopping with many external partners preferred to service shoppers in the last mile. With prime retail space increasing at a premium, the acquisition gives Co-op the ability to ‘step-change’ its offer to new shoppers in different demographics with varying missions. Co-op’s branded products will feature in all Nisa stores with its partners selecting from Co-op’s product portfolio.

Supply Chain Update

Head of Supply Chain, Richard Ablitt, then presented the supply chain update, which began with an acknowledgement of a challenging first six months of 2018. This began with the ‘Beast from the East’, followed by storm Emma and then into the hottest May day on record, each of these unprecedented events contributed to significant reductions in on shelf availability for approximately four weeks.

With capacity being constrained, Co-op has invested in opening a new distribution centre in Q4,2018 in Northamptonshire, helping to increase network capacity by 8%. It also plans to open a second site in the south-east in 2021. To support with the 2018 summer period, Co-op has committed to investing in over £20m of additional safety stock whilst maintaining additional fleets across its UK network to support this additional volume.

Supplier Relationships

During the next section of the day we heard from Peter Fenton, Supplier Engagement Manager. As a priority, Co-op is aiming to tackle four key areas to improve its supplier relationships:

  1. Reducing time taken to resolve financial disputes
  2. Launching a supplier helpline
  3. Creating a supplier dashboard, allowing suppliers access to depot shortages in the fresh network
  4. Improving the promotional confirmation process

Chris Machin, Category Supply Manager - Fresh then presented some of the results from a recent supplier survey completed in conjunction with IGD, outlining the strengths, weaknesses, and areas of opportunity for Co-op. The aim of this survey was to help inform Co-op’s future strategy and outline any capability gaps. As a result, Co-op committed to the following joint initiatives:

  • More supplier masterclasses
  • Review of the promotions, replenishment, derogation, gap scanning processes
  • Buy-ins to be reviewed for promotions
  • Creation of standard templates for reporting
  • Creation of a formal dispute resolution process

Achieving these objectives will require a cultural change across the business to compliment the new systems implementation over the next three years. Supplier collaboration will be at the heart of the success.

Retail Business Transformation (RBT)

Dean Crowther, Category Supply Chain Manager –Ambient was next on stage, outlining how RBT would step-change Co-op’s performance over the next three years. This will lead to a stronger Co-op, supported by a stronger network of communities. Crowther outlined that one of the key objectives of the programme was to free up Co-op staff for value add exercises helping to create happy customer experiences in store driven by better availability and tailored ranges.

  1. RBT has seven core objectives:
  2. Improve the promotional forecast process
  3. Give fresher information to suppliers
  4. Gain logistical efficiencies
  5. Improve in store compliance
  6. Improve payment process
  7. Better communication
  8. Free up time for collaborative initiatives.

Q4 2018 will see a pilot phase undertaken with a selected group of suppliers, followed by a rollout phased across 2019. This will require a period of upskilling across the head office team and further collaboration required with suppliers to assess systems integration.

Growing Co-op way

Martin Rogers, Head of New Channels was next up, outlining how mergers and acquisitions were fast becoming the new norm across the FMCG industry, a trend expected to accelerate in the future. Operators are now having to win to take share, with many options available to do so. With the Nisa partnership one way of driving growth and on top of the 100 store openings a year, Co-op is also looking to franchise its model, licensing the Co-op brand to independent retailers across the U.K.

If you’d like the chance to speak with Co-op’s senior Supply Chain leadership team, they’ll be hosting a retailer breakout session at the IGD Supply Chain Summit, 2018.

Alex Edge

Alex Edge

Supply Chain Insight Manager

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Barcode standards agency, GS1 UK, has launched its new product data service, productDNA.

ProductDNA aims to deliver accurate and consistent data; capturing, managing and distribution information in way that is easily accessed and shared across the supply chain. The productDNA service consists of:

  • A new industry data model for suppliers to share product data with retailers
  • A cloud-based secure product catalogue
  • An independent physical product verification to ensure accuracy of product data

Easy access to data

The service covers over 150 product attributes, including ingredients, weight, dimensions, nutritional values and allergen information. Brands and suppliers own the data, and retailers have easy access to the information, ensuring that shoppers can receive accurate and up to date information about their products.

Improving efficiencies

GS1 UK is managing productDNA through its Retail Grocery Advisory Board. The board aims to provide better customer experience whilst improving efficiencies throughout the supply chain. Members include major retailers (Asda, Boots, Co-op, Morrisons, Ocado, Sainsbury’s, Tesco and Waitrose) and manufacturers (Coca Cola Enterprises, Dairy Crest, Kellogg’s, Mondelez, Müller, Nestlé, PepsiCo P&G and Unilever) in the UK.

Promoting better quality data

GS1 UK’s chief executive, Gary Lynch, commented: “The grocery sector has spent years grappling with the transfer of data. ProductDNA sets out agreed processes and data rules, based on the common need to improve product data quality and efficient sharing across the retail industry. We’re excited to have created productDNA in partnership with our members to address these issues and look forward to its adoption by the industry.”

Presentations

03/10/2018
An essential summary of supply chain priorities, latest network developments, and other key statistics for Co-op.
25/09/2018
Find out how Co-op and Muller have saved time, effort and resource in processing and visualising large volumes of data whilst helping to grow sales. This has been done by partnering with Atheon to use its SKUtrak solution.
05/09/2018
In this case study, find out more about the shortlisted entries for this year’s IGD Sustainable Futures Award. The finalists are: Aldi, Arla, Coca-Cola European Partners, Co-op, East of England Co-op and Tideford Organics.

Download our new infographic to discover the latest trends among Co-op shoppers that will help you get closer to the largest convenience retailer in the UK.

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Early bird offer!
19 September, Manchester

Succeeding together. The supplier engagement day will help delegates learn practical ways to action Co-op’s strategy and will also give you the chance to help strengthen relationships and businesses together.

A practical one day workshop for all roles in suppliers, to help develop your understanding of the vital part that supply chains play in underpinning FMCG businesses.