With annual turnover in 2010 of approximately £7.5 billion, and approximately 2,800 stores — from convenience stores to petrol forecourts — The Co-operative Group is the U.K.’s fifth-largest food retailer and the country’s largest mutual retailer Following its 2009 acquisition of the 600 Somerfield stores, The Co-operative Group saw an opportunity to streamline operations by centralising its store replenishment process, a strategy that will help the firm to save more than £12 million a year while maintaining its market-leading ethical stance.

The Co-operative Group launched Store Merchandising and Replenishment Transformation (SMART) — an ambitious multi-year programme scheduled to reach full deployment by the end of 2011. Previously, The Co-operative Group relied on the acumen and experience of its store managers for daily replenishment orders. While still loosely under the direction of corporate planners, store managers had broad latitude to make key merchandising decisions for their own stores. However, relying on those thoughtful hunches created unpredictable stock outages and overages that the organisation needed to reduce or eliminate. The organisation also sought to deploy a consistent, unified set of workflow processes to underpin the technical solution.

That’s when The Co-operative Group began to scrutinise the solution used by its 600 newly acquired Somerfield stores. The Somerfield model encompassed several collaborative systems that centrally managed the range, space, promotions, abnormalities, seasonality, replenishment opportunities, and distribution network.

A key component of the SMART solution is the sophisticated general store merchandising (GSM) system that enables a central buying team to more tightly control product range and space across stores, while still enabling store managers to make key decisions regarding optional and local lines.

The final product range is embodied in a “planogram” that shows the relationship between fixtures, space and products. GSM factors in both central and store-level decisions to create store-specific space plans that best reflect the needs of each store’s unique customer preferences, local preferences, promotions, and inventory levels further back in the supply chain.

To manage the multitude of simultaneous promotions running across the Co-operative retail organisation, which uses a separate centralised event store management (ESM) system that controls the replenishment of promotional lines to stores. ESM processes more than six million records each night — a job that must complete by a specific time so that Co-operative Group’s promotional orders reach the distribution system in time for the warehouses. This is on top of the 45 plus interfaces that run in a specific sequence. Co-op has a six-hour overnight window to process all the planograms, promotional events, and order creation. This window wasn’t big enough if Co-op were to satisfy the requirements of the Food business.

Prior to the acquisition by The Co-operative Group, Somerfield’s IT team turned to Syncsort DMExpress to break that processing bottleneck and bring greater speed — and accuracy — to the replenishment of its 600 stores. Soon, Somerfield’s GSM application was automatically generating 600 store-specific plans that factored in historical sales figures, derived forecasts, current stocks, and point-of sale data — in just two hours each night. DMExpress is the only data integration solution to help drive ROI through a unique library of data integration and sorting algorithms for high performance and optimised utilisation of standard hardware.

A 2,800-Store Deployment Brings Greater Speed and Impressive ROI

Recognising that the Somerfield system for generating planograms was feasible for 600 stores in a short window, The Co-operative Group analysed whether it was possible to deploy the same solution for its full complement of 2,800 stores — a six-fold increase in data — in the same overnight processing window.

“Each of our stores manages more than 180 food categories, with each category consisting of approximately 100 individual line items, “ said Peter Chapman, SMART IS programme Manager. “When you multiply that by 2,800 stores, you get in the region of 54 million planograms. That is an enormous volume of data to be processed to create thousands of space plans every day of the year. We have a very narrow batch window to make that happen. But we found that, with Syncsort DMExpress, we could achieve that huge volume of processing on time for all of our stores on the same day they need them — not 24 hours later. Having that data in each store at the start of their trading day means store managers are continually aligned with the absolutely latest data, promotions, and trends. When the batch processing window closes, the planograms can be viewed and acted upon locally at the stores, while still being hosted centrally.”

According to Chapman, DMExpress has delivered more than what the organisation optimistically anticipated. “Based on the initial work with Somerfield, we knew that DMExpress had excellent functional capabilities,” he said. “And our pilot phase certainly confirmed that. But we didn’t know how scalable it was. During the volume testing, DMExpress has exceeded our expectations in its ability to process huge volumes of data. Today the entire estate is reliant on GSM for its range and planograms, and by the end of 2011, the entire estate will be having its promotions managed by ESM.”

Chapman explained that GSM generates store-specific space plans using multithreading programs. To improve performance, the programs convert the database tables to binary files and sort them on specific fields using DMExpress. Some of these data files are fairly large, ranging from 700MB to 2GB. “Our performance testing has shown that using C++ with DMExpress is at least five times faster than using C++ without Syncsort and around 10 times faster than C++ running directly against the database.”

Chapman also pointed to one example of the agility that these rapid planograms create. “Weather is one of the toughest variables we must deal with,” he said. “So if there’s warm weather forecast, we know we’ll sell more cold drinks. We can influence the stores’ orders centrally, over night, and dictate to the stores where to place additional drinks in their individual stores the next morning as they open. The increased volumes are then delivered in line with an increased space now allocated to the soft drinks. This helps us capitalise on emerging opportunities far more quickly than ever before.

“DMExpress has dramatically simplified the overnight batch process for GSM to a tremendous extent. We have seen a huge performance boost from this system, which has enabled us to achieve major efficiencies and improvements to our central ordering solution. The anticipated ROI derived from implementing a centralized solution is significant — approximately £1 million per month. Without DMExpress, we would not have been able to achieve the critical overnight batch processing that makes it all possible.

“And finally, it simply works! DMExpress is truly an unsung hero in our IT infrastructure. We have experienced zero downtime with DMExpress and are yet to raise a service call after a year of continuous high-demand usage.”
 

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