Customers use 'Tell Coles' campaign to lambast Coles for poor on-shelf availability making it the retailer’s top priority, Smart hears
By Anna Game-Lopata | June 27, 2013
Coles General Manager Replenishment Grant Enders today told the 2013 Smart Conference, customers are complaining about the inability to access products, particularly ‘specials’ each week.
Enders, who has
seven years’ experience in supply chain roles at Coles, told the session dedicated to its new partnership approach to availability, the retailer “has a long, long way to go”.
“When Wesfarmers bought Coles five years ago, feedback from suppliers was that Coles is the most expensive retailer to deal with,” he says.
“We were difficult to deal with and drove cost into our partners’ supply chains. While Coles has made definite runs on the board, there’s still a lot of work to do.”
Enders says Coles has been investing significantly in customer-centric collaboration with its supply base over the last three years.
“With 3000 suppliers and a $1.2 billion spend on supply chain functions, there’s a real opportunity to take costs out,” Enders says.
He says the cost down imperative is based on Coles’ desire to reinvest profit back into “offering customers value”.
“If we can’t get it in the market we will do it ourselves, because innovation is how we differentiate ourselves,” Enders says.
Coles’ Delivered In Full on Day (DIFOD) metric is currently running at about 92 percent.
Enders says Coles wants to raise DIFOD to 95 percent initially, aiming for 96 percent.
“[Getting to 96 percent will be an ongoing journey, but we see a real gap in what we believe is achievable from a DIFOD point of view,” Enders says.
“The gap is on both sides, so [it’s a matter of] how we work together to improve that.”
To that end, Coles is investing in its top 60 key suppliers which account for 80 percent of its volumes. The investment includes people, IT and processes.
“Coles has developed category management teams, comprising marketing, replenishment, technology and finance people as well as a category manager accountable for the end to end requirements of a specific category,” Enders explains.
“We’ve also introduced weekly collaboration meetings, a supplier academy, portal and preferred supplier model.”
The portal allows suppliers to look at their own metrics and their 35-day order lead plan from Coles. They can download the information into their own systems and start planning.
The outcome of the work with category teams
at Coles is
an end to end supply chain action plan.
Coles has weekly collaboration meetings with its top 40 suppliers.
“It’s a significant investment from our supply base,” Enders says.
“And it’s a significant investment from us. Some suppliers are across four categories, so one meeting is actually four meetings.”
Enders
asserts Coles has matured as an organisation and has
recognised the importance of prioritising issues critical to its both its key partners and itself.
“We bring those [critical issues] together so we have a joint key performance indicator (KPI) we can work on together,” he says.
“It’s all about providing the right level of information across our supply chain and our partners’ supply chain so we can fulfil our obligation to our customers.”
Coles has also introduced a supplier “dashboard” with six KPIs, three of which are focussed on supply chain to balance commercial imperatives with supply chain initiatives.
“Coles and its three top suppliers, Lion, Kraft and P&G designed a framework to contextualise how suppliers can impact availability for customers,” Enders says.
“Despite everything we were doing there were still practices across both supply chains that were ineffective.
“For example, we had a different view of what service meant.
“The framework is a collaborative approach to work out what we need to do together; what were the important elements for suppliers that would enable an improvement to availability,” Enders says.
Forecasting was one element the parties agreed was an area both needed to work on.
Enders says the one thing Coles has achieved from collaboration with key suppliers is the agreement on “one number” for demand.
“No longer do we have the sales team saying it’s one number, the category team saying it’s another number, then we deliver something else,” he says.
“Of course things change, it isn’t perfect but it’s a step forward from where we were.”
He adds Coles
never mandated the framework, or tell suppliers they must use it.
“We left it to them and various organisations have used it to varying levels.”
Enders says the feedback has been very useful to Coles.
“We actually want to be challenged, we want to be part of the conversation. We don’t want to do the old tell and do, just go and get it done,” he says.
Enders also says Coles is putting extra focus on how it empowers team members to maintain inventory in the system and the right
level of information and skill sets to replenish stock in the store.
“Every morning before ten o’clock each of our stores have people walk round scanning every gap so it can be filled from stock in the back,” he says.
“If the stock isn’t there they adjust the inventory to drive replenishment. Sounds simple, but it doesn’t always work.”
Enders concedes the complexity of the “last fifty metres” is an ongoing challenge.
“However we’re committed to working to make sure the last fifty metres is as simplified for team members as possible,” he says.