Coles Group has significantly progressed in its efforts to become more operationally driven by data and advanced analytics, with evidence on show across its supply chain, stores and online presence.
Coles Group’s Matt Swindells.
The group has, for several years, revealed a series of point investments in its advanced analytics capability, targeting efficiency improvements in various parts of its operations.
At an investor day late last week, the vision for advanced analytics came together, with chief operations and supply chain officer Matt Swindells highlighting the retailer’s transformation into a “data-driven, technology-led, digitised omnichannel operation.”
Manhattan TMS
One project to largely fly under the radar is a replacement of the grocery company’s transport management system (TMS).
The new Manhattan Active TMS was introduced earlier this year, according to Coles documentation [pdf], replacing a previous system called OneNet.
Swindells said that the software vendor, Manhattan Associates, specifically sought out Coles’ input as part of a broader upgrade to its “base product”.
“They said to us, ‘We know you now know transport. We are upgrading our base product, we would like to work with you on your designs to be bespoke to go into base’, and that is exactly what we’ve just introduced.
“This gives us revenue and cost visibility, it onboards suppliers faster, and it also has full tracking and traceability.”
Fresh produce replenishment
Swindells said the impact of advanced analytics is also apparent in fresh produce replenishment in its store and distribution network.
“We finished this a year ago, and what I really like about this is we used our own internal advanced analytics team to build and own and create the forecast [for what was needed and when in stores],” he said.
“We ran a bake-off with best practice solution providers, and we came out on top. Our depth of knowledge over two decades in replenishment planning has set us up really well to get control of our fresh supply chain.
“And so, we can now control range, the operation, both within stores and within the distribution centres, and we can give [fresh produce] suppliers more certainty [about demand].
“It means the speed at which we can move fresh produce will be faster than ever, and in fresh, speed wins. The freshest products, with the most efficient operation.”
Efficient fix activity
Swindells said that activity in a store typically can be thought of in “three main buckets – fill, fix and serve”.
“Fill is obvious – stock onto a shelf, but fix as a process is maintaining inventory accuracy, making sure the [store/shelf] layout is right, rotating products and code checking,” he said.
“In a business of our scale, it is a large amount of activity. Historically we have asked our team members to fix across the whole story every day – scan every gap, investigate every low and high item, make sure you check for all the things that should be rotated, rework the load out the back twice a day.
“And what we know is 15 percent of all that activity resulted in an action that drove no value.”
Through work with advanced analytics, Swindells said that inventory in stores had been “digitised further”, and staff now work to a “guided” list of activities, informed by data.
“A team member now is directed, based upon data, to the activity in the store, and we can now measure that the effectiveness of that activity has gone from 15 percent to 70 percent,” Swindells said.
The Palantir project
Earlier this year, Coles announced a mysterious partnership with Palantir Technologies.
Not much was said about the retailer’s planned use of Palantir at the time, except that it would aid executive oversight and have a focus on workforce management.
The investor day provided the first real detail of the partnership, and how it is landing in Coles stores.
Swindells said that there are 24,000 process “standards” that are used “to run a Coles shop in a week, and they are measured to 15-minute increments.”
“They reflect activity by day and department, and … the sales we project to take through that period.”
Swindells noted that “process alone does not generate value”, leading the retailer to “bring in data and analytics to a depth that we’ve never done before.”
“It takes all those work standards, by day and by department, by store, by 15 minutes, and at a store level it correlates them against the team: Who works there? What is their capability? And importantly what hours do they want to do?” he said.
“We’re not trying to force the team to a theoretical efficiency standard.
“We are bringing for the first time the activity in a store to the desired hours and capability of the store team. It is a fundamental difference.”
In the first phase of activity, Coles is using Palantir to bring together “a complex time and motion system and … team member rostering capability system.”
“[Palantir have] done it,” Swindells said.
He said that team member churn had reduced by 25 percent. In addition, “80 percent of all of our team are now working the desired hours that they have told us are the shifts they want to do.”
“Not only is our efficiency still in place, but our team member engagement is up a quartile, and our performance improves. This is really powerful,” he said.
“Where there are cost pressures, the ability to drive efficiency with the team, not against them, is a differentiator.”
Swindells said the retailer now planned to “integrate customer NPS [net promoter score] data” into Palantir as a “third dimension.”
This would position Palantir as a system driving “efficiency of process, engagement of team and capability, and customer outcomes.”
“We’ve got the ability now to have a way of working efficiently for the right outcomes,” he said.
Loss prevention
Swindells briefly touched on loss prevention, saying that existing initiatives such as the gates at so-called assisted checkouts had proven effective.
He said several technology and data-based systems are under development.
“We’ve got weighted shelves that can detect behaviour that is more aligned to someone who may not pay on the way out, and we’ve got virtual curtains that can also intercept and interact with a consumer if we think that they need a bit of assistance,” he said.
“We have to keep the technology ahead of the problem.
“We have to keep our team members working in a safe environment and we have to keep making sure that not only is loss a problem in the P&L, but it’s also a problem in availability for other consumers.”
Store wayfinding
Coles chief digital officer Ben Hassing also provided a glimpse of several technology-based advances the retailer is making.
One of these is the incorporation of digital wayfinding into the Coles app, which means customers can build a shopping list in the app and then be shown the most efficient way to pick those items based on the store and shelf layout.
“We’ve taken this next step in 15 stores in Victoria where we actually ‘wayfind’ that shopping list,” Hassing said.
“You may have 20 items, we will tell you where to go throughout the store, so you can save time while you shop instore.”
Hassing said that capability could be extended further with some form of gamification introduced in the future.
He also briefly showed off smart trolleys, which the company is trialling from Instacart, as well as electronic shelf labels and “availability cameras”, which appear to provide proof to a shopper that a product is actually on the shelf.