8 IdeaBook 2015
supply chain and redefine roles within the wider business
… and quickly!
A FRESH START
During my first month (April 2012), it was clear that I
needed to make some changes without delay. These initial
changes would lay the foundation for the rest of the strategic changes that would be necessary. I therefore immediately moved responsibility for partner replenishment
from finance to the new supply chain team. This change
would ensure that partner replenishment would receive
the right amount of attention during
the transformation. I next undertook
a review of providers of replenishment
and demand planning software, which
included looking at how we could tap
into our valuable telemetry data and
use this to maintain the inventories at
partner sites.
In June 2012, I initiated a tender process designed to seek out a new logistics
partner. This process included reviewing relationships with suppliers and
assessing whether Costa Express should
start to purchase ingredients directly
from suppliers.
By November 2012, my team and I
had come up with both a new replenishment planning tool and a new logistics
provider, Howard Tenens, and planned
to have them both up and running by
January 2013. As part of this plan, we
had decided to start purchasing ingredients directly. By
doing so, we would be able to negotiate and control our
costs more effectively as our volumes grew.
Howard Tenens collects stock from suppliers (
including coffee beans, flavored syrups, cups, lids, stirrers, and
napkins), stores it in a central warehouse, and delivers
stock as needed to Costa Express partners. Besides
enabling us to purchase ingredients directly, having a
new logistics partner has simplified our logistics model.
Our previous model was more distributed, with one
central warehouse and nine regional ones. Now that we
hold everything in one central location, we are able to
make more next-day deliveries. Another advantage is
that Howard Tenens runs most of its fleet on either dual
fuel (combined gas and diesel) or biomethane fuel. This
means we are on track to save approximately 73 metric
tons of carbon emissions in our first year working togeth-
er. We have also started working with another division of
Howard Tenens to support our coffee machine-installa-
tion logistics.
Despite initial reservations within the business, I was
adamant it would be best to implement these changes all
at once instead of sequentially, challenging the conventional wisdom. This meant that by January 2013 we were
in the midst of three major supply chain changes: a new
IT system, a new logistics provider, and a new purchasing
process.
As part of the new IT system, we chose a software
application from ToolsGroup called
SO99+ that manages key supply chain
planning processes, including demand
planning, demand sensing, and inventory optimization. We chose it because
it could help us improve forecast accuracy while at the same time maintaining
high customer service levels with less
inventory. This went live in January
2013 as planned and was fundamental
to the enabling of other changes involving both people and processes.
Before implementing that application, Costa Express had used the
spreadsheet system to estimate how
much inventory to supply to each site,
The new system allowed the business to make an
important fourth change: redefining the role of the Brand
Guardians. Because the software was so much faster,
more accurate, and easier to use than the old spreadsheet
system, these people were able to take on the new role
of Brand Excellence Advisors, whose main responsibility
today is helping partners sell more effectively and deliver a great customer experience. With this new role, the
