Five retailers and brands shaking up their supply chain tech

Supply chain planning solutions provider JDA Software underlined a strong demand for back-end investment in UK retail during its half-year results announcement last month.                                                                      

The vendor noted it had recently closed deals with the likes of Marks & Spencer and, while overall global demand for its software and subscription products apparently grew by 23% in the first half of its financial year.

Andy Morrey, co-founder of the eNova Partnership consultancy, says an industry-wide focus on supply chain technology investment exists because eCommerce and click & collect volumes are rising, and the complexity of serving today’s shopper has increased.

“A lot of retailers have not fully understood the cost to serve or the pressures of selling across multiple channels, but they really now have to address the cost to serve,” he argues.

“We’re at tipping point of volume, it is impacting margins and therefore retailers have to realise cost efficiencies.”

Essential Retail has picked out some examples of how retailers are investing in behind-the-scenes technology to improve their internal operations and better serve shoppers.

One Stop Stores – tech to localise offering

Tesco-owned One Stop Stores worked with Galleria for a number of years to plan space and assortment, but is now benefiting from more innovation and resources after the supplier was acquired by Relex in 2016.

The 900-store convenience chain recently went live with the Finnish supplier’s Behavioural Clustering solution, which helps the retailer understand localised variations in customer preferences.

Relex’s system enables One Stop to automate the analysis of purchasing behaviour at store cluster and individual store level, with the aim being to better align assortment and space to customer demand by store.

Ultimately, the technology will allow the company to identify store clusters with a high variation of localised assortment, and use the data to determine future strategies around merchandising, assortment, pricing and marketing.

Mervin Nugent, senior space/range and systems manager at One Stop, says the new toolkit allows the retailer to take “a granular approach to decision-making across the business”.

“Not only are we able to improve the in-store shopping experience and build customer loyalty, we’re also becoming more efficient and maximising sales,” he adds.

Morrisons – AI for accuracy

The UK’s fourth largest supermarket, Morrisons, which famously operates an integrated supply chain model, has announced a number of changes to its methods behind the scenes.

Last month it agreed a supplier deal with McColl’s, which will see the retailer provide a wholesale service to the UK convenience chain. One year ago, meanwhile, Morrisons started working alongside German data science and machine learning company, Blue Yonder, to improve stock ordering processes.

Using the tech firm’s Replenishment Optimisation system, based on artificial intelligence (AI), Morrisons automates over 13 million ordering decisions a day, based on multiple lines of internal data and external influencing factors.

The grocer has used the technology for ambient and long-life product replenishment, but is soon set to use the AI capability for fresh food. CEO Dave Potts described the introduction of the new cloud-based system as the retailer’s “biggest new initiative”.

Warburtons – tech to earn a crust

On the brand side, Warburtons, which delivers bread to over 18,500 retail sites daily, has also upgraded its supply chain systems to improve performance.

The key focus was to get products off the shelves more quickly and streamline deliveries, and it opted to replace ageing IT with demand and promotional planning software from FuturMaster, which integrates into the company’s core SAP ERP system.

Using the new tech, Warburtons says it has been able to increase the accuracy of its forecasts, reduce administrative tasks, and work with individual retailers to predict whether product promotions will be successful.

“Given that we produce over two million wax-wrapped loaves, wraps, crumpets, pancakes and bread rolls every day, a 6% increase in forecast accuracy is a massive achievement,” explains Iain Bishop, senior commercial forecast manager at Warburtons.

“We can see exactly how many loaves will be required by every retailer for the next day, week or month.”

Warburtons has a team of three planners managing up to 2,500 forecasts each day using the FuturMaster software. The bakery brand estimates the new approach has saved them nearly £0.5 million over two years.

Asda and Ocado – in-house tech approach

Much of the innovative supply chain tech at Asda and Ocado is developed by the grocers’ internal teams.

It is now two years since the launch of Asda’s ToYou pick-up, drop-off service, which allows customers shopping at a variety of partner retail brands to choose the grocer as a destination to pick up or return their online orders.

Primarily developed by Asda’s information systems development department, ToYou also incorporates technology from Tata Consultancy Services, Oracle, Metapack and, fundamentally, Manhattan Associates.

Paul Anastasiou, senior director for business development in Asda Logistics Services, says the ToYou service continues to grow its partner base and technological capabilities.

“In 2017 we've introduced digital returns QR labels utilising mobile wallet technology which can be created on the go, on a smartphone and printed at store to make returns easy,” he adds.

“By the end of 2017 we expect to be working with over 30 partner brands.”

Online-only grocer Ocado is pushing the boundaries of supply chain tech development with use of robotics, drones and sophisticated analytics systems in its warehouses – powered by a 1,000-strong team of tech experts, developers and engineers.

The grocer operates a separate Ocado Technology division that not only supports the internal business, but provides the Ocado Smart Platform to run eCommerce operations for third-party retailers, most notably Morrisons.

Of late, this innovation drive has seen the company experiment with driverless vehicles fulfilling online orders and an e-car delivery proposition. Both are very much at prototype stage, but trials of those services were deemed successful.

This summer also saw a number of retailers, including Ocado, combine with big-brand suppliers to sign a GS1 UK industry charter announcing their commitment to a single solution for managing and exchanging product data.

Co-op, Itsu, L’Oréal, Mondelēz, Nestlé, PepsiCo, P&G, Sainsbury’s, Tesco, Unilever and Waitrose added their names to the agreement.

Two technology providers, 1WorldSync and Alkemics, are working with retailers and suppliers on a pilot programme, which is expected to improve data exchange in the supply chain when it is officially launched next year.

Currently, brands provide product information in multiple ways to different retailers, adding cost and complexity to the process. GS1 UK and its supporting retailers argue that committing to common standards will be far more efficient.

Mark Watson, director of planning & supply chain at Ocado, says: “As an industry, it is essential we work together to solve the problem of providing quality product data to all our customers.

“Giving them this information will help them make easier purchasing decisions – whether it’s based on health and wellbeing or lifestyle choices.”

And it is that aim to make things “easier” that lies at the heart of all of this supply chain technology investment and innovation currently taking place in retail. Retailers are implementing changes to simplify internal processes, automate some of the trickiest functions or remove complications for shoppers.

According to eNova’s Morrey, much of this investment is taking place due to the need to simplify back-end processes and focus on the front-end consumer experience, but it is also because of the multiple new fulfilment options existing in today’s supply chain.

“Before online orders reached tipping point, lots of retailers had a number of warehouses serving stores and a separate warehouse for eCommerce, but we’re now seeing stores as hub spots – shops are often viewed as warehouses themselves,” he notes.

“Holding stock in all these different places is too much because you’ve got to satisfy the customer whatever channel they come into. Retailers need transparency of where and what the stock is, and they need simplified processes so they can focus on their customers.”