When Wesfarmers announced its demerger from Coles on March 16 last year, an aggressive transformation timetable was set out almost immediately with a target completion in November 2018.
This created overnight an enormous amount of unexpected new work with 26 systems required for the transition. These services had been provided by Wesfarmers Corporate or other divisions of the group. Many of these systems were required prior to the demerger which clearly provided a huge set of risks and challenges.
At the same time, Coles’ executive team were in the early days of executing a new strategy, ‘A Fresh Tomorrow’, which included a significant focus on technology.
Coles’ chief information and digital officer (CIDO) Roger Sniezek and his technology team were busier than ever and now had this new challenge with a delivery date no-one wanted to move. Naturally, no-one wanted to slow down the execution strategy either.
“Together with the financial services leadership team, we looked at how we were going to plan and deliver this,” Sniezek tells CIO Australia. “While we were able to rejig a few things and apply a few of our best resources to the demerger program, this was a drop in the ocean compared with the resourcing that was required immediately.”
Sniezek turned to several partners who helped plan and deliver 26 new systems.
‘This was agile on steroids,” says Sniezek. “There was huge technology leadership focus on the demerger but we still had work to do and deliver well over 100 of the agreed technology strategy projects.”
But the teams pulled it off with no material technology incidents as part of the demerger process.
“We even received direct acquiring licenses from Mastercard and Visa globally so that we could continue to acquire nearly $40 billion of transactions each year across Coles Group, Kmart, Target and Officeworks,” he says.
The lesson here, and other times in his career, he says, is that CIOs need to work with great technology partners who can help in times of emergency as well as times of normality (even though there’s no such thing).
“We’ve applied this lesson by supercharging out strategy execution through a number of strategic partnerships. Our refreshed strategy, ‘Winning in our second century’, sees a significant focus on technology-led stores, supply chain and support centres.”
Since last November, alliances with several vendors are expected to cut costs by $1 billion over three years. The retailer cut a $950 million agreement with German company Wiltron to build two automated distribution centres to fulfil deliveries to stores. This provides a safer working environment for team members, lowers supply chain costs, and enhances competitiveness.
Earlier this year, Coles implemented the SAP suite to transform procurement, HR and finance; and signed a deal with Optus to provide fibre network links into every store, distribution, and support centre. Coles also struck a partnership with British online food retailer and platform provider, Ocado, to build automated fulfillment centres to meet the growing demand for home delivered groceries.
In July, the retailer said Microsoft Azure would become its cloud provider of choice, enabling the migration of applications from its data centres. It is also building a scalable enterprise data platform with Microsoft in Azure, which will be the foundation for future work in artificial intelligence, says Sniezek.
Innovations deliver retail efficiencies
Coles’ recent innovations are tackling one of the biggest challenges: how does it efficiently flow nearly 20 million cartons of stock each week to the right aisles at the right time across more than 800 supermarkets each carrying around 20,000 individual products?
The retailer’s Guided Split store function uses algorithms to detect what stock from a delivery should be sent straight to the shop floor and what can be kept in the stockroom for later replenishment.
This leverages wearable technology, voice, and Coles’ Simpler Tools mobile devices, which power activities for team members when they are on the shop floor.
“We have also used advanced analytics to better understand stock availability to optimise the replenishment of our store inventory, reducing gaps on the shelf and lost sales. This new machine learning model is replacing traditional availability measures that relied on historical data team member experience,” Sniezek tells CIO Australia.
The Simpler Tools innovation was driven from a desire to provide team members with mobile technology so that decisions on the shop floor are based on accurate and relevant data.
“Previously, we had 42 separate apps and websites to complete daily tasks so a key objective was to radically simplifying this,” he says.
The idea for Guided Split came through the operations and technology teams watching tasks in store and recognising the inefficiencies in the current process of unpacking stock that arrives on pallets. Team members were either taking stock out onto the shop floor that couldn’t fit on the shelves or hadn’t identified all the gaps where incoming stock was needed.
“Our Simpler Tools device made this information available but was cumbersome to use while moving cartons – which is when we hit on the idea of a wearable solution,” says Sniezek.
Similarly, Coles’ Lost Sales initiative originated from a collaboration between the supply chain, technology and data science teams identifying that current store processes only detect a limited number of inventory gaps on shelves and only do so at very limited specific points in time.
“The goal of the Lost Sales model was to make visible the true gaps on shelf that impact our customers – every product in every store, all through the day – and then provide data-based decisions on this insight.”
Guided Split is one of Coles’ first in-store experiments with wearable technology.
“The primary driver was productivity gains, but we have seen several associated benefits including an improved shopping experience for customers as more efficient replenishment means fewer roll cages in aisles,” says Sniezek.
“It also gives us visibility of distribution centre ‘mis-picks’ and improved safety by reducing double handling of cartons meaning fewer opportunities for injury.
The technology has enabled Coles to save more than several million per annum through store team member productivity, says Sniezek.
The Lost Sales machine learning model pulls together thousands of features describing sales patterns, supply chain data such as orders, deliveries and receipts, along with rich customer data to get an unprecedented view of customer-facing availability.
“We are putting the model to use by optimising orders, stock levels, and inventory replenishment in our fresh departments, and in meat alone, sales have improved by hundreds of thousands of dollars per week with an associated improvement in customer satisfaction,” says Sniezek.
A key challenge with this model, he says, was translating the maths behind the complex machine learning models so they could be understood and trusted, as well as aligning the organisation around a new way of measuring stock availability for customers.
“This was achieved through supply chain rather than technology being the champion of the project outcomes, explaining these to the wider organisation, and driving the change in reporting metric through the weekly executive trading meetings. We provided self-service dashboards to the supply chain and store teams to provide actionable and measurable insights,” he says.
Meanwhile, the Simpler Tools project was instantly embraced by stores as it simplified tasks for team members and is an intuitive tool. This was backed up by a strong focus on training, with champions identified in each state and dedicated change management.
“Structurally, this initiative was a true collaboration between our operations and technology teams, delivered iteratively and ensuring that user feedback and experience were constantly fed back into the product development team. Simpler Tools was not a packaged product, it was developed by Coles – this enabled us to adopt a fully-agile, product-led approach,” he says.
A head for business
Coles is an ASX-listed organisation and a large part of Sniezek’s role is to create and deliver the retailer’s strategy. This involves having a strong understanding of the macro and micro factors influencing retailing, the current business environment and technology more broadly, says Sniezek.
As CIDO, Sniezek ensures his colleagues are informed on the digital landscape and upcoming opportunities in their areas, as well as how the technology roadmap is “joined up” across the organisation.
Recently, he has held advanced analytics workshops for his colleagues, their general managers and direct reports to explain the opportunities of data science, as well as a masterclass in artificial intelligence courtesy of the Australian National University’s Genevieve Bell.
Finally, Coles’ organisational feedback tool, mysay, is a scientific measure of team engagement which can be compared to local and global benchmarks.
“We use this tool to identify areas of opportunity company-wide and specific opportunities two to three levels below. This has allowed us to develop very detailed plans to help grow our teams. In the past 12 months, within my area, these plans have driven an increase in engagement, which is a fantastic result,” he says.