LONDON -- Taking store replenishment to a refined level, Sainsbury's here began this summer to phase in a new store replenishment planning system that calculates order plans daily by store and stockkeeping unit.
Although the chain, parent of Shaw's, West Bridgewater, Mass., has been using demand forecasting software for years, there was a "huge problem with consistency of use of those systems," according to Ed Thomas, Sainsbury's Cygnet project manager.
Cygnet is the name of the project to "re-platform" all legacy store and warehouse ordering systems, on which the chain is collaborating with Retek, Minneapolis, and Accenture, Chicago.
Like most food retailers, Sainsbury's found that having good availability of items, particularly perishables, was essential to keeping its customers. "There has definitely been a change in customer behavior," Thomas said. "They notice if something is going to be out of code in two to three days, and select a fresher product. This increases the challenge of controlling stock loss."
Consumers also clearly notice if an item is out of stock, he said, adding that the chain cannot afford to overstock perishables because of the loss that will occur.
Particularly during seasonal promotions, the forecast must be as close to perfect as possible. "You have to be bang-on each day during Christmas," Thomas said. Thus, the chain concluded it needed daily forecasting.
Although Sainsbury's uses the Retek Merchandising System for its core corporate data, it could not find replenishment technology to match its volume and performance requirements. Retek and Accenture then developed a custom replenishment module for Sainsbury's needs. It integrates with Retek's demand forecasting software, which has been enhanced to provide daily forecasting, custom alerts and pre-built workbooks created during the overnight batch run.
The system will produce a plan every night for every store commodity, Thomas said. After stock data is taken from stores, orders are generated and sent to vendors at 4:30 a.m. "Given a database of 2.5 terabytes, this is quite a feat," he noted.
Meanwhile, Sainsbury's is also developing a warehouse replenishment system with Retek and Accenture that produces a daily order plan for the chain's warehouses. It collects and consolidates all store orders. The software also supports adjustment of store orders to take stock availability into account.
Retek's new software will also help plan deliveries to warehouses. Suppliers will be given instruction on products, trucks and warehouse destinations. Vendors will be able to give Sainsbury's preferred delivery times and dates, which can't affect traffic. The planning system supports getting a vehicle into a warehouse every 90 seconds. Thomas originally revealed Sainsbury's plans at the Retek World 2003 conference in Orlando, Fla., in May. Thomas said Sainsbury's executives learned several things from developing the replenishment program, including:
Get on with it. "Sometimes it's better to make a decision that's wrong, rather than dragging your feet, waiting and spending money, though the project is not moving forward," Thomas said.
Complete training. Employee training has to be conducted so the tool becomes "their right hand," he said. But employees should be required to get a certain score on the test of the new technology before being allowed to use it.
Stay on the same page. With development taking place at four locations worldwide, it is easy to misunderstand requirements. At Retek's Atlanta sites, Sainsbury's put some Accenture team members to make sure they understand how the technology works and "not do their own thing."