Problem: Bringing order to a chaotic inventory replenishment system
U.K. coffee retailer Costa Express's growth plans were threatened by an inability to consistently forecast its partners' inventory replenishment needs. Software from ToolsGroup ended the guesswork and gave Costa clear visibility into its supply-demand world.
The Problem: Successful coffee retailing in space-constrained Britain requires creative resource utilization; the Starbucks "coffeehouse-on-every-corner" model is impractical. Costa Express, a unit of the Whitbread Group retail chain, has prospered by partnering with retailers to sell gourmet coffee from self-serve machines at airports, railway stations, hospitals, universities, offices, and gas stations.
Like many caffeinated growth companies, however, Costa faced the challenge of aligning its supply chain with a surge in business and the limits of its IT network. Since its 2011 acquisition by Whitbread, Costa had increased its machines footprint to 3,000 from 900. It also planned to expand beyond the U.K. But struggles with product replenishment threatened to derail its efforts. Though Costa's machines came with programs that supplied real-time sales data, its spreadsheet-based platform made it impossible to extract, consolidate, and present the data in a timely manner. Its replenishment-planning team was often left with the difficult task of estimating how much supply each site would need. They weren't always successful. As a result, many partners were overstocked, and inventory was lost to waste and spoilage that Costa couldn't reconcile. Costa realized the problem would only get worse as it continued to grow and the number of replenishment combinations multiplied.
The Players
Customer
Costa Express, a unit of the Whitbread Group retail chain Primary business: Selling gourmet coffee from self-serve machines at airports, railway stations, hospitals, universities, offices, and gas stations
Supplier
ToolsGroup
Solution
The Service Optimizer 99+ (SO99+) cloud-based supply chain planning solution
The Solution: In early 2013, Costa purchased a cloud-based software application, called SO99+, designed by ToolsGroup, a Boston-based IT solutions provider. The system took the guesswork out of replenishment. The system automatically collected data every four minutes from all 3,000 machines to spot sales and order trends and to forecast demand. It calculated the variances in demand and how much buffer stock would be needed at each site. It then created schedules for resupplying the precise amount of inventory at each site.
Costa could now match actual sales data with the levels of stock on hand at each site. By improving the accuracy of its forecasts, Costa enhanced a customer's coffee-buying experience and did it with less inventory. The company's replenishment team, freed from micromanaging supply, could focus on helping partners increase sales, improve service quality, and troubleshoot non-inventory-related problems. The software's accuracy and user-friendliness gave Costa the confidence to enter into direct sales and service relationships with ingredients suppliers instead of going through its existing third-party logistics service provider (3PL). This improved Costa's negotiating outcomes and made it easier to communicate changes to its vendors as its business grew. Along with the new replenishment software, Costa brought in a new 3PL and significantly flattened its distribution network. The company went from having one central warehouse and nine regional locations to just one facility.
The technological and physical changes, combined with the ability to purchase supplies directly, paid huge dividends for Costa. After six months, its logistics costs had dropped by 30 percent. Its carbon footprint was cut by 70 metric tons. There was a 20-percent reduction in field stock held at partner sites, and delivery refusal incidents from partners were halved. Costa developed direct purchasing relationships with 15 suppliers covering more than 50 stock-keeping units (SKUs) and renegotiated changes in product prices and pack sizes that led to a cut in the cost of some items.
As for expansion, Costa in January launched an "intelligent coffee station concession" to be placed in high-end properties, starting with locations in Dubai. ToolsGroup software will link up to these machines in the same way it does with Costa's standard equipment. Costa also plans to use the software to manage its spare parts supply chain.
By the way, the new concession is equipped with a feature that releases coffee smells to create what is being labeled an "immersive coffeehouse experience." If Starbucks' color weren't already green, it might be turning green with envy.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.