Buyers guide to ERP: Midlands Co-op case study

Midlands Co-op, the UK's second largest independent co-operative, is this year due to complete a three-phase ERP project that began in 2007, covering 160 retail stores.

Midlands Co-op, the UK's second largest independent co-operative, is this year due to complete a three-phase ERP project that began in 2007, covering 160 retail stores.

The ERP platform provides central data management, automated order and inventory management, stock replenishment, EPoS and business intelligence, as well as streamlined invoice matching and accounts payable processes. But, notably, it isn't an Oracle, SAP or IBM system, but one from second-tier ERP vendor Aldata.

Mark Ruttley, head of IT at Midlands Co-op, previously worked at Northern Foods where he implemented SAP, and considered both SAP and Oracle for the Co-op before opting for Aldata.

"I was keen to have an integrated system rather than plug-and-play modules and looked at Oracle in particular," he says. "But it was very clear it was a set of different products bolted together. We wanted something much simpler, modular in description and licence terms, but integrated.

"Aldata provides a real-time solution, from the till to the central data store, with a little bit of handshaking, and it's very scalable. It's very easy to add on a store because it's centralised and integrated into one system so there aren't a lot of technical architecture issues."

Core systems

Midlands Co-op replaced a patchwork of core systems across its stores, some of which joined the Co-op network through merger and were running technology platforms at least 10 years out of date.

Some core legacy applications dated back to 1993 and were not well integrated or scalable. They were also prone to escalating maintenance costs. "It was quite a convoluted system and we wanted to take a leap ahead of the pack," says Ruttley.

The organisation embarked on a three-phase implementation of Aldata Gold, starting with an overhaul of its master data, which was formerly held on an Unix-based 'RB2' system. Phase one involved upgrading core infrastructure and creating a co-ordinated data strategy that ensured the business had consistent operational data across its network of stores. Phase one went live in November 2007.

Phase two spans September 2008 to June 2010 and covers the implementation of EPoS, store inventory management and PDas. This phase brought the first wave of financial returns, which helped to fund the whole project. The higher revenue came mainly from operational improvements and customers having a better experience, says Ruttley.

Gap and price checks

Among the ERP system's new features was the ability to operate in-store gap and price checks using mobile Motorola wireless PDas. This helped to speed up the reordering of stock, which was previously done overnight via a batch update.

Midlands Co-op brought in new tills and Aldata's EPoS software to replace legacy ones, and this has helped to drive returns. "We did have some issues and niggles with the store front-end solution, but no show-stoppers," says Ruttley. "By mid-June it will be running across the whole estate."

Phase three will run for the rest of this year and is centred on driving further returns through automated sales-based ordering and sophisticated business intelligence. "These will bring truly tangible returns," says Ruttley.

For example, the organisation has been piloting a sales-based ordering project that enables high-value goods, such as tobacco, wines and spirits, as well as fast-moving products, to be reordered the minute they are sold through the till. Co-op staff do not have to fill out an order, which creates huge operational efficiencies. The plan is to roll this out across certain categories of product, and in the larger department stores.

Midlands Co-op employs 8,000 staff and has gross sales of more than £800m. Its principal activities are food and non-food retail, travel and funeral services.

 

Lessons learned

The phased implementation has meant the Co-op could break down a massive IT project and focus on particular IT components and issues.

Completing phases also minimised its reliance on "more expensive" external technical and project experts, says Mark Ruttley, head of IT at Midlands Co-op. "Having all the expertise in the project all the time would be expensive."

The Co-op focused on granular go-live dates very early on, for example a pilot store or a group of five stores. This helped it to learn valuable lessons before moving on to the bigger stores. "Everyone knows their role and what to do if goes wrong," says Ruttley.

 

ERP at Midlands Co-op: timeline

 

Phase 1

  • Upgrade core IT infrastructure
  • Create co-ordinated data strategy
  • Establish master data records
  • Integrate these with legacy systems
  • Go live: November 2007

Phase 2

  • New PoS till systems in 160 stores
  • Store inventory management
  • Wireless Motorola devices
  • Go live: September 2008-June 2010

Phase 3

  • Automated inventory ordering/management
  • BI system for sophisticated stock/sales forecasting
  • Go live: Between now and end of 2010

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