Foodstuffs North Island became one of New Zealand’s most successful brick and mortar grocery businesses thanks to a string of market leading brands such as Four Square, PAK'nSAVE and New World. Established in 1922 along with sister co-operative Foodstuffs South Island, the cooperative’s owner/operator model has seen it become the country’s biggest grocery distributor while remaining 100% Kiwi owned. The North Island co-operative strives to be: In tune with what customers, colleagues and communities need; In form to give customers what they want efficiently, sustainably and profitably; and In front – innovating to make sure New Zealanders get more of what matters most to them.
Acting CIO Ashley Colyer recalls the fundamental strategic decision the co-operative made about the future role technology would play across the organisation: “Seven or eight years ago, IT was considered by many simply as a necessary cost of doing business, something we worked hard to control. However, our Board recognised IT was going to be the key enabler of our future success, leading to a seismic shift of our investment in technology.”
Colyer explains that implementing SAP as the core ERP was at the heart of an IT transformation program which saw the replacement of all technology, from the network to data centres, applications and hardware. “It’s a true digital transformation from back end core platforms to customer-centric digital technologies,” he says, emphasising the positive development of recently deployed e-commerce platforms.
Alongside this recent focus on customer facing digital programmes, Colyer explained that the second broad area of focus was around internal processes optimisation. “We asked, how will we operate more efficiently and effectively? How do we optimise our supply chain? How do we reduce the amount of manual effort associated with core business activities? For example, with support from EY, we deployed new transport management and warehouse management systems that have really underpinned our supply chain transformation. We're also three years into a program of simplifying the internal user experience of some of our core applications – notably the SAP platform – and moving away from user interfaces that are hard to understand and easy to get wrong, to applications with very defined purposes, built with the end user in mind. This makes it easy for people to do their job with very little training, essentially replicating the consumer technology experience.”
Colyer also notes that Foodstuffs North Island leads the charge in New Zealand with the adoption of Office 365 which has seen over 3mn documents moved to the cloud. “That’s unleashed our people from their desks, the office, the corporate network and even the need for VPN in many instances,” he says. “We can now work on any device, anywhere, anytime. It's been enormously successful for us allied with a flexi desk, activity-based working environment. Of course, with more functions moving to the cloud, reliable and performant network connectivity only increases in importance and this can be challenging for our more remote stores who have access to limited bandwidth. Working with Riverbed, we’ve been able to address this using their SD WAN solutions to optimise the available network to all our stores and we’re well progressed with completing this enabling programme.”
The company’s positive approach to change management is providing a platform for everybody at Foodstuffs North Island to get on board with new ways of working. “We have really matured our capability across all business units. We deliver a constant and heavy program of IT change, both within Support Centre and stores. We've a multi echelon approach to change management with a team at Support Centre whose raison d'être is to support delivery into the business across our 332 stores and help them not just to adopt, but optimise the way that technology is used. It’s a big challenge with so many distributed users, so you need an efficient structure.”
Colyer believes the grocery industry is ripe for the application of automation, AI and machine learning as the vast majority of the business is data driven. “Promotions, for example, knowing which to put on, when, how and to whom. All of that can and should be driven by data,” he explains. “Previously there really wasn't the capability to process the volume of data to do justice to that. Now we're starting to work with partners who have developed sophisticated AI models allowing our category managers to know what to promote and when to optimise the impact of our promotion and marketing activities.”
Colyer adds that the fundamental shift currently being realised at Foodstuffs North Island is a customer driven approach to data core to the company’s strategy. “We need to let our customers’ data define how we operate,” he says. “So instead of promoting something because our suppliers are giving us a special on it, it's promoting something because we think it will resonate with our customers. Understanding that level of granularity takes trillions of calculations so we need the sophistication of AI.”
For Foodstuffs North Island to develop these capabilities, strong partnerships have been key. EY played an important role in the company’s ERP implementation and wider digital transformation, providing “intellectual horsepower and capacity to help deliver critical large IT programmes,” says Colyer of this important strategic alliance. Allied to this, South America-based Grability Inc has provided the mobile platform for the organisation’s forays into retail e-commerce since 2015. “It’s a really engaging mobile app: tactile, intuitive and with a great user experience,” he adds.
Over the past year, Colyer highlights the hugely successful overhaul of Foodstuffs North Island’s wholesale e-commerce platform, migrating to Salesforce’s recently acquired “CloudCraze”, a natively and purpose built B2B e-commerce solution which had yet to be implemented in the region,” he reveals. “We partnered with Adept Group, a local company with fantastic Salesforce expertise, to deploy the solution for our wholesale brand Gilmours. They were key to delivering a project that came in on time and under budget. The impact on the business was instant. Since we went live, sales growth has been dramatic for the business.”
Colyer notes a huge shift in the digital expectations of customers, whether shopping online or in store, which is focusing the company’s energies on building an integrated, customer-centric digital experience. “It's about where they get their inspiration, how they create a shopping list and how we can make it easy for them to find products in store. It’s also about the online shopping experience and how we make that as simple and as engaging and as rewarding as possible.”
Like many digitally forward businesses, Colyer predicts Foodstuffs North Island will continue to use AI to greater effect. “It will mean we can start moving our people into significantly more value-add activities. Working out what to order and when is not something a person should be doing. It's completely predictable to a level that's as good as, if not somewhat better than, a human could do.” He sees the future focus for staff on building a better experience for customers. “Instore, that may lead to fewer staffed checkout lanes allowing our people to be out helping and inspiring customers – it’s a big shift away from ‘processing’ towards ‘customer experience’,” pledges Colyer. “It’s about adapting your systems and processes to accommodate that.”
The ultimate goal, and number one strategic priority, for Foodstuffs North Island is to leverage IT and data to serve customers. Allied to that Colyer stresses the exec level focus on simplifying the business: “Our goal is to reduce duplication and streamline processes leveraging automation and AI to create the headroom in order to progress many more customer centric initiatives.”