Berkshire Co-op Market, located in Great Barrington, MA, is the area’s source for natural and organic products served up in a friendly, farmer’s market style environment. The cooperative has 3,400 active Owners, which represents about 7,000 people (Owners are allowed Associates). They are also open to the general public.
Berkshire Co-op Market stocks over 10,000 products and they process around 1000 sales transactions per day. Fifty-four percent of all sales come from Owners. The goal is to achieve a 70% Owner-Sales ratio through strategic marketing, as well as, the use of technology to understand buying habits and trends.
Berkshire Co-op Market sought a system that would serve as much more than a front- end cash register and would meet their unique needs as cooperative retail business.
In 2009, the Berkshire Co-op Market Management team began the search for a new retail automation solution to replace their antiquated point-of-sale system. Berkshire Co-op Market sought a system that would serve as much more than a front- end cash register and would meet their unique needs as cooperative retail business. After much research and testing, Berkshire Co-op Market decided to partner with ECRS as their solutions provider.
After initial installation, the Co-op decided to take another step forward by working towards achieving perpetual inventory, which is a rare and very difficult feat in the retail grocery industry due to product volume, seasonal factors, new/ changing merchandise, and number of suppliers. In partnership with ECRS, Berkshire Co-op Market began its perpetual inventory project in May 2010.
The following case study, based from an interview with Berkshire Co-op’s General Manager and former National Cooperative Grocers Association (NCGA) Board Member, Art Ames, will provide an overview of the first phase of this ongoing project and discuss challenges and early successes of the initiative.
Berkshire Co-op Market is providing a model for other Cooperatives by recounting their early accomplishments as well as lessons learned. Their hope is to help Co- ops achieve greater efficiencies and bottom-line results so they can better serve their communities, operate under cooperative principles, and focus on the things that truly make them successful.
Where to Begin
When CATAPULT was installed in 2009, the immediate goals for the project centered on the need for accurate transactions, available financial data, Ownership (membership) management, and detailed business reporting. Berkshire Co-op Market required a system that was easy enough for cashiers to use but was also sophisticated enough to provide the kind of automation required to run a cooperative business. They also wanted to partner with a solutions provider whose system could keep pace with their growing business.
A few months after the ECRS system implementation, Berkshire Co-op Market, spearheaded by General Manager, Art Ames decided to explore the idea of perpetual inventory, or auto-replenishment. Basically, CATAPULT Order Assist™ technology would automatically build suggested orders using intelligent forecasting and analytic tools. The Co-op chose to implement this with the most sophisticated and powerful order suggestion calculations available, DemandFill™. This would be further enhanced by ECRS’ Supplier Gateway- based LogicSync™ business rules, facilitating tight supply chain integration with their suppliers and automating key inventory management processes.
As discovered at Berkshire Co-op Market, the combination of human and business intelligence can prove invaluable to a grocery business.
The concept of automated inventory replenishment, or perpetual inventory, is difficult for many grocery retailers to grasp because walking the floor to place orders has been the standard for so long and grocery inventory management can be quite complex. However, it is this complexity that provides a compelling argument for implementing such technology. As discovered at Berkshire Co-op Market, the combination of human and business intelligence can prove invaluable to a grocery business.
Ames admits that when going into this project they had no real idea of their true inventory value; a problem that was impacting their bottom-line which consequently affected their Owners, customers, and community. This uncertainty about the core of their business is the reason Ames pushed the adoption of this technology in the store. Changing process standards and simply building the foundation to move forward required hard work and dedication from everyone within their organization.
“We had to change a lot of old habits and basically micro-manage processes, but that is what it takes to advance internal practices and successfully implement something new and innovative,” said Ames. “We spent a lot of time training, learning, testing, and tweaking. However, once we become more efficient in dealing with our primary issues we found that we had become more efficient in secondary issues as well.”
The Co-op also brought in a senior ECRS Consultant to help them get started with their inventory automation project.
“He [ECRS Consultant] came in and started with our database,” explained Ames. “Since we didn’t have perpetual inventory in mind from the start, it created work to fix existing data issues and insure inventory was properly set up in the system with accurate ordering parameters, stock levels, supplier order information, etc.
He also worked to convince our Buyers that computer generated order suggestions would be accurate and this concept could become practice. We did a test with our Wellness Manager where he wrote a manual order and compared it with a CATAPULT-generated order. The CATAPULT order was more accurate in every test we did.” Continues Ames, “Because it is simply human nature, we also dealt with Buyers carrying too much personal influence in the products they stocked.
Let’s say Buyer A takes a Vitamin D supplement everyday because he believes it’s great and truly helps him. You can be sure that the Wellness department will always have Vitamin D in stock because Buyer A thinks it is important. There’s just too much room for personal influence, and most of the time, the person doesn’t even realize they are doing it. DemandFill generated orders remove this influence and puts items on the shelf that customers are buying. That being said, it is definitely a combination of human and computer intelligence that makes you successful.
While we may miss items or order the incorrect item, CATAPULT doesn’t know that there is a hurricane coming in next week and that you’d better stock up on water and bread.
A large part of CATAPULT Order Assist is helping you become more proactive and critical with your inventory, and it makes the overall process much easier.
General Manager, Berkshire Co-op Market
And because your Buyers aren’t spending 5 hours writing one order, they have time to focus on things that might have otherwise been missed”
Taking it to the Next Level
Invigorated for change after the Consultant’s visit, Berkshire Co-op Market continued working toward their goal of inventory automation. To this end, they began using ECRS’ Supplier Gateway™ system to improve communications with their suppliers. This was set up with their primary and trusted supplier, United Natural Foods (UNFI) and a main Wellness department supplier, Solgar™.
Supplier Gateway takes CATAPULT Purchase Orders and electronically transmits them from the POS to the supplier. It also automatically sends back information such as order acknowledgements, shipping notifications, price and cost changes, and invoices (depending on the supplier).
“The process of setting up Gateway to work with our vendors became an avenue for human interaction and facilitated better communication. And now everybody is happy because it’s easier for us to place and receive orders and because we are stocking what our customers are buying the supplier is selling more products. It’s a win-win situation.” said Ames.
It’s not about ordering less; it’s about ordering what people are purchasing.
Berkshire Co-op Market reports with their test department (Wellness) a 7% decrease in inventory value and 6% uplift in sales in product lines where CATAPULT DemandFill and Supplier Gateway are used. This is due to the fact that orders are more accurate, there is less dead-stock inventory taking up valuable shelf space, and out-of-stocks are avoided. It’s not about ordering less; it’s about ordering what people are purchasing. Ames also reports that every time they set up a line for auto replenishment, profits from that line increase.
The system has also helped Berkshire Co-op Market clean up bad habits and inaccurate data, as well as, increased overall efficiency. Employees have more time to focus in areas such as customer service and training, and as a result, they are much happier with their jobs.
“Here’s the thing, nobody likes to write orders and it takes hours, so commonsense says don’t make employees write orders for hours; let them do other things and actually enjoy their jobs,” said Ames. “They want to be out mingling with customers, learning about new product, and coming up with new, exciting ideas. If you can make employees more productive, your orders are more accurate, and your bottom-line is improving because of these changes, then why not move forward?”
“I used to work for a large grocery store, and nothing is more frustrating than receiving an order and you go to place it on the shelves and it won’t fit, or you are overstocked on some items and out-of-stock on others. It’s frustrating for employees and customers.”
When you have better orders everyone is happier, moral improves, your store actually looks better, and productivity and profits increase.
While Berkshire Co-op Market continues to work towards achieving their final goal of complete perpetual inventory and implementing Gateway for their 400+ vendors, their early success has already proven to be a model for other Cooperatives and has allowed them to better practice under the Seven Cooperative Principles (Statement on the Co-operative Identity).
Berkshire Co-op Market’s ultimate goal spans a four-year time frame with plans for an upcoming expansion project and an eventual second store. ECRS provides a platform to help them tighten internal processes so they can better serve their community and boost profits to fund these growth plans. It is also important to note that profits for cooperatives mean more money they can give back to the community and Owners and more services and education they can offer to their customers. In the cooperative spirit, Berkshire Co-op Market is helping other co-ops achieve similar results by sharing their story – planning, challenges, issues, implementation, and accomplishments.
“ECRS has provided us with a great tool to increase productivity, make better use of staff time, retain happier employees, elevate customer service and interaction, yield better financial results, and improve checks and balances”, said Ames. “Automation, with proper use and a willing partner, offers tremendous potential within the cooperative grocery market.”