Co-op IT head discusses integration issues following Somerfield buyout

Supermarket chain has plumped for a central replenishment system and the iControl EPoS system

The Co-operative is integrating IT systems following its acquistion of Somerfield

Following The Co-operative (Co-op) acquisition of Somerfield for £1.57bn last year, the Co-op's IT team has been busy integrating the IT systems of the two supermarket chains, including supply chain technologies and the networks that support them.

Director of information systems for food and retail, Mark Hale, spoke to Computing about the process.

He explained that there was a lot of duplication currently: “Because we’ve got two sets of systems at the moment – Somerfield and Co-op – we’re having to assess each and decide which system is going to suit us best going forwards.”

Central replenishment systems
Hale said that his most significant project to date has been the integration Somerfield’s central replenishment system, which has cost the group £5m. Hale expects to see a return on investment within two years.

At the moment, new orders are processed at Co-op using sales-based ordering. The store manager decides what he needs to order and then programmes the order into the central system.

“The store manager interacts with the system and makes his own decision for stock, based on details such as whether it’s going to be sunny at the weekend – in this case he might order more ice-cream or fresh produce,” Hale explained.

Central replenishment is different. The produce for each store is ordered centrally and orders are calculated based on store size, seasonality and events, such as whether there are significant sports matches taking place. The order is then sent to the store from the central system.

“It’s a more modern way of ordering and a lot of the major retailers do it this way,” said Hale.

“Somerfield had spent a lot of time and money implementing those systems whereas Co-op was slightly behind. So one challenge for us now is to take those Somerfield systems and develop them in the Co-op environment.”

He said that this process entails re-platforming the infrastructure and making it scalable to 3,000 stores rather than the 1,000 stores that Somerfield had. Hale is also bringing all of the supporting software up to date with the latest versions.

“Somerfield was using a number of versions that were out of date, so we’re using this opportunity to bring everything up to date. It’s been a huge project – there are seven separate applications that all fall into the central replenishment suite. Doing all of that has been a real challenge.”

Electronic Point of Sales
Another significant project has been the integration of an electronic point of sales (EPoS) system, which has cost the chain £15m. Co-op has decided to use its own existing iControl EPoS system rather than Somerfield’s legacy IBM 4690 system, which is proprietary.

The Co-op system, on the other hand, is written on Microsoft.net. Hale claims it is modern, modular and already proven.

The integration process for EPOS is quite simple – most of the work is around modifying the in-store hardware and radio frequency (RF) network.

“What we’re not doing is converting data or anything at the store end because there’s no point really. All the sales information is held in the centre. This makes the conversion straightforward.”

Moving forwards

The IT team at Co-op is focused its attention on implementing contactless payments and the retailer aims to run a trial in the second half of 2011. It is also going to be implementing a combined petrol system within the EPoS system next year.

“We’re looking to put petrol functionality in the EpoS system. So the EPoS system, as well as including all the grocery sales, will also control the pumps. A lot of retailers have separate systems in the petrol forecourts. But we're looking to integrate that into our EPoS system.”