CIO interview: How Reynolds' IT helped it grow from an £8m company to a £215m company

Reynolds CIO Richard Calder tells Computing how a flexible IT architecture has helped the fresh food distributor grow fast in uncertain times

When Richard Calder joined food distribution company Reynolds in 1999, the company had revenues of around £8 million. Today, it boasts an annual turnover of more than £200 million, having taken advantage of the boom in casual dining and the rise of restaurant chains across the UK.

Calder, though, took the scenic route to the CIO's office. "My educational background was legal. I have a law degree and post graduate business qualification both from LSE. I went into the family business then later moved onto this one. I started in a hybrid sales role - an operational role - and as the company grew the areas of most interest for me were business improvement and process improvement," says Calder.

For Reynolds, IT isn't just about running the business, it's about winning business

A shift into IT therefore seemed the logical next step. "My angle was that having come from an operational background - a business background rather than a technical background - that's where I felt I could add value to the business," he continues.

"When I started here the company was about £8 million As company grew, the areas of interest for me were business improvement and process improvement, and then I moved into IT."

Today, Reynolds is a £215 million revenue business, growth fuelled by the rise in restaurant chains that, increasingly, want companies like Reynolds not just to provide raw ingredients, but to part-prep their supplies too. That means, for example, filleted cuts of fish or meat, and pre-sliced onions as part of broader, long-term contracts.

As the company expanded, says Calder, "Obviously the IT became more important, but my angle was, that having come from an operational background, not a technical background, that's really where I felt that I could add value in the business".

The big change for Reynolds, he continues, was the implementation of Infor M3 in October 2010, with a current migration to the latest iteration of M3 being completed this month. This has entailed a reduction in the number of servers required to run it from 25 to just six.

The aim of that ERP software implementation was to enable the company - in an industry with razor-thin margins - to be able to set itself apart from rivals, and to better meet the changing demands of customers. In the process, says Calder, IT has become central, not just to the business, but to winning contracts, too.

Indeed, over the past decade, customers have taken an increasingly keen interest in the IT systems of their suppliers, says Calder, not just to ensure GDPR compliance and other security related matters, but to ensure that they can innovate and quickly respond to changing demands.

How Reynolds' IT clinches new business

"Within contracts now, there is normally a big section on IT systems and the risks associated with them. But also the large groups want to see potential for innovation from their food suppliers and they also want us to be flexible so that they can add product categories quickly. We therefore have to be able to demonstrate efficiency. It's a fairly crucial part of the tender process now," he says.

In other words, the major restaurant chains need more than simply a supplier of fruit and veg. They need to know that the supplier can service every restaurant they have, wherever they are, with what they need and at the right standard, as specified by contract so that they can offer the same menu and food (give or take some regional variations) from Land's End to John o' Groats.

Customers come to us with a system saying, ‘We'd like you to integrate with this'

On top of that, they also want information from their core suppliers fed back to them, and they only want to deal with companies whose processes are largely or fully automated.

"They would expect, and have come to expect, high quality data at the time they want it and in the format that they want it in, which gives them the insights that they need. Often, we'll know things before they do - yes, they'll have EPOS systems. We've noticed that… of our top-50 customers nearly 90 per cent of them have purchase to pay systems. So, they see the value of smoothing out these processes," says Calder.

^{Inside Reynolds' distribution centre in Waltham Cross}

He continues: "We have one of the guys here, pretty much full time, on integrations where customers come to us with a system saying, ‘We'd like you to integrate with this'. We also partner with several companies to say, ‘If you don't have a system try one of these' because it's much more efficient for us to be processing sales orders that way than over the phone.

"What's more, customers want it demonstrated to them. One of the things that we are keen on is that if we develop a new application or new technology to help customers we'll demonstrate it and prove it - it won't be, ‘Yes, we'll deliver this in a year's time'. They want to see it, and rightly so."

That means that before customers sign on the dotted line, they want to know what IT Reynolds is running, how flexible it is and how easy it is to integrate with.

They want to be sure that we can handle it, not only in terms of disaster recovery but what processes you have in place

For Reynolds, IT isn't just about running the business, it's about winning business.

"They want to be sure that we can handle it, not only in terms of disaster recovery - that's a standard question - but what processes you have in place and the systems you have in place: what can you offer over and above other food service distribution companies? What's the quality of information that you can handle? How efficient is your picking?" says Calder.

"They are now going into this detail. In some ways IT, instead of being a footnote in a contract, they want to know what we're doing in this area, what we are doing in terms of our quality systems and that all sits within my purview," he adds.

Backing all this up, Calder continues, is a "small but vibrant software development team", giving Reynolds an in-house capability, not just to integrate customers with Reynolds' Infor ERP system, but to also to roll-out apps that plug-in to it.

That meant implementing M3 in a fairly vanilla format when it was rolled out to ensure there are fewer surprises when it comes to software development, with the in-house team filling-in some of the inevitable ‘gaps' that all ERP systems come with. These applications include a proof-of-delivery system to add professionalism to Reynolds' operations, as well as mobile applications in the company's warehouses.

[Next page: How Reynolds' RFID-based tracking project saved up to £150,000 per year, mobile apps for the warehouse and why Reynolds embeds IT staff into the business]

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CIO interview: How Reynolds' IT helped it grow from an £8m company to a £215m company

Reynolds CIO Richard Calder tells Computing how a flexible IT architecture has helped the fresh food distributor grow fast in uncertain times

One of the projects that has gained most attention is the RFID tracking project, intended to cut plastic waste by making sure that delivery crates - totes, in the industry jargon - are returned to the company. This is no trivial issue: Calder believes that the company has saved as much as £150,000 per year following the implementation of the project.

"We were packing goods into sturdy plastic totes because that's what our customers wanted. That was all very well, but we were finding that we weren't getting them all back," says Calder.

^{Reynolds managing director Tony Reynolds}

He continued: "It wasn't as if it was just a small number. People were finding them useful [and] they weren't returning them… We were losing a significant sum of money each year having to replenish crates that just seemed to disappear out of the system. We know this isn't a unique problem to Reynolds - you only need to walk round any farmers' market to see that."

It got to the stage where even Reynolds' finance director was questioning how much the company was spending on replacing delivery crates that kept going missing.

"It came at the right time, just as RFID tags were dropping in price and had become more reliable," added Calder.

Our guys wrote the software in order to be able to associate particular crates with particular customer orders

The system put together by Calder's small IT team wasn't just about tracking the crates. Integrated with the company's ERP system, it could also be used to help track the goods inside the crates and the deliveries, making sure that the right crates went into the right lorries for delivery.

"Effectively it's an asset tag. The crate goes down the conveyor line in the distribution centre. At the bottom of the crate, embedded in it, is the RFID tag. So our guys wrote the software in order to be able to associate particular crates with particular customer orders, and with the unique tag at the bottom of the crate."

As the crate negotiates the various stages in the distribution centre, it passes via various RFID readers before it is loaded onto the van. This helps ensure that the crate is loaded with the different food items ordered by the customer, and onto the right vehicle. Vegetables, meat, fish and other food stuffs are packed in their own separate crates, of course, but the crates can be stacked together when they are loaded onto the lorry for fast delivery.

Calder's IT team spent a number of months testing the system to ensure that it worked as planned, as well as to iron out any glitches or loopholes, before rolling it out.

There will always be some that we lose, but we are now retaining up to about 98 per cent of our crates

Most importantly, though, in terms of satisfying the finance director's initial demands, is that the crate can be tracked, checked out and checked back in again when they are returned from customer premises. When they are returned, the tags embedded in the crates can be wiped, checked off in the ERP system, washed and re-used.

"There will always be some that we lose, but we are now retaining up to about 98 per cent of our crates. That is a massive benefit for us because it helps the customer, it reduces their waste disposal costs. It also helps us in that we are able to re-use these assets rather than using cardboard boxes that are single-use and then thrown away.

"Now, there's only one person involved in [managing] the process and we have a bit like a credit-control screen [in our ERP system] where, if a restaurant hasn't returned its crates, credit control can contact their head office. They can see by day which ones haven't come back and, if it goes over four or five days, they can phone the restaurant and ask ‘where are our crates?'

"We are talking of savings of between £100,000 and £150,000 a year on crates that were being lost. We are doing it with a number of large customer groups now, and we'll be doing that more and more in the future," says Calder.

We are talking of savings of between £100,000 and £150,000 a year on crates that were being lost

Reynolds can also build crate return-rates into the contracts it strikes with restaurants and restaurant chains, for example, with the most diligent customers benefiting from the most competitive pricing arrangements. The system can even generate reports for customers so that their head office can chase-up lackadaisical branches on Reynolds' behalf.

And on top of that, it's also attracted the interest of Avery-Dennison, one of the world's biggest suppliers of RFID tags and tagging systems.

"You've got things like crates, cages, all sorts that go around the UK and get lost, misappropriated, and cost a massive amount of money every year. The technology is now at the right price level and reliability - that's the key - it's ready now," says Calder.

And it's not just RFID tag supplier Avery-Dennison. When the story first ran in Computing, Calder was contacted by a number of CIOs across the world, all keen to find out more about this particular project.

On the other side of the equation for the business, of course, is the produce. Reynolds has sought to shorten supply chains by going straight to the producers, striking long-term contracts at fixed prices. As such, the company competes against major supermarkets across Europe to strike the right balance of price and quality that it customers demand.

"In terms of our supply chain we have six-month seasons so that we can give a supplier pretty much a fixed volume for six months, which is what they like.

"The days of trading volume and taking a punt on whether the weather is going to be good in Spain is a risk we can't take and our customers don't want us to take that risk.

"If we were to [try to put customers] on weekly pricing most would recoil in horror, because they've got their menus that they design, fix and print three- or six-months in advance. They need that certainty...

"Some companies will decide not to do six months, but we need to offer that to satisfy many of the customers that we supply. They certainly don't want to pick up an invoice one week seeing a box of tomatoes costing £8 one week and £16 the next."

Obviously, another major element of Reynolds' operations is its warehouse systems, which include meat and fish, as well as dairy, fruit and vegetables. Items like fish and meat are kept in a separate warehouse to ensure that they are stored in optimum conditions.

"We have a just-in-time system whereby, for example, we can take a customer ordering dairy, fresh produce, fish, and meat. The fish element goes straight to the fish warehouse, where it's packed into individual, sealed boxes. It's all integrated. In terms of the logistics, that's straightforward.

"The difficult bits are things like catch weight, but we manage it reasonably well. We use a lot of volumetric picking to make the pickers as efficient as possible. Again, the conveyor pick can do about 10,000 boxes in a seven-and-a-half hour shift, so they are doing about 12,000 individual packs every hour down the line, putting in about nine items in every box.

"Where we do all three elements, it's like a mini-consolidation within our warehouse. The driver, meanwhile, has everything on his handheld - he doesn't need an invoice, although some still insist on having the piece of paper and the electronic invoice," says Calder.

As such, it's in the warehouse, more than any other part of the business, where Reynolds' efficiency is made, as well as on delivery vehicles.

[Next page: Warehouse apps and embedding IT staff into the business]

The IT Leaders' Summit is back - coming to London on 23 April.

CIO interview: How Reynolds' IT helped it grow from an £8m company to a £215m company

Reynolds CIO Richard Calder tells Computing how a flexible IT architecture has helped the fresh food distributor grow fast in uncertain times

It is these two areas that Reynolds has relatively recently rolled out mobile apps, not just taking plenty of input from staff in the form of ‘requirements', but embedding IT staff on the shop floor in order to really learn how people in other parts of the business work.

"For a lot of the enhancements to the applications that we have written, the suggestions and feedback that we've got that have been most effective have come from the shop floor," says Calder.

"Drivers would say, ‘Wouldn't it be good if we could do this, because it would mean that I wouldn't have to hold a paper invoice and I could check everything in on the back of my vehicle before I leave. That would save me a lot of time'," adds Calder.

Furthermore, the areas of the business where resistance to such digitisation had been expected proved to be the most welcoming, he says. Staff increasingly expect from workplace IT the kind of experience they have come to enjoy on smartphones and tablet computers - not semi-paper-based processes or apps with clunky interfaces that look like they were originally designed for Windows Mobile 5.

"We spend a lot of time on the design phase. I think the mistake we have seen some people make is to build for Android or iOS apps exactly what the old Windows Mobile app did," says Calder.

The development of mobile apps for warehouse staff was aided by IT staff shadowing warehouse workers, Calder continues. "We went round with the pickers. We went round at night and saw what their frustrations were. It's about taking out the unnecessary steps when, for example, you don't want to go back to the office [for the next customer order], you want the task to be pushed out.

"That's relatively straightforward. Then, you want to be told where to go. You want certain things to be done automatically on the device. You want the scanning to be easy - you don't want to be pressing a button on the side of the device. So all of those things we built-in, spending a lot of time on that side of it, and it helped that we took the time to understand the operation."

Next steps, Calder told Computing, may even involve algorithms that can guide pickers around the warehouse with the most optimal route. Further work is planned to improve precise locating of goods in the warehouse for pickers and replenishment forklift drivers so that tasks are pushed to those closest physically to where the task needs to be done, thus reducing distance travelled by warehouse operatives and improving overall efficiency.

Having the right technology, we believe, can reduce labour turnover in the warehouse

Indeed, Reynolds has been using a combination of algorithms that ought to optimise pickers' journey around the warehouse, both for picking and replenishment.

"It's a tough job in the warehouse. Working at three or four degrees for eight hours, it's never going to be a super-fun. But there are ways we can make the process simpler and more efficient. The picker will often know the most efficient way of picking and it's getting some of that intelligence in there along with some of the various algorithms," says Calder.

"Having the right technology, we believe, can reduce labour turnover in the warehouse. At the moment with the uncertainty in the labour market generally this is crucial added benefit"

For the future, Calder's team has been looking into Bluetooth beaconing in the warehouse to better guide staff around and, potentially in the future, robots too.

"In terms of the big data side of it, we're looking at analytics to try and predict our delivery times more accurately. However, it's not as straightforward as, perhaps, parcel delivery where each delivery will take a very short time," says Calder.

Drivers, he adds, often have the kind of tacit knowledge of routes and customers that can't easily be computerised. As a result, this is still at an early stage.

"On some of our delivery routes, drivers will deliver the whole 18-ton truck within a couple of square miles, certainly in central London, and they will be darting all over the place: some of them will know that the security guy gets there early in the morning and there's a certain amount of leeway there. But we want to be able to capture this so we can reasonably accurately predict when the driver will get there.

^{Reynolds urban prototype delivery vehicle unloading in the city centre}

"There's some other stuff on the Infor M3 side that we are looking at implementing - additional modules with graphical lot-tracking so you can see from a particular lot precisely where every single product is going. This is crucial for traceability of product in the supply chain"

"Also, being able to better manage our waste level. [This is already] very low but our customers' expectation of availability is very high, understandably… So we spend a lot of time on reducing waste, and we have got to be pretty agile, too.

If you haven't got a good forecasting engine then you're going to struggle

"Certain products will have both a sales date and an expiry date, which might be next week. But the customer will need to have four days' life on that product, so we've got to be really on the ball. We've got to turnover that stock… We put an awful lot of effort in our forecasting. If you haven't got a good forecasting engine [in this business] then you're going to struggle. For the forecasting we use a third-party product that integrates with M3, called Relex.

"And our customers run a lot of promotions, and have a lot of menu changes, so we have got to be on the ball or otherwise we'll end up either shorting product, which we don't want to do, or wasting product, and that's something we can't afford to do," says Calder.

The IT Leaders' Summit is back - coming to London on 23 April.