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Supply Chain Innovation: Costa’s Vision of Supply Chain Planning

By Jeff Bodenstab2 Dec 2014

Costa Express gets a buzz not just from coffee, but from data. You can hear the excitement in the voice of Chris Clowes, Supply Chain Manager at fast-growing coffee shop brand Costa, as he speaks in a recent Race for Supply Chain 2020 webinar hosted by Supply Chain Insights. Chris’s presentation detailed Costa’s vision for stepping their supply chain performance up to the next level.

“We have an amazing amount of data coming into our business,” Clowes says. “Our self-serve coffee machines ‘talk’ to us—every 15 minutes.”  Chris’s topic at the seminar: How to use all this data to drive increased revenue and performance.

Chris answers that question in two parts. First, he describes how their replenishment planning system takes point-of-sale data from unmanned coffee stations to forecast demand, optimize inventory, and generates nightly replenishment proposals for distribution and procurement. It tracks demand surges, and highlights replenishment exceptions for 7,000+ machines needing frequent, low-volume/low-value deliveries. The replenishment plan enables Costa to optimally manage the supply of ingredients—coffee, flavored syrup, cups and lids—from a warehouse to partner sites.

“We push stock out more accurately, so we can respond to seasonality—say, if we have a coffee machine in a university that shuts down at Christmas, but our motorways service stations get really busy during the holiday,” Clowes explains. “We can now manage our variables and our machines on very much a macro level; two people manage stock replenishment across four countries. It’s all about managing the exceptions, rather than managing the day-to-day process.”

The supply chain planning implementation won Costa, along with ToolsGroup, the technology category award at the European Supply Chain Excellence Awards.

Then in the second part, Chris explains Costa’s near-term vision for demand shaping and demand management. “We recently introduced a new machine with a built-in camera that can recognize your demographic to drive promotions,” says Clowes. “It can put out a scent when you make your cup of coffee; it plays music, to give you the experience of being in a coffee shop. It has wave and pay as well as Chip and a smartcard payment system.”

Costa wants to exploit the data this new machine can provide. “We currently get information every 15 minutes; a machine could go 14 minutes without having milk before we know about it,” Clowes says. “Our sales information is only sent to us every 24 hours; if we could get minute-by-minute updates, how do I optimize stock efficiency in our supply chain to maximize sales through inter-day visibility?”

Clowes goes on to explain how they plan to incorporate this data into loyalty programs, custom real-time offerings to clients at the machine, and even on-machine “Mayday” personal support like an Amazon Fire. Clowes concludes, “We want to unlock the power of our data. We want 100 percent of our machines talking to us 100 percent of the time. That’s what Costa Express is looking to do over the next five years.”

For a further reading on the related topic, click here to read the Costa Express Case Study.