Costa Express provides airports, railway stations, hospitals, convenience stores and other locations with the latest self-manned coffee stations, along with regular replenishment of coffee and supplies. It allows these partners the opportunity to profit from the strong Costa brand and the growing demand for high-quality coffee on the go.

After an initial success with a few hundred stations in 2011, the company hatched ambitious plans to grow to 3,000 locations in less than five years and expand into new countries. In order to sustain its revenue sharing model, Costa Express needed control over and visibility into its supply chain, particularly to accurately calculate and replenish stocks at the order-line level for all its partners. So Costa Express’ unmanned coffee bars used integrated telemetry that provided real-time reporting on machine performance and drink sales.

But shortly after Chris Clowes joined Costa Express as Supply Chain Manager in April 2012, he discovered that the real-time sales data wasn’t being used for replenishment. Because there was no system in place to consolidate and analyze that data, the team relied on a manual spreadsheet-based estimates based on current stock holding and average cup sales. A “Brand Guardian” supported 800 stations, including training partners, replenishing stock and giving advice on how to maximize sales and improve the coffee experience.
 
But this approach was not able to scale with the business. Indeed the company was adding partners much faster than expected, and Clowes wanted to ensure growth remained profitable.
 
Clowes’ team evaluated numerous supply chain planning software providers, selecting ToolsGroup. Costa Express chose the hosted SaaS version of the software to accelerate the implementation and realize the benefits more quickly.
 
While ToolsGroup’s consultants were working on the system design and data analysis, Costa Express initiated a major supply chain transformation, adding a new logistics/warehousing partner, a new IT system, and a new process of purchasing stock directly from the suppliers. At the same time, the company’s coffee stations expanded by 25 percent.
 
Despite these various challenges, the implementation went live within six months. According to Clowes, “The flexibility of ToolsGroup’s consultants during all this change was world-class. The original model they developed needed to be adapted several times during the implementation, but they didn’t blink - just got on with it.”

... Day to Day

Before implementing ToolsGroup’s software, Costa Express used to estimate how much stock to supply each site with at the end of each month using figures provided by the partners. Now, Costa compares the actual sales data to the levels of inventory declared in the sites to give far better visibility and control.
 
ToolsGroup’s SO99+ software uses the actual sales data provided by the unmanned coffee stations to forecast demand, optimize inventory and generate replenishment proposals for Costa Express’ distribution and procurement operations. This enables Costa Express to optimally manage the supply of ingredients from the central warehouse in Andover out to 2600+ sites.
 
Clowes comments, “In some countries that we’re entering, we’re legally required to make month-end declarations, so our new level of forecasting accuracy is extremely helpful.”

Results and Benefits

In the first month, the added visibility from ToolsGroup’s software had enabled Costa Express to reduce the amount of inventory sent to its partners by 20 percent. While still early on, Clowes concluded, “So far this project has gone far better than we ever could have imagined. When you make all the changes we did to our supply chain - all during a period of high growth - anything less than a disaster is quite good! As it is, we’ve actually managed to grow our revenue and reduce our inventory costs so I’m very pleased.”
 
In addition, because the software has assumed much of the detailed tasks of analyzing data and inventory replenishment, Clowes was able to change the role of Brand Guardians to “Brand Excellence Advisors”, whose sole focus today is helping partners sell and deliver a great customer experience.