The Co-op streamlines suppliers following Somerfield take over

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Following the acquisition of Somerfield, The Co-operative Food has aligned its suppliers after extending its use of the GXS Trading Grid.

The £1.5 billion Somerfield deal, which was completed in 2009, increased The Co-op’s share of the UK supermarket sector from 4.5 per cent to eight per cent, boosting its store portfolio to almost 3,000.

The challenge for the food chain was then to integrate the different systems and infrastructures across the two businesses.

Some stores had to be divested following negotiations with the Office of Fair Trading, while the others have been rebranded, and logistics processes have been re-engineered accordingly.

When it came to suppliers, The Co-op and Somerfield had many in common, but the overlap was not 100 per cent. For example, The Co-op has its own range of food grown on its own farms and its Fairtrade range covers more than 200 own-branded and 60 branded Fairtrade products.

Somerfield stores had a different market profile and positioning, so outlets and product ranges had to be aligned.

The Co-op saw the need for an electronic trading network that would allow it to go on trading with partners through the change process, while remaining flexible and scalable.

The supermarket chain exchanges 70,000 invoices each week with some 1,400 suppliers.

A prime requirement was that the system could cope with this scale and volume of transactions. The Co-op Food is a long-standing user of GXS Trading Grid, which provides the business with near real-time data exchange of standard business documents such as purchase orders, invoices and advanced ship notices with suppliers anywhere in the world, so it extended its use of this to integrate Somerfield’s suppliers.

The system mediates the differences between The Co-op’s preferred document format and the formats chosen by trading partners, which reduces the support requirements and takes away any need for the company to hand-hold individual suppliers as they connect to the trading network.

Alan Broadhurst, a solution manager at The Co-op, says: “Given the value of the transactions, this is an application that you want to have up and running 24/7. The ideal scenario is that the application is so reliable that you don’t notice and don’t stop to think about it. This is what we have achieved with GXS Trading Grid.”

Andy Edmondson, an application analyst at The Co-op, adds: “One of the beauties of the application is that we do not need to have a large army of people attending to it. In fact, we have a team of just four Co-operative employees who have responsibility for managing the trading network at our end. The presence of GXS means that we do not have to link directly with suppliers in terms of their connectivity since GXS takes care of that aspect of things.”

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