It isn’t hard to understand how or why supermarkets supplanted the traditional corner market – people like being able to get everything they need in one place. As the largest American group purchasing organization serving the grocery industry, Topco Associates LLC understands this, and that principle has been the driving force as the company enacts a major transformation that ultimately will make it a one-stop shop for its members.
As Executive Vice President and Chief Supply Chain Officer Paul Matthews explains, Topco is evolving into an organization that will bring comprehensive supply chain solutions to its members. “Just looking at our vast network of warehouses and transportation routes between and across our 50+ members and 1000+ suppliers; the opportunity was massive to optimize on just these two supply chain elements alone,” Matthews says. This was the genesis of “Project Everest” to develop Topco’s supply chain value proposition. “Our member owners have some of the most advanced and efficient ’last mile’ capabilities in our industry; this combined with their commitment to supply chain is a recipe for success,” Matthews says.
Topco is a leading procurement organization that provides its members with products and services from top brands as well as private-label goods. While delivering incredible value to its members year after year, Topco couldn’t ignore the fact that its members and its industry are changing. “Being low cost is no longer a sustainable winning strategy. Today, if it’s not on the shelf the customer will go elsewhere. Our members asked us to leverage our world class procurement capabilities in building an even better supply chain capability that drives efficiency through their warehouses, grocery stores, inventory management and transportation to get the right product in the right place at the right time and of course the right cost. The challenge became them asking us, ‘How can you take us from good to great?’” Matthews says.
Matthews joined Topco about two years ago to take on the challenge of leading the organization’s transformation.
“This isn’t just transforming a supply chain,” he says, “everything about this industry is changing. We have many challenges today including food safety, sources of supply and competitive threats, the threat of a national disaster, and the trucking crisis that no one has the answer for, just to name a few. Customers expect more, suppliers are consolidating, and regulatory is driving complexity.”
Mastering Supply Chain
Matthews says the transformation approach has three key tenants. It begins with the basics of building and training the team, designing the new and scalable processes and selecting a technology infrastructure that can support both today and the company’s future needs and capabilities.
According to Matthews, the need for improved information flow to Topco’s programs prompted it to move the entire company to the SAP enterprise resource planning software platform. Combined with salesforce.com, Topco’s CRM solution, the new systems will enable Topco to maintain clear and consistent communication and visibility across all segments of the supply chain.
“Next, we must define and sell the supply chain value proposition to those functions both internal and across the membership,” Matthews says. Topco has traditionally focused on the cost of goods with members’ procurement teams. However, according to Matthews, now that Topco’s value proposition is expanding, the company needs to do a better job in both quantifying and measuring these new benefits. “This spans far outside of procurement departments within the membership. It now reaches across many departments and budgets,” Matthews states.
One specific example has been on the packaging side. During a member store visit, the team observed the checkout process, and realized how it took both the customer and the cashier several swipes across the bar code scanner to get a good read due to the orientation of the bar code on the packaging.
“Now we are piloting packaging for our private-label products with bar codes in multiple locations,” Matthews says. “Our goal is to increase the efficiency of the cashier – ultimately improving the customer experience. We’re looking at every movement – from our handling operations and truck drivers to the warehouse operator, grocery store associate and the customer to create supply chain efficiencies.”
Matthews compares the challenge and the experience of Project Everest to other transformations he has led.
“The complexity of serving 50+ members with several hundred categories and services that require multiple temperature and special handling characteristics is tough,” he says. “Balance this with a great team of over 500 associates that bring a wealth of knowledge and passion with our members and suppliers, the desire and commitment to change, and suddenly you realize the ‘stars are aligned.’”
Even though Topco already has a strong position as one of the nation’s largest purchasers, the commitment Matthews sees has proven to be the key to its success. With the dedication and cooperation that Topco’s associates, members and suppliers have shown, Matthews is confident that it will emerge as a world-class supply chain organization. “You can’t ask for a better trifecta here,” Matthews concludes.