Coop Danmark
Largest S/HANA transformation in the Nordics
Coop Danmark has a complex corporate and logistics structure with sub-brands, numerous external partners, a franchise business structure,merchandise flows including local assortments and six warehouses with a multitude of logistic scenarios (incl. cross-docking, flow-through, value-add services and much more) to serve both local stores as well as partners in Greenland and Faroe Island. Nevertheless, Coop wanted to face new digital challenges: a modern shopping app, self-checkout, staff-less point of sales possibilities, increased involvement of local producers and locally adapted and differentiated assortments, serving multiple sales channels and fulfilment options or even technical support to optimize the carbon footprint.
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Remarkable benefits of Coop Danmark’s SAP S/4HANA transformation journey
Coop is one of Denmark’s largest suppliers of groceries, with a market share more than 30 per cent. The company employs approximately 40,000 people and operates over 1,000 grocery stores throughout Denmark, either by itself or through more than 400 partners. Coop Danmark has operated as a cooperative for more than 100 years. Coop has a total of 1.9 million members, which is about 30 per cent of the Danish population. Members enjoy several advantages when shopping.
Partner sought for largest SAP S/4HANA transformation in the Nordics
Even before the project started, Coop had already focused on digitalisation and developed the Coop app, an intelligent shopping app for Coop members. It has received many awards for its operation and well-integrated functions and has topped the AppStore lists of Apple and Google in Denmark for a long time. However, the company’s supply chain systems were several decades old and could no longer be upgraded timely enough for the transition into the 21st century or expand to meet new requirements.
KPS has necessary know-how and experience in the retail sector
Coop looked for an experienced partner with the necessary know-how and retail experience to implement the largest SAP S/4HANA Retail transformation in Scandinavia to date as a lighthouse project. With strength in both consulting and implementation of large-scale projects, KPS was the ideal partner for Coop Danmark.
New back-end IT infrastructure established via SAP S/4HANA
The central challenge was to set up an entirely new back-end IT infrastructure via SAP S/4HANA to establish an always up-to-date end-to-end transparency of all processes in the company. This includes all flows of goods from vendors through the supply chains and transportation routes, the warehouses and their stocks, all the way into the customer basket. The new system also had to handle all related financial transactions and make them transparent with instant visibility of logistic and financial transactions.
Another essential point was to reduce the environmental impact of transporting the goods and optimally supporting the employees involved in transport logistics. This includes, for example, a coordinated navigation solution for the drivers and packing strategies calculated and optimised for this purpose.
Some technical systems such as the Coop app for Coop members, legacy warehouses, the checkout systems and the e-commerce webshop were integrated into the new SAP S/4 HANA platform by KPS for optimal connectivity.
Not foreseeable, but nevertheless, a unique challenge was the outbreak of Covid-19 because the pandemic gave the grocery markets an enormous sales boom. Therefore, the changeover took place when the markets had to perform at their best and with long periods of remote work only. Nevertheless, the set-up of the new platform worked smoothly – a remarkable achievement.
This was also due to the prudent way the change management was implemented. At the start of the project, it was clear to the decision-makers at Coop, as well as the KPS team, that they had to convince not only the employees in the administration, central procurement and category teams but thousands of store associates, warehouse colleagues and independent store owners and bring them along in the change process. Thus, the IT project became a cultural changeover to digital processes.
For us, the requirement was: ‘The right assortment at any time in sufficient quantity.’ The new system should be able to show immediately for each store how high sales and shelf utilisation are and when ordered goods will arrive.
Supply chain becomes more robust against delays and delivery bottlenecks
In addition to the greatest possible transparency across the entire supply chain, other goals were that the new platform – integrated with a newly implemented forecasting and replenishment system from RELEX – should also make the supply chain more robust against delays and delivery bottlenecks. It needs to predict goods demand seasonally, on promotion or even weather-dependent, and ensure sufficient stock in the local stores to meet peaks in demand.
“For us, the requirement was: ‘The right assortment at any time in sufficient quantity.’ The new system should be able to show immediately for each store how high sales and shelf utilisation are and when ordered goods will arrive,” says Jan Adolfsen, Coop Danmark. “It will also optimise transport routes to reduce the company’s carbon footprint permanently.”
The new system is intended – with coherent processes as well as near real-time transparency – to help Coop better understand the needs of its customers. This includes offering regional goods locally and aligning the assortment of each individual shop accordingly.
Another important specification for the new infrastructure was that it should be conceptually and technically designed to quickly and easily introduce expansions and innovations with a short lead time.
100% of total sales flow via SAP S/4 HANA – end-to-end
After the start of the project in 2018, it quickly became apparent that KPS, together with Coop, would carry out the changeover step by step according to product categories. The first go-live took place in Q3 2019, and by the end of 2021, 52 per cent of the goods flows were managed in the new system.
In March 2022, an additional 23 per cent of product categories were added, so in total, approximately 73 per cent of the overall revenue of Coop is now flowing through SAP S/4 HANA – end-to-end. This includes fast-moving goods like Fruit & Vegetables, milk and other dairy goods where control of freshness, short shelf life, and best before dates are crucial for a superior customer experience. Other articles like coffee, corn-flakes, sugar and beverages – with the management of empties and returns – have also been running smoothly through the new platform.
At the end of 2022, the remaining product categories were added, including the final integration to e-commerce platforms and complex articles, such as fresh meat with variable weight and fully traceable origin.
The overall project will be completed with the final steps of the migration and consolidation of the finance and accounting system to the new SAP platform. Considering the annual financial statements, the final financial cut-over is planned for 2023.
2018
Project start
2019
First go-live
2021
Management of 52% of goods flows in the new system
März 2022
73% of the total turnover flows via SAP S/4 HANA
Oktober 2022
100% of the total turnover flows via SAP S/4 HANA
2023
Final steps of the migration and consolidation of the finance and accounting system to the new SAP platform
High degree of standardisation for rapid implementation of the new SAP platform
The successful implementation was possible because KPS could already draw on various business scenarios and best practice use cases from the past for the retail and grocery industry. The consultants had to adapt and expand these accordingly for Coop.
The SAP project was therefore not developed from scratch on a ‘blank piece of paper’ but based on proven processes and accelerators forming a foundation for a grocery platform. This meant that a large number of external systems (123 IT systems in total) with which the new platform exchanges data could be connected efficiently by KPS and create a true end-to-end platform.
The project team built on a high degree of standardisation, which allowed for faster implementation – even though Coop has a very complex corporate structure and complicated flows of goods to manage, the number of special developments was remarkably low. The project management attached particular importance to only customising those modules and processes where adaptation was unavoidable.
The goal was to ensure a high degree of standardisation so that business innovations and extensions could be implemented quickly and easily in the future. An SAP landscape that is as standard-compliant as possible also helped to import SAP updates promptly. This has been successfully achieved at a level significantly outperforming the average SAP project in the market.
The final pieces of conversion and consolidation of the finance and accounting system to the new SAP platform will conclude the overall project. Taking into account the year-end closing, the final financial cut-over is planned for the spring of 2023.
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The conversion of the IT infrastructure challenges employees
The complete transformation of IT infrastructure is indeed a business project. Dealing with the business changes in the daily operations of each employee can be a significant mental challenge. The Coop family know that almost everything will change, and there will be a lot to learn.
Employees turned into fans of the new system
So, a decisive factor was: How can the company not only bring the staff along but actually make them fans of the new system and eventually reach new levels of operational excellence? It was clear that if external management showed a few colourful PowerPoint slides, this would meet with rejection and would hardly be successful.
New system and way of working presented in a live demo
Thus, the idea was – as early as possible – to enable Coop team-members to present the new system and ways of working as a live demo. For this purpose, in the very early phases of the project, there were six large events called “Structured Walk Through’s” to which Coop invited colleagues and store managers from across the organisation. The events took place in large cinemas with up to 400 participants, which provided early stakeholder buy-in and offered the opportunity to exchange ideas with peers and colleagues.
And that has worked well: The employees saw that their peers were able to use and explain the solution and that their management was committed to the project. They could experience the principles and benefits of the new platform in a ‘live’ virtual run-through and directly ask questions that could be answered with live examples in their future system.
In previous projects – which were difficult to implement – the strong focus on business change management was reduced. The fact that all Coop employees support the changeover has contributed to the success.
Freddie Sachmann, Coop One Program Director, Coop Danmark
Successful implementation – despite the pandemic and great complexity
The framework conditions for completely renewing Coop’s most important IT systems were not easy. The project is the largest of its kind using SAP S/4 HANA Retail in the Scandinavian countries to date. It involves hundreds of stores and thousands of suppliers, each with different IT systems. The changeover was all-encompassing and took place when the Covid-19 pandemic triggered a purchasing boom and put pressure on supply chains globally.
“It is all the more commendable that we are making rapid progress with the changeover and are expected to control the last product categories with the SAP system by the end of 2022. This is also a particular credit to KPS because of their extensive retail and SAP know-how, and the established business scenarios form a solid and standardised foundation for current operations and future developments at Coop. We look forward to implementing the next innovative ideas,” sums up Jan Adolfsen, Coop.
KPS has supported us in this very challenging project with a high level of professionalism and commitment. The consultants’ in-depth expertise and a change management-based strategy helped us to successfully manage the changeover under the difficult conditions of the Covid-19 pandemic. We look forward to further high-potential projects in cooperation with the KPS team.
Kræn Østergaard Nielsen, CEO Coop Danmark
Coop Danmark SAP S/4HANA Transformation Projekt
Coop Danmark, one of Denmark’s known food retailers, and KPS worked together to complete one of the largest SAP S/4HANA transformations in the Nordics.
A completely new SAP S/4HANA IT back-end infrastructure that integrates technical solutions such as checkout systems and the Coop app replaced the existing host solutions. Get the complete overview of the project in the following download.
