Case Study: Extolla Delivers Supply Chain Transformation For Coles Liquor And Lion

Table of Contents

The Challenge
The Solution
What was the outcome?
Key success drivers
Awards and recognition

Coles Liquor, a major omnichannel retailer in Australia, faced a significant supply chain challenge due to the inefficiencies of Direct Store Deliveries (DSD) from one of its largest suppliers, Lion.

To streamline logistics, reduce costs, and improve stock availability, Coles Liquor sought to transition to a Regional Supply Distribution (RSD) model, integrating Lion’s stock into its distribution centre (DC) network. Extolla, a specialist in supply chain transformation, was brought on board to facilitate this shift, ensuring a seamless transition and maximising value creation.

“Extolla delivered legacy-changing benefits for Coles Liquor. We achieved improved control of stock-holding positions, with a 50% reduction in inventory holding – a long-term benefit for us.”

Andy Hampson, Supply Chain Director, Coles Liquor

The Challenge

The existing DSD model was complex, costly, and inefficient. Stores struggled with unpredictable deliveries, limited visibility into incoming stock, and increased handling costs.

Lion struggled with the high Cost-to-Serve, slow and suboptimal service levels, and the complexities of direct-to-store deliveries. Seeking to enhance efficiency and streamline operations, Lion aimed to simplify its supply chain while improving service reliability.

Coles Liquor needed a scalable solution that would not only improve store operations but also create a competitive advantage in its supply chain.

The Solution

Extolla played a critical role in designing and executing the transition to an RSD model. Their expertise in supply chain strategy, sourcing, logistics, and operations ensured:

Optimisation of Delivery Schedules: Consolidation of Lion’s deliveries into Coles Liquor’s DC network, reducing the number of deliveries and improving fulfilment accuracy.
Cost-Saving Collaboration: Introduction of a ‘Value Creation’ cost-sharing model between Coles and Lion, ensuring both parties benefited from shared efficiencies.
Data-Driven Efficiency: Implementation of an Electronic Data Interchange (EDI) system, enabling seamless real-time data exchange between Coles, Lion, and logistics provider BevChain.
Sustainable Operations: Reduction in truck rolls, minimising carbon emissions and aligning with corporate sustainability goals.

“Extolla was a good choice for us as they understood our Cost-to-Serve and the Coles network. They kept us all accountable to the ‘Value Creation’ principles they set.”

Megan Sunderland, Supply Chain Management Director, LION

What was the outcome?

The transition was completed ahead of schedule, delivering significant benefits to all stakeholders:

Operational Efficiency: The new RSD model improved stock availability, reduced out-of-stocks, and streamlined inventory management.
Cost Reduction: Lion reduced its cost-to-serve, while Coles benefited from lower logistics costs and improved supply chain transparency.
Enhanced Delivery Accuracy: Centralised inventory management and automated processes led to more accurate and timely deliveries.
Financial & Environmental Gains: The project cut transportation costs, reduced carbon emissions, and contributed to sustainability targets.

Key success drivers

Extolla’s Expertise: Their industry experience and strategic approach ensured rapid implementation and risk mitigation.
Collaborative Model: The Extolla developed cost-sharing ‘Value Creation’ framework incentivised cooperation between Coles and Lion.
Technology-Driven Approach: The integration of EDI systems improved data visibility and decision-making.
Sustainability Focus: The new model significantly reduced the carbon emission footprint of deliveries.

The Extolla-Coles Liquor-Lion partnership exemplifies how strategic collaboration can drive legacy-creating supply chain transformation.

The transition from DSD to RSD not only delivered tangible business benefits but also set a new industry benchmark for efficiency, cost savings, and sustainability.

“We were specifically looking for a team with genuine industry expertise, not just one who provided PowerPoint presentations, and Extolla delivered exactly that.”

Andy Hampson, Director of Supply Chain, Coles Liquor

Awards and recognition

The success of this project was recognised at the Coles annual awards, where Coles Liquor won ‘Team of the Year’ and Lion was named ‘Supplier of the Year,’ highlighting the power of partnerships in achieving groundbreaking supply chain innovation. Additionally, Extolla won The Power of Partnership Award 2024 with the National Online Retailers Association for this project, further cementing its industry-leading approach to supply chain transformation.

“Working with the Extolla team was amazing and everyone was really happy with the results.”