Boring old Woolworths has produced the stuff of a John Le Carre novel, as Bill Eclairs explains.

A story in the Sydney Morning Herald this week had it all. A secret project inside giant retailer, Woolworths, a billion dollars at stake, an executive wanting to swap from Woolies to Franklins, possibly with key information and certainly with a lot inside knowledge about the big secret project that could change the very nature of the retail colossus. And, if Woolies’ CEO was to be believed, the very future of the company depended on this project and could be imperiled by an executive who wanted to defect (where is John Le Carre when you really need him!).

This was the original report in the SMHSupermarket executive’s parting bomb.

And the next day there was more. This time in the Australian Financial Review as it sought to follow up the story it has missed the day before An expedited hearing of an appeal, concern inside Woolies that the executive concerned might get to keep hundreds of thousands dollars from exercising his Woolies share options just before resigning to go to Franklins. And again that Project, Project Mercury.

And in the AFR today a breathless story headed “Mercurial times for Woolworths” with phrases like a team assembled ‘behind closed doors’, a ‘supply chain project so secret”. readers were told so secret that Woolies asked for and got most of the original hearing behind closed doors.

Also the AFR claimed “The details of the $1 billion undertaking, Project Mercury, have been kept secret from almost all of Woolowrths employees.”

Well, flatter me with a Winged Messenger4 or two. There’s actually a lot about Project Mercury our there in cyberspace.

And, gee, it must really be secret and of course you’d have to believe CEO Roger Corbett when he likened Project Mercury to the effort to build the atom bomb.

It must be big!

And with a project that secret and important you’d reckon there’d be nothing in Woolies staff news magazines, nor on the corporate website.

Well, AFR and others, think again. By the simple act of ‘googling’ ‘Project Mercury Woolworths and supply chain’ I got a number of hits, mostly from last year.

Take this one from a Woolworths staff newsletter, freely available on the company’s website here.

This is what it says:

“The Woolworths Supply Chain Development Program known as ‘The Mercury Program’ will help us deliver complex change across a range of areas. This will beachieved by learning from our past and sharing a common view with our suppliers of how to grow sales and lower costs.

“Over the next 18 months we will be progressively transferring our slower moving, ambient items to one of two National Distribution Centres (NDCs) in Sydney and Melbourne. The timing and locations will take into account the individual circumstances of each vendor.

We are in the planning stages for this project and we need information on the location of finished goods for products ranged in Woolworths Supermarkets. This will enable us to identify the most logical distribution centre for each line.”

And this one from another Woolworths news item, available online at the company’s website – http://www.woolworths.com.au

“The Mercury Program is now very much “in-gear” and ready to move us toward our vision of an integrated, end-to-end supply chain.The Program is the consolidation of many projects, already under way within Supply Chain, Buying & Marketing and Supermarket Operations, with the support of IT and Human Resources.

“These projects look at everything from:

• How, when and what we order from our Vendors *(eg. StockSmart and Replenishment)*;

• How orders are delivered by our vendors to our Distribution Centres and Stores *(Primary Freight, Vendor Capability, Transport Management System, e-DSD)*;

• How orders are consolidated and delivered to *(Rollcages; WMS; DC Design; New Network; Composite deliveries)*;

• How stock is managed in Stores to ensure availability for Customers but reduce stock on hand *(AutoStockR and Stock Management Principles)*;

• “How POS information is used to keep system information up to date, in order for us to know what stock to order from our Vendors when; and most importantly

• How our working relationship within and across teams needs to change to ensure that we think and act with the end-to-end supply chain in mind, in everything we do.

“This is an enormous program of exciting and challenging work. We have committed over 300 Woolies people and nearly $1 billion to these changes and believe that, over the next 5 years, we will be able to deliver fantastic benefits to our Shareholders and Customers.

“The Mercury Support Group has been established to facilitate the crossfunctional teamwork and understanding required to achieve the anticipated business benefits of the projects of Refresh Level II and other related projects. It is the responsibility of the Support Group, along with the Program Offices in each of the functional areas to ensure that the projects are planned, coordinated and implemented effectively.”

And here’s a third reference from last December from a newsletter called Trading Partner News, which goes inside Woolies and to its many suppliers – here.

“The Mercury Program is already transforming our mutual businesses by driving sales and reducing costs across the supply chain. Right now almost 200 people are working on projects ranging from redesigning our distribution network, through to identifying and implementing customer friendly initiatives for merchandise display in our stores.

“Each of the projects has been analysed in detail, and its context defined through extensive research of international retailers and in the Australian retail environment.**

“Some suppliers are already working with Woolworths on primary freight. Many have provided information to assist us in identifying which Distribution Centre is the most suitable for their product. Other suppliers are already investigating options to make packaging more store friendly with shelf ready trays for example.

“The changes will focus on reducing supply chain costs for us and our trading partners, resulting in lower prices for our customers and more business for everyone.

“For products to be efficiently managed through the distribution network Woolworths and our trading partners will both need to make changes. These details will be workshopped with our trading partners so that each of us is clear on the details of the changes required.

“By early February 2004, our website (www.woolworths.com.au <http://www.woolworths.com.au>) will outline the requirements to enable your product to efficiently move through our supply chain. It will also clearly outline the dates that these requirements are needed by and provide assistance to all suppliers who may have questions.

“It is essential that every trading partner allocates a couple of hours to review the details of these requirements thoroughly.

“By the end of February 2004, every trading partner will need to have completed the self-assessment questionnaire on your current logistics set-up and capability. The questionnaire will be emailed to you.

“The self -assessment will take a couple of hours to complete and will require input from manufacturing, logistics, finance and IT functions within your company.

“Completing the self-assessment will enable your company to identify areas of capability that require attention before the deadlines outlined.

“The information we will provide you with in February 2004 will detail where to go for assistance. We will also be sending you information on the Mercury workshops we will be running for our trading partners in the first half of 2004. We look forward to working with you to make the changes as smooth and effective as we possibly can.

“One change that will impact on all trading partners who have stock ranged in any one of our Distribution Centres, is the requirement that orders be delivered in full, in good quality and within the time slot given. So please give this area your early attention”

Now that’s hardly a secret, is it? There’s enough information there for any capable logistics and supply chain executive to work out what Woolworths is doing and to speculate quite accurately about how they will do it and how much they will cut in the way of costs.

Now, the US (in fact the Allies in World War Two) did go to considerable lengths to keep the Manhattan Project( the BOMB) a very closely guarded secret. They certainly didn’t tell the Japanese!.

But compared to that, Roger Corbett is guilty of considerable byperbole for commercial reasons alone when he compared Project Mercury to the Atom Bomb project.

It is nothing of the sort. Most if not all of Woolies’ suppliers are in the loop. And so are hundreds if not thousands of staff who would have a general and in their area, pretty detailed idea of the changes that are coming.

The executive involved in the court case reported by the SMH yesterday had an intimately knowledge of just how Woolies plans to implement Project Mercury (which is part of the overall Project Refresh revamp).

But there is enough information in the public arena to give any capable logistics person a good idea of what is going to change.

And, despite the hyperbole of the AFR on Wednesday, it is hardly a secret kept “from almost all of Woolworths’ employees.”

Peter Fray

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