Co-op managers sometimes have to rely on their instincts. Equipped with hope and a prayer, they have to make decisions about the business based on a feeling or intuition, although access to reliable data makes for better decisions. In an increasingly cutthroat and sophisticated marketplace, intuition alone is a risky decision-making practice. A multi-use business tool that allows a co-op manager to forecast big-picture trends, as well as examine data that contributes to effective daily operations, is now a necessity to remain educated and competitive.
An approach designed specifically for the cooperative retailer, Common Cooperative Financial Statements (CoCoFiSt), was developed first by the CGAMW and Blooming Prairie, and was built upon by Walden Swanson, a CDS financial consultant. Assistance came from National Cooperative Bank Development Corporation, MSI Insurance, Cooperative Development Services, Northeast Cooperatives and Blooming Prairie. The program’s purpose is to strengthen the cooperative advantage by collecting and sharing financial data to improve co-op operations.
Currently 80 co-ops around the country participate in CoCoFiSt and share information on key variables like margin, labor, inventory and sales. Each co-op receives their own report that includes hundreds of detailed variables such as sales per linear foot, inventory turns and individual department sales. “Key trends and anomalies are highlighted to help a manager notice things that might need attention,” Walden explained. “The goal is for co-ops to improve faster than the competition.”
The primary benefit of CoCoFiSt is creating an atmosphere of continual improvement within an individual co-op, as well as within the cooperative movement as a whole.
CoCoFiSt is not just about numbers, but people-power. Walden developed CoCoWorks! sessions, one or two-day workshop sessions involving general managers and department managers, designed to improve co-op operations by at least $5,000 per year, understanding that group synergy, cooperation, and best-practices are what can take a co-op to the next level. “CoCoFiSt facilitates that by making detailed financial and operating information available among cooperatives and bringing people together through CoCoWorks,” Walden said.
Co-ops have made tremendous progress in improving store operations and strengthening the cooperative infrastructure. “The CoCoFiSt numbers indicate that, on average, productivity is rising in all departments and average same-store growth is very good when compared to the competition,” said Walden. In terms of infrastructure, co-ops have created CGAs, NCGA, CGIN, CCMAand CoCoFiSt that have been valuable collaborative tools. Co-op warehouses continue to offer very valuable programs such as Manager on Contract, Co-op Advantage, CoCoWorks! sessions and workshops.
“On the other hand, we still have some areas of weakness we need to fix,” he added. We aren’t able to buy products as cheaply as the chains—similar sized single co-ops may be paying 4 or 5 points more than comparable sized chain stores for the same products. This presents an opportunity to deliver a better service to our customers.
“We need to figure out how to drive costs out of the system as well as some of our competitors do. For example, we have many more administrative staff on a per store basis than our chain competitors,” said Walden. “We are missing the opportunity to save money for our members or switch labor hours to customer service, or other areas that directly serve our members.”
“The whole industry has changed from when we started. It’s moving at a good clip. We are working together more regionally and nationally, but we need to move faster,” Walden observed. “Mainly co-ops have formed as local institutions, but the market has changed and we need to think about a national strategy in order to compete.” From an analysis of the operating results of cooperatives and natural food chains, Walden concludes that co-ops can improve bottom lines by about 10 million dollars annually. He offered the following suggestions for how co-ops can do this:
• Buy better. “I estimate that through more or expanded joint buying agreements, CAP-like programs, the NCGA controlled label project, and by improving pricing and product choice procedures, co-ops should be able to collectively increase margins by about 2 percent. On sales of $300 million, this is $6 million more per year of benefits to co-op members.”
• Adopt Best Practices. “Some best practices are very inexpensive to implement. For example, several co-ops have adopted the Weaver Street filing system and report 2 or more hours saved per week. That’s approximately $1,500 in savings per year, and finding 10 of these little improvements would add up to $15,000 per year per store. For 100 co-ops, that’s $1,500,000.”
• Centralize some practices. “The Southeast CGA has embarked on a Shared Accounting project and set developing a common backend database as the first priority. The database aspect of this project has morphed into CoCoIT, a project that involves co-op’s brightest information managers in adapting their best databases into a product for all co-ops.”
Through CoCoFiSt and related programs, Walden has seen a high level of willingness within co-op management to address these issues. “People are aware and open,” said Walden about CoCoFiSt and other co-op collaborative programs.
“I think it’s important to have as much fun as possible,” said Walden, who believes hard work and humor go well together. In fact, he offers an award for people who submit good questions or insights to him about CoCoFiSt. It is the “CWPPP Award,” also known as the Coveted White Plastic Pocket Protector Award, for all the CoCoNerds out there. So far he’s given out about 100 of them. “I buy in bulk to reduce the cost of goods,” he said.