AKRON, Ohio -- Fred W. Albrecht Co. here expects to save nearly $5 million after launching a computer-assisted ordering and merchandising system.
The retailer is rolling out several software programs this month to link store-level scan data with corporate ordering programs and build the foundation for Albrecht's future automated perpetual inventory system.
"We're buying the software package to catch up to the Wal-Marts of the world," said David Stanek, vice president of management information systems.
Stanek said the system will allow Albrecht to reduce inventories substantially in its 33 Acme, Acme Supercenter and Y-Mart stores and distribution centers.
"We project about $4.9 million in savings over the next few years, which will be coming mostly from an expected reduction in inventory and carrying costs," he told SN.
Albrecht also hopes the increased accuracy of its orders will improve the productivity of administrative and warehousing employees. "What we're hoping for is staff redeployment," Stanek said.
The software will generate store orders based on scanner data sent daily from individual stores. The retailer had relied previously on mainframe estimates of store stock levels. "The stores were not part of the process, but this new system will branch out to our stores," he said.
"Before we had a home-grown system. We had developed buying and inventory programs, and over the years we discovered we couldn't compete with the [supercenters]. Now we will have a completely integrated system."
Stores will send scan data directly to the corporate mainframe using leased lines that were installed during a major point-of-sale renovation last year, Stanek said.
Use of the scan data will enable Albrecht to monitor product categories to an extensive degree. For instance, category management in the retailer's supercenters, which have a high amount of general merchandise, will be vastly improved, he said.
"Our core business is groceries, and we've never had a really good system for general merchandise," he said. "Now, when we sell a widget we'll know today that we sold it and we can replace it tomorrow.
"Not many of us in our industry have made it to a perpetual inventory level," he said. "We're going to be one of the first, I hope."
Stanek said another benefit of the new system, manufactured by JDA Software, Scottsdale, Ariz., is the ability to track how promotional items actually fare and to compare their sales against those of previous promotions.
"We hope to increase our gross margin opportunities by improved deal analysis," he added. "We'll be able to analyze our ads against our normal sales. We'll know how well the ads have done in gross profit, and whether they had the impact that we wanted."
The system also will give Albrecht additional information on when, if at all, the best time is for practices like forward buying and diverting.
"When a deal is at the end of its due date, the system will recommend whether or not to buy in based on the carrying costs of the inventory," he said. "We hope to improve our forward buys and thus our gross margins."