The technological revolution is moving up to the executive suite. Powerful tools, in the form of executive information systems, are finding their way into the hands of chief executive officers and senior vice presidents. Through EIS, time-pressed top-level executives are now getting a snapshot of their operations to make more effective decisions.
Using personal computers, executives can retrieve daily, concise reports on chainwide sales, profits and payroll, among other business areas. EIS represents a major leap forward for many executives, who often rely on staff-prepared reports for making decisions.
While a few retailers and wholesalers have full-blown EIS in place, the majority are still only in the exploratory stages. A number of hurdles remain, such as the need to upgrade hardware and software systems as well as the challenge of convincing upper management to use -- and trust -- computers on a regular basis.
EIS, however, is gaining ground as a critical business tool. "You're going to have to have EIS to stay in business," said John Laboda, director of management information services at Grocers Supply Co., Houston.
"I see a very strong need for EIS because our executives have less and less time," said Ken Doherty, vice president of information systems at Calgary Cooperative Association, Calgary, Alberta.
"They don't have time to browse through a bunch of paper data, or even electronic data," he said. "[EIS] has got to tell them something up front: Here's what's good, here's what's bad, ignore that. The more you can do for executives in the shortest time and in the easiest manner, the better these systems become," Doherty added.
EIS is only in its initial stages in the supermarket industry. A recent Food Marketing Institute study of MIS executives reported 20% of respondents had installed EIS. Many other retailers are making less bold, but still substantial, first steps, such as automating daily sales reporting.
One main challenge in introducing EIS -- and ensuring it gets used -- is to make the process and content appealing to senior-level executives. Retailers and analysts said two key areas cannot be stressed enough when designing EIS:
User-Friendly Design: Because many executives lack technical experience and have little time to deal with too many choices at the keyboard, retailers need to make EIS as simple to handle as possible.
Remote Access Capability: Executives need systems that can be accessed from home or while on the road, retailers said. Having information available only at the office ultimately limits the effectiveness of EIS
and can lead to frustration once executives come to rely on the tool.
The drive to implement EIS is coming from a number of fronts. Some retailer MIS departments are taking on the challenge themselves, but for other retailers the demand is coming from the head offices.
"We had a new chief financial officer come onboard and bring new ideas as to what executives are looking for in information, and what they need to run the business," said Gordon Goodyear, director of management information systems and electronic data processing at B&B Cash Grocery Stores, Tampa, Fla.
"He said they really need to know day-by-day what the sales are by at least 9 a.m. the next morning."
B&B developed EIS that delivers several key figures daily to the personal computers of high-level personnel. It has greatly improved the ability of operations and marketing executives to evaluate the effectiveness of various promotions.
"Executives are now able to make more timely decisions," Goodyear added. "In the past, by the time they knew what happened it was too late to do anything about it."
Following the retailer's special "Midnight Madness" promotions, which begin in the afternoon and end about midnight, executives can now review sales results early the next morning.
"They run those promotions for about two to three days," Goodyear said. "If the first day isn't what they thought it would be, they're going to go out to the stores to find out why."
Regular sales activity can be monitored in the same fashion, he added. "They can call up on their screen or print a report the next morning on every single store: what they did day-by-day for that week, or they can go back to any week in sales history."
Before B&B developed EIS, executives would only receive weekly sales reports on the Tuesday or Wednesday of the following week, Goodyear said.
Calgary Co-op, which has expanded its EIS to about 40 corporate-level and middle-management officials, uses color codes to alert executives to areas of both high and poor performance.
"There are set parameters. They might respond to a figure above or below average, above or below last year, above or below budget," Doherty said. For example, if gross margins are less than the same period a year earlier, the figure is flagged by a red marker. By contrast, data reflecting improved performances are designated by a green marker.
"When [executives] turn on their PCs, they get the hits of the day: Here's what happened that was very good," he said. "Then they go to a menu screen, which is a series of icons, and they can pick and choose whether they want to look at manpower, sales, margins, staffing or net profit.
"Executives using the system have significantly reduced the time they spend trying to find information," Doherty added.
Associated Grocers, Seattle, has created a similar in-house EIS tool for its highest-ranking executives. The system monitors activity in a number of key areas identified by those executives, including inventory levels, product turns, service levels and sales.
The system is not designed to provide highly specific data. However, more granular levels of information are available should an executive want to "drill down" to it.
To gain item-level information, for instance, executives would activate certain queries that access the transaction data bases, said Richard Lester, vice president of information systems. "That's not what we consider part of EIS. EIS is considered high-level."
The system, which Associated has been using for about two years, has enabled executives to determine in a short amount of time where each day's potential problems and opportunities lie.
"They look at it every single morning for the exceptions and some time during the day they follow up on those exceptions," he said. "They get answers to things that the data causes them to have questions about."
Before EIS, it was harder for executives to anticipate and respond to developing trends in time to make a difference, Lester said.
"They would get multiple reports," he said. "Some were daily, some were weekly, some were every month. It was a mixed bag before. Now they get a single set of screens they can walk through every day."
G&R Felpausch Co., Hastings, Mich., is taking its first step toward EIS with its recent automation of daily chainwide sales reports.
"We acknowledge the need for EIS," said Michael Hubert, director of management information systems.
Felpausch's executives have been hungry for store- and department-specific data "forever," he said. "Sales data is something they've always requested, to find out today what happened yesterday."
The retailer's program -- which makes sales information available to any authorized employee with a PC -- represents a first step toward developing an executive information system. Use of such data even in raw form, however, has already enhanced Felpausch executives' knowledge of store operations.
"We used to just get sales every Monday. Everybody used to say things like, 'How are things going? Oh, seems good, seems good,' but they never had concrete information," Hubert said. "Now they have daily, real-live actual sales flowing in from all the stores.
"They can view on-line all of the store sales through midnight of the previous day," he added. "We could refresh the data more often if there's a request for it."
Felpausch's next step will be to link sales data with item cost levels to determine gross margins on a daily basis. "That's just a matter of getting the math done," he said. "We know what we're selling, we know what the retail is, we know what the cost is."
Tracking sales activity, while almost a universal application for EIS, is only the tip of the iceberg. Retail executives are also accessing summaries of payroll expenses, employee overtime figures, gross margins and a wide variety of other applications.
"It changes constantly," Calgary's Doherty said. "As people come up with new things that are important to them, we try to build that into the system."
B&B, for instance, gives one vice president regular information on the status of the retailer's real-estate holdings.
"We have our own property management system, and he's more interested in that aspect of the business," Goodyear said.
The executive "looks at rental revenues and vacancies," he added. "We have a vacancy recap where he can look at any shopping center we own and say, 'OK, what do I have open in this particular center?' "