Systems integration is less a luxury and more a necessity in today's retail environment, particularly when every facet of an organization needs access to data in order to make decisions about which products to carry and which customers to target.
Some wholesalers, including Supervalu, Minneapolis, are employing enterprise-wide systems to integrate the systems providing key financial, sales, distribution and merchandising data. The enterprise system being installed by Nash Finch Co., Minneapolis, will also interface with the company's warehouse management and point-of-sale systems when it is completed.
Systems integration at retailers ranges from efforts at Ralphs Grocery Co., Compton, Calif., to link purchasing data to in-house pricing systems, to the use of POS item movement data to improve category management efforts at Ukrop's Super Markets, Richmond, Va.
Integrated systems produce benefits across the entire retail operation. By giving the marketing staff access to the same information being used to forecast future demand for products, for example, a more cohesive business strategy can emerge.
A retailer could have instant information about the profitability of a store or even a single stockkeeping unit because the POS, pricing and labor cost information are updated on a daily basis, or even more frequently. In addition, a buyer with access to the warehouse management system could schedule deliveries of certain items during slower periods.
The future of integration will encompass not only the systems inside an organization. Integration between a retailer's ordering system and a vendor's ordering system, for example, could result in virtually hands-off replenishment in the future.
Some retailers, such as Wegmans Food Markets, Rochester, N.Y., are working on such systems with key suppliers such as Nabisco, Parsippany, N.J., to bolster sales and drive down costs in the supply chain.
"I envision the day when we can pick up files customized to us, maybe through the Internet," said Mike Hubert, director of management information systems for G&R Felpausch Co., Hastings, Mich. "We spend way too much time entering data, especially for cost changes and new item deals."
Such data integration between retailers and vendors will help provide more accurate forecasts to the vendor, and result in fewer out-of-stock and overstock positions for the retailer.
Systems integration will also play a major role as consumers begin to buy more groceries over the Web. While many retailers see the potential of selling via this medium, they are struggling with how to mesh these systems with their current applications. They are questioning how to fulfill orders from Internet customers, and how to incorporate these sales into their planning and forecasting systems.
Brodbeck Enterprises, Platteville, Wis., which operates Dick's Supermarkets, has had to integrate a number of systems in order to offer Internet coupons targeted to its loyal customers.
The retailer and its software provider worked to integrate systems performing such diverse functions as projecting future sales, tracking customer loyalty and providing historical data about specific customer purchases.
While difficult to achieve, the integration effort has paid off at Brodbeck in high coupon-redemption levels and increased customer loyalty, according to Steve Dittmer, retail systems director. "We have a 20% redemption on these coupons, which is a lot higher than the manufacturers' coupons in the Sunday paper. That means people are coming into the store and buying," he said.
Many retailers and wholesalers have been trying to create these types of tightly knit systems by linking their separate departmental systems, with limited success, sources told SN.
Despite these difficulties, a bigger information-technology problem -- the year-2000 issue -- is motivating some companies to integrate their systems, and quickly. The numerous pieces of software that must be replaced or recoded in order to correctly read dates after Jan. 1, 2000, are encouraging retailers and wholesalers to scrap their current systems for new, integrated systems.
Whatever the reasons for integrating and re-engineering systems, the benefits far outweigh the pain, according to Charles Mobraten, senior manager at Ernst & Young Consulting Services Organization, San Jose, Calif.
"Business analysts we talk to tell us they spend 80% to 90% of their time pulling together data," Mobraten said. "That only leaves 10% to 20% of their time actually analyzing the numbers to make business decisions. The true benefit in integrated enterprise-wide reporting systems is in the centralization and streamlining of gathering data."