WHITE SULPHUR SPRINGS, W.Va. -- Giant Food has charted a multifaceted, long-term growth plan by balancing the dual goals of cost reduction and demand creation, according to Pete Manos, president and chief executive officer.
In a speech outlining the chain's "playbook for the 21st century," Manos detailed a vision for growth that incorporated efforts from category management to continuous replenishment. In his address, delivered at a session of the Grocery Manufacturers of America's Executive Conference here, Manos stressed that his plans hinge on close working relationships between the Landover, Md.-based chain and its suppliers.
"At Giant, we believe that we are today laying the foundation for doing business in the next decade and beyond," Manos said. "Efficient Consumer Response has brought to light the need for manufacturers and distributors to work together as never before+Whether we are referring to cost reduction or demand creation, the gains we can make together will far outweigh those we could make individually."
Under the heading of cost reduction, Manos grouped efforts including electronic data interchange, electronic fund transfers, direct-store deliveries, continuous replenishment and cross-docking. He also described efforts to enhance data analysis. In discussing demand creation, the executive detailed category management moves and accompanying organizational changes. The category management initiative will require tight-knit trading partner relationships, he said.
The chain has enacted numerous structural changes around category management. "At Giant, we re-engineered the Grocery Purchasing department into the new category management structure," he said. "We developed a personnel assessment tool to identify the right candidates for the position of category manager. We approached category management as a corporate effort using a cross-function team approach.
"Also of importance is that our compensation program for category managers has been changed to tie bonuses to category and corporate performances."
Regarding electronic data interchange moves, Manos said more than 75% of Giant's volume is purchased electronically from more than 600 suppliers. About half of the company's invoices are now handled electronically. Giant is also implementing UCS2 transaction sets. Moreover, the Advance Ship Notice, which enables the company to know the products on a delivery, "also holds promise and is in our plans for next year," he said.
Electronic funds transfers are "a logical next step to electronic invoicing," Manos noted. Although Giant is currently paying electronically with some of its paperless DSD vendors, "the next step is to make the necessary software changes to provide EFT for the warehoused product," he said.
Direct-store delivery has enabled Giant to deal paperlessly with some companies, lower receiving time, improve data accuracy and reduce unauthorized items, Manos said. Meanwhile, continuous replenishment efforts have proven effective in slicing inventories, carrying costs and lead times, Manos noted. "Giant is aggressively pursuing new CRP partners," he said.
The retailer also sees more opportunity for direct shipment of products to its stores. Cross-docking is a practice that holds much potential for Giant, which is currently "cross-docking supplies on a daily basis," Manos said.