A NEW STRUCTURE 1994-02-28 (2)

MATT NANNERY

Grand Rapids, Mich.-based Spartan Stores is among the companies realigning their corporate structures to share information across departments. And the MIS department is seen as the "enabler."

Supermarkets and wholesalers will rely more and more on their MIS departments to facilitate the fluid sharing of information between departments and between trading partners as ECR progresses, according to ECR proponents.

Steve Biondo, director of human resources at Spartan, said the wholesaler began a companywide period of self-assessment in 1992. That move, and the changes it has spawned, has allowed Spartan to move ahead of the pack toward ECR.

In a bold backup for its move toward ECR, the company shut down a 300,000-square-foot warehouse devoted to forward buying in January 1993. Forward buying is widely blamed for prolonging the time goods sit in warehouses waiting for shipment to supermarkets. Corresponding holding costs add significantly to the retail prices of goods, ECR proponents say.

The wholesaler also is setting up ECR-oriented "partnerships" with both suppliers and retailers. Among manufacturers, Spartan already has partnered with Procter & Gamble and is negotiating with Dow Chemical Co., Dial and Quaker Oats. The wholesaler already is using electronic data interchange to transmit purchase orders to more than half of its suppliers.

Spartan has set up "model" ECR partnerships with three supermarkets representative of the various-sized stores it serves. The wholesaler will work with those stores to bring ECR-related measures like category management, EDI and back-door scanning of incoming shipments on line. Spartan hopes to use the knowledge gleaned from those relationships to bring other retailers up to speed on efficient practices.

Though to outsiders it may seem that Spartan is throwing itself headfirst into ECR, Biondo said that's not so.

"We began to reorganize our company in August of 1992," Biondo said. "Eight people from different departments were pulled from their jobs for 18 weeks to form a cross-functional team to work out our plans."

Biondo said such teams are critical if companies are to dismantle "stovepipe" organizational structures. Critics say those structures, which favor efficiencies in distinct departments, often undermine companywide efficiency and ECR in general.

"Cross-functional teams allow you to bring ECR to your organization," he added. "Companies have to look at all the stages, see which ones add value and get rid of the ones that don't."

Biondo said Spartan's original cross-functional team included representatives of eight departments: procurement, retail operations, MIS, sales/marketing, human resources, finance/accounting, distribution and customer service.

Isolated from day-to-day pressures for 18 weeks, they confronted a variety of issues in an effort to collectively trim costs and enhance productivity across departments. The major focuses of the team were order management, warehouse automation/inventory management, electronic invoicing, cutting distribution center inventory, improving item-movement forecasting, category management for retailers and piloting model supermarkets.

Though the core cross-functional team still meets to set goals and oversee progress, Spartan has formed nine others to work toward implementing the changes mentioned above.

Biondo said the team focusing on warehouse automation is fairly representative of how the teams function. The four-man team includes people responsible for procurement, sales to retailers, distribution and MIS.

Biondo said the team is taking a critical eye to inefficient internal practices and looking at outside companies who've streamlined operations.

"We had been forward buying to make money in the past, but we realize that practice doesn't serve the consumer," he said. For external models, Spartan looked to the clubs. "We realize that mass merchants get their advantage from efficiencies in distribution," he added.

Biondo said the warehouse automation team is in the "requirements planning" stage -- trying to define the logistics and technical support services that will be necessary to cut warehouse inventory and precisely time the flow of goods in and out of the warehouse.

"They have to eliminate selection errors, track goods case by case through the warehouse via bar codes and improve shipping interfaces to support advanced ship notices with both retailers and vendors," Biondo said.

"We will know exactly what's coming in or going out on what truck when," he added.

The team hopes to fully automate the tracking of goods within the warehouse, too. "We'll have on-line access to inventory by item," Biondo said. "We'll know slot location, how much is in stock and when shipments are expected."

He said easy access to timely data on the flow of goods out of the warehouse over time should let Spartan replenish goods automatically this year. Replenishment based on retailer point-of-sale data is still at least another year away, according to Biondo.

Biondo said warehouse labor scheduling based on precise timing of deliveries and shipments is another focus of the warehouse automation team.