ENTERPRISE SYSTEMS

DEENA AMATO-McCOY

The integration of information technology enables retailers to flow data between a variety of systems, both at headquarters and at store level, and access all information from a common database. This replaces the process of running a variety of applications on multiple systems. Integration benefits include the ability to analyze data, streamline operations, and improve the accuracy and integrity of data due to the elimination of rekeying data.

Supermarkets are achieving integration by linking robust store systems and application upgrades.

"Retailers considering IT integration need to step back and take a look at the flow of their data, where they are getting it from, where does it need to go, and once it gets to that area, what format does it need to be in when it arrives," said Mike Hubert, director of management information systems for G&R Felpausch Co., Hastings, Mich.

Among the core and back-office applications that are getting the most attention are point-of-sale data, time and attendance applications, inventory management, price management, direct-store delivery, accounts payable, general ledger software, even frequent-shopper data and category management information.

"These are the areas that we can bring together to form a profitability report for our retail stores," said Mike Brown, manager of retail systems for United Grocers, Portland, Ore. "Through IT integration we can have access to what store profits are based on item movement, labor and pricing. And we can have this on a daily basis."

Integration is initiated by establishing standards and planning which systems to focus on. Once a plan is mapped out and systems are linked, integration eliminates the need to rekey data. This is a key element in reducing operations and labor costs.

"You no longer need to output results from one computer and re-enter that data into another system," Hubert added. "That is a waste of time.

"It takes a lot of planning and design on how to get different system interfaces to coexist with each other," he said. "Once there are standards in place that will transfer the data between the systems, there is more flexibility in sharing information within the company's departments."

In cases where retailers are taking "best-of-breed" systems from a variety of vendors, chances are integration will be more difficult due to a lack of standards. Schnuck Markets, St. Louis, is avoiding this dilemma through the use of a relational database.

A relational database stores data from disparate systems. Though the information is not formatted in the same fashion as the other system it is connected to, the relational database compensates with a common format, making the information available to the programmer.

"It is easier to integrate systems if there is something pulling the data together and formatting the information to be viewed," said Bob Drury, vice president of management information systems for Schnuck. "Since we look to integrate the best systems we can and try to bolt them together, we use a relational database to move the information between the two systems."

Integration is allowing more corporate staff and sales associates access to information, which helps support better daily business decisions.

"Different departments, such as marketing, are interested in point-of-sale data, to help make better decisions based on item movement," said Lisa Piron, director of management information systems for Green Hills Farms, Syracuse, N.Y.

"We are getting to the point where more departments want to use this critical information," she added. "There needs to be an efficient way of extracting it without having to enter three computer screens and visiting various offices."

Once retailers begin accessing information in real-time, they can start to reap benefits such as cutting costs out of operations. Buyers at Certified Grocers of California, Los Angeles, for example, can monitor warehouse systems, eliminating congestion and additional operating costs at loading docks due to over-scheduling.

"Using non-integrated systems makes people less empowered and offers less control on streamlining procedures," said Marty Simmons, director of retail information systems for Certified Grocers.

In the past, the wholesaler's buyers made deals to have product arrive at the wholesaler's loading docks. However, at times there would not be enough loading docks available to accommodate the trucks on certain shipment days.

"By giving buyers access to warehouse systems, we have been able to eliminate that problem," he said. "Tying our buying areas with our warehouse systems tightly integrates our shipping, billing, picking and ordering systems. We have noticed a 2% increase in our sales, by reducing loss of sales, since integrating our ordering system between us and our retailers."

Felpausch expects to reduce costs through the integration of its inventory-management application.

"We are just getting to the point where we are seeing cost reductions now that we can receive electronic invoices," said Hubert. "Before we did not have our inventory on-line, and we could not keep perpetual inventory. However, once an inventory management application is integrated, this is possible."

United Grocers is seeing cost reductions with the integration of DSD. "This could be the highest return for integrated systems," Brown said. "All product that is to be received at the back door is preloaded into our system, along with price. When product arrives, data flows from the back door to our system where the inventory is updated in real time.

"When the vendor arrives, there could be a discrepancy with their invoice," he added. "This is where huge dollars are lost every day. In the past there was no real-time inventory to check the invoice against. Integration is eliminating the need to physically count items, as well as manually keep track of the cost of these items."

One issue that may be spurring integration is year-2000 computer problems. This is forcing companies to look at their IT needs, infrastructures and applications. As a result, retailers and wholesalers can achieve a complete system that provides operations data daily.

"Though the millennium is not directly related to IT integration, our philosophy is replace what we can, and at the same time integrate our separate pieces together if possible," said Jim Rau, director of information technology for Prevo's Family Markets, Traverse City, Mich.

United Grocers believes the millennium challenges will give retailers the opportunity to make integration a priority.

"This issue is forcing many companies to make decisions about their business systems," Brown said. "This is a huge opportunity to upgrade to newer technology and replace disparate systems with those that are able to be integrated."

IT executives told SN that their integration plans are continuous, and some are already looking to future initiatives. For example, Felpausch, well on its way to connecting internal data, hopes to manage the flow of data between vendors in the future.

"I envision the day when we can pick up files customized to us, maybe through the Internet," he explained. "We spend way too much time entering data, especially for cost changes and new item deals. There needs to be more external maintenance so that we have more seamless vendor relationships."