FMI DISTRIBUTION 1999-03-15 (2)

PATRICK SCIACCA

SAN ANTONIO -- Retailers must weigh numerous factors in purchasing warehouse management systems. Developing a system in-house requires significant information technology resources. Packaged systems often require a degree of customization to fit a distributors needs.

Three leading retailers discussed three very different paths to choosing a warehouse-management system during a workshop session at the 1999 Distribution Conference, held here March 7 to 10 and sponsored by the Food Marketing Institute, Washington.

Wegmans Food Markets, Rochester, N.Y., went the in-house route, even though "it's unusual to develop your own WMS," according to Mike Bargmann, director of distribution for the retailer.

"For us, a new WMS was very important," he said. "It was one of the Top 5 projects for the company."

The WMS development effort received strong backing from the company's management, Bargmann added, and "we had an awfully solid IT program. We could see where our WMS was headed and developed a good five-year plan." The components of the WMS are still being developed as they are needed.

This very personalized system allows the retailer to move quickly and make changes to it. "In the end, we see our WMS as a strategic advantage," Bargmann said.

Although the system is very agile and can currently meet all the retailer's requirements, the possibility of using a vendor-supplied solution in the future is not out of the question. "We continue to look at opportunities and development of systems in the marketplace," he noted.

Price Chopper Supermarkets, Schenectady, N.Y., bought its WMS from a vendor, according to Renato Cellupica, vice president of distribution.

The retailer sought to replace a system that had been in place since the 1980s and had had "a lot of Band-Aids" put on it over the years, he said. The old WMS couldn't handle new technology such as radio frequency systems, he said.

The retailer met with several vendors, and in the end decided to go with a package solution. "The single biggest factor [in choosing a vendor solution] was the resources available to us," Cellupica said. "We didn't think we were going to have the continuity of resources or skill level [to develop a WMS]. Why reinvent the wheel?"

Although the system didn't immediately perform all the functions Price Chopper wanted, it came pretty close, according to Cellupica. The vendor's solution addressed about 90% of the functional requirements for the system.

Several industry consultants told SN that a 90% functionality rate for a WMS is very good, and that there will always be some customization needed with such a system, whether it's "off the shelf" or designed in-house.

Doug Pope, vice president of warehousing at Seaway Food Town, Maumee, Ohio, concluded the presentation. When faced with its WMS decision, the retailer opted to do nothing, he said, "but to our horror, doing nothing was doing something.

"Our information systems officer came in and said we would have to spend about $200,000 to make sure our WMS was year-2000 compliant," Pope explained.

Updating the system Food Town already had in place would have cost more than a totally new system, Pope added. "Warehouse-management systems cost a whole lot of money," he said, and chuckles from the crowd indicated that they were well aware of the high cost of such systems.

Pope said that when the evaluations were completed and the numbers came in, the retailer decided not to change the system at all. "After all this, Food Town opted to stand with what we had," he said.