HAWAIIAN CHAIN IMPROVES LINKS TO MAINLAND 2004-02-23 (1)

CHRISTINE BLANK

HONOLULU -- Corporate and store systems installed by Star Markets here have enabled the 10-store island chain to improve communications with vendors on the mainland as well as with its wholesaler.

The improvements in communications are part of an overall IT overhaul that began three years ago with the installation of Tucson, Ariz.-based TCI Solutions' Retail HQ and Retail SM (Store Merchandiser) to replace its corporate host system and store system, said Dave Doty, comptroller for Star Markets.

Vendor management was a critical area of reform: The HQ and SM software streamlined Star Markets' old system into a single item and vendor data repository for its corporate office and stores, Doty said.

This has helped upgrade the former system of communicating with vendors, which was "haphazard," Doty said. "We had a manual receiving system: We received products, then sent invoices to the corporate office, got those into our general ledger, and paid our bills."

Today, all of Star Markets' vendors fill out allowance forms created in Microsoft Excel, and e-mail them directly to headquarters -- not individual stores. "It is standardized, so we don't have all these different formats in faxes or e-mails," Doty said. Star created the Excel form to go along with TCI's HQ program, he noted.

In addition, costs and allowances are much more accurate. "We are able to make sure we were really receiving allowances promised to us by our vendors," Doty said. "In the past, it was hit or miss whether we would pay a higher cost or the cost that was negotiated." The TCI system has also streamlined ordering. Store orders are consolidated at headquarters, and then transmitted in a single order to Star Markets' wholesaler, Unified Western Grocers, Commerce, Calif. "This has greatly reduced manual processes and errors," said Diane Mitnick, spokeswoman for TCI.

At checkout, Star Markets has been better able to control prices, promotions and markdowns as a result of "a big improvement in data integrity for pricing," Doty said. "It allows us to manage our margins and pricing much better than we had in the past. We had separate approaches for ways we managed prices." In addition, the chain is able to provide a consistent price image to its shoppers.

Star Markets has also upgraded several other IT systems, including point of sale, handheld applications, phone systems and its T1 communications network.

As a result, "we can be much more on the fly with how we respond to stores," Doty said. It also upgraded its sign and label system, and linked all store scales with headquarters. Although Star Markets' investment in the changes was "huge," executives realized they would see "tremendous benefits rights away" and needed to make changes to compete. "The competition will always move to the next level," Doty said. "The question is, will you move to the next level as well?"