SPOTLIGHT ON THE BACKSTAGE

David Orgel

Ahold USA has long been a company focused on building efficiencies and expertise in technology and the supply chain. "We've really accelerated this over the past two years," stressed Bill Grize, president and CEO, Ahold U.S. Food Retail. After years of accomplishments in these arenas, there remains a surprising number of additional opportunities for the company. Grize recently outlined for SN some of the major initiatives relating to these areas.

PRODUCE PROCUREMENT: Ahold has centralized produce procurement and enjoyed some fairly healthy savings in cost and product. The next stage over the next two years is to enhance procurement and "continue to lead in terms of what we offer from a product standpoint in the stores," Grize said.

NON-PERISHA-BLES PURCHASING: Ahold is already purchasing general merchandise, health and beauty care, and pharmacy centrally. But the remainder of the grocery categories are purchased by the individual operating companies with only some central coordination. That pattern is still too cumbersome. Ahold would like to "simplify the touchpoints," Grize said. The first step is building systems support for this process. "We'll set the stage in 2003 for movement on getting more efficiencies there in 2004 and beyond."

NOT-FOR-RESALE PRODUCT: Ahold has completed a lot of backstage work with its not-for-resale products, which are bought with no intention of reselling them to customers. This includes anything from foam trays in the meat department to office furniture. "We anticipate some pretty good savings in that arena," Grize said. "That singularly has been our most productive venture to date in terms of being able to generate savings for our organization."

GROCERY PRIVATE LABEL: Ahold has recently put additional focus on private label for groceries. "We're not yet pleased with the increase in penetration, but we are pleased that we've done a much better job in sourcing," Grize said. Some of that improvement has translated into better prices at retail or improved profits. Also, Ahold has done a much better job in packaging and presentation.

CENTRALIZING SYSTEMS: Given all the company acquisitions in recent years, Ahold still has a lot more work to do on centralization of technology. Grize said the company is about "3 to 3 1/2 years from being fully common in technology." But in the next two years, Ahold will target and address the critical areas according to order of priorities. Systems centralization will lead to cost savings as Ahold ends the maintenance costs involved with legacy systems.

HUMAN RESOURCES SYSTEM: Ahold is testing a system called HR Express in which job candidates can apply to a store from the Internet and even move through processes from screening to orientation. "This was beta tested at Giant of Landover with good results in terms of quality of individuals who applied and reduction in turnover," Grize said. "We're pleased with both metrics, and we're in the process of rolling that out across our six chains." Grize added that the system has drawn interest from companies outside the supermarket industry, and Ahold is in the process of patenting it.

GLOBAL SYNERGIES: Grize and his European counterpart are working together to "take advantage of the company's global scale to gain efficiencies." A major focus is the move to a common architecture, Grize said. Supply chain/logistics and warehousing are also a major opportunity for global synergies.