RETAILER WILL IMPLEMENT OUT-OF-STOCK MANAGEMENT

SARAH MULHOLLAND

SCHENECTADY, N.Y. -- In an effort to reduce out-of-stocks and keep inventory under control, Price Chopper here will implement new software designed to manage store replenishment more effectively.

Price Chopper Supermarkets here has selected Vivaldi Store Replenishment software from Mount Laurel, N.J.-based Industri-Matematik International.

The system will also help the chain address problems associated with an endemic labor shortage, providing for a more effective allocation of manpower.

The program combines retail sales forecasts, point-of-sale information and store inventory levels to generate orders that are matched with product available from the warehouse.

Ultimately, the computer-assisted application will be restocking entire stores with a constant flow of product based on customer demand, maintaining a "perpetual inventory," said Tom Nowak, chief information officer for the chain.

Out-of-stocks have long plagued the retail industry and are a primary cause for customer complaints.

Nowak foresees a new level of customer service with the completion of this program.

"When we're fully implemented, this system will be ordering most of the product in our stores, including perishables," he said. "Our out-of-stocks will go down.

"This will significantly reduce the time it takes to generate an order at store level. Our order takers will be more customer-focused, and able to focus on inventory accuracy as opposed to taking orders."

The implementation process is set up in three phases, and it will take roughly 18 to 24 months for a complete rollout in all Price Chopper stores, Nowak told SN.

According to Nowak, the ability to work in stages was one of the most attractive features of the Vivaldi program.

"It can be implemented in pieces and that is something that we were looking for," he said. "It has a first-phase component that makes the existing manual ordering process more accurate.

"It also provides the modules for the future when we put on entire departments and let the computer take on the ordering."

During the initial phases, order takers will be given information -- such as access to retail forecasts -- to increase accuracy before the computers are online.

According to Nowak, this is a valuable interim piece as retailers struggle to train and retain experienced people.

"Another benefit is making sure that we have the right amount of inventory," he continued. "There will probably be some reallocation of inventory and some inventory dollars saved."

While many retailers currently use some kind of assisted-ordering systems of their own creation, there have been very few large-scale implementations.

Nowak acknowledged the complexity of the process, deeming it a "major project" for his stores.

Different categories and departments will be working within different time-frames. Some items pose unique questions that have to be addressed separately, particularly on the perishables side.

Also, integration will be a multifarious undertaking, establishing connections to POS, warehousing and accounting systems.

Nowak would not comment on actual costs and savings; however, he anticipates "major benefits" in return for the effort.

According to Richard Cardozo, director of retail solutions for Industri-Matematik, one of the most common mistakes in past pilots was a simple lack of time and patience.

"You can't just throw it in and start generating orders," he said. "A perpetual inventory is subject to a lot of different processes."

This system is designed to go beyond filling the shelf, he said. The forecast looks at any number of causal factors that affect movement from past sales to future promotions. Using this information, inventory needs will be calculated on a daily basis.

Eventually, this information could possibly be made available to suppliers. By making warehouse conditions more visible to manufacturers and enabling them to pass on a lower price, retailers could realize an additional benefit in procurement costs, Cardozo said.

"This is what collaboration is all about," he said. "But it takes awhile to get there."

Price Chopper is the first chain to pick up Vivaldi. According to Cardozo, Industri-Matematik continues to work with several grocery operations of similar size and stature.