Associated Grocers of Baton Rouge: Rebuilding IT After Katrina

MICHAEL GARRY

“May you live in interesting times,” says an ancient Chinese proverb. When Steven A. Miller joined Associated Grocers, Baton Rouge in June 2005, it was just two months before Hurricane Katrina stirred up some very interesting — and devastating — times for his market area in Louisiana and the Gulf Coast.

But since then, Miller, as senior vice president of strategic planning, projects and information services, has brought about myriad changes in the technology practices and infrastructure of the retailer-owned wholesaler so that its 180 members, who operate 240 stores, are no longer as vulnerable to natural disasters as they were that terrible summer.

Miller, who previously had worked in IT for Master Foods, Columbus, Ohio, has also introduced numerous other technology improvements at Associated Grocers. These include a new business intelligence tool, data synchronization, computer virtualization, a new promotion system, a help desk deployment and an impending price management application. For this body of work, Associated Grocers, Baton Rouge has been selected to receive SN's 2008 Technology Excellence Award in the wholesaler category.

One of the casualties of Katrina was telephone communications, leaving many of Associated's retailers unable to process dial-up credit card and food stamp transactions at the POS or transmit orders to Associated's warehouse. “So, almost immediately afterwards, we gave everybody the ability to send orders over the Internet, a more reliable method,” said Miller. “And we made a full-court press to put in POS [transaction terminals] that could send transactions over the Internet.” In both cases, dial-up communications remained a backup.

Associated replaced every existing handheld ordering device used at member stores with Symbol RF wireless units with Ethernet capability; the cost of the devices was covered under the stores' service contract with the wholesaler. Stores had to pay separately for new POS terminals, with about a third of them going through RORC (Retailer Owned Research Co.), which provides technology for several retailer-owned wholesalers.

To bolster Internet connectivity at Associated's Baton Rouge headquarters, Miller has added significantly more bandwidth this year in the form of new cable and fiber-optic lines; these supplement the company's two existing T1 lines. “We use all four now, but it appears as though we have only one Internet connection,” he said. The connection is a conduit not only for receiving store orders, but also for sending pricing information and receiving POS data.

Right after Katrina, Associated created a database containing survey information gleaned from its retailers about their expected product needs before and after a hurricane. “These orders are pre-booked, so if a store can't transmit the order, but can still reach us via email or phone, the order is ready to go,” said Miller. “We let our volume of hurricane supplies grow so we can give priority to those stores.” The database also contains retailers' contact information and data on their hurricane preparedness, such as the existence of a backup generator for the store.

Last summer, for the 2007 hurricane season Associated added another data-gathering tool: Microsoft's SharePoint system, a Web interface that serves as a social network inside the wholesaler. Within SharePoint, Miller created an “emergency site” containing links to local authorities and weather sources. In the event of a hurricane, Associated executives “can go to one place and get information about who to contact and what is impacting our market areas,” said Miller. “It puts us in a position to know if a road is open or closed, safe or unsafe.”

The SharePoint link gives the company the ability to “get products to a retailer even if they are in an area that's locked down,” Miller said. “In the past, it took precious time to explain to authorities our reasoning for needing to enter disaster areas.”

As part of these preparations, Associated has cultivated relationships with local authorities. “Many have invited us to participate in disaster recovery planning,” Miller said. The wholesaler has also equipped its trucks with signs and badges “so we can get into areas faster” during a disaster situation.

At the same time, Associated has established a “T-minus” schedule that changed the way it operated following a hurricane. “It's like having a countdown to blastoff,” said Miller. After Katrina, Associated found that it selected orders prematurely for many stores that never reopened, and “we didn't want to be in that position again,” he explained. So when Hurricane Rita struck not long after Katrina, “we decided to not select groceries until we could ensure that we could deliver to stores and that they'd be open.”

Miller's IT efforts have extended well beyond Katrina-inspired initiatives. For example, nine months ago Miller introduced a low-cost business intelligence tool, Report Portal, from XMLA Consulting, Tampa, Fla., which is widely used within Associated Grocers to “look for improvements,” he said.

For example, the Web-based, feature-rich tool can be employed quickly — “at the click of a button” — to identify a store that isn't carrying a top-selling item. “And we're able to drill down to a fine detail and make suggestions to our retailers on prices and promotions,” said Miller. By contrast, prior to having a business intelligence tool, “when we needed detailed information on a [retail] customer, we ran queries that took a long time.”

The initial cost of the Report Portal system is about $10,000, and it can be deployed for much less than six figures — well below the cost of many business intelligence systems that do essentially the same thing, said Miller.

Miller recently wrote about his implementation of Report Portal for CIO magazine's website (see related story, "Business Intelligence on the Cheap," next page).

Last October, Associated launched a new, internally developed promotion system that handles such tasks as vendor fund management and the timing of vendor deals. Similar to the business intelligence system, the new promotion system allows the wholesaler to gain access to data far more easily than in the past. “Creating new promotion programs is simpler,” said Miller.

Miller credited Associated's five-person team of developers for designing the promotion system. “We have a group of people capable of developing enterprise-level applications and deploying them,” he said. “Kudos to them.”

Associated also recently deployed a new, automated IT help desk application that allows the company to track and prioritize requests made via the Web. Previously, requests were made to IT personnel by phone, email or in person. The new system “ensures that we don't lose requests,” Miller said.

Data synchronization is another area where Associated Grocers has made inroads. Last July, Miller implemented two tools to support data synchronization: the InSync Data Staging solution, from Retalix, Dallas, and the XML-based File Sync product from Ontuet, Des Moines, Iowa. Associated Grocers uses the former product to integrate supplier data from the GDSN (Global Data Synchronization Network) into its internal systems. Miller likened the latter product to an Internet service provider, or ISP. The wholesaler uses 1SYNC as its data pool.

Associated Grocers is in the process of synchronizing item data with Kraft. “We are about to do the balance of Kraft items, and then we'll move forward with other CPG companies,” said Miller. In addition, the wholesaler is looking for “alternative methods” to receive item data from smaller local and regional vendors.

Associated's buying system requires maintaining about 300 attributes for each item — far more than the 25 parameters that Associated receives through the GDSN. To eliminate the manual entry of all the non-GDSN information required for a line extension, Retalix has configured its solution to copy that information from a similar item in the line that's already in the system, and then overlay the GDSN data. “Data sync is about accuracy, but minimizing data entry is also very important,” Miller said.

Associated's next major IT project is expected to center around the implementation of a retail price management tool from BRdata, Melville, N.Y. The system will give Associated's retailers three options on pricing for Associated-supplied items: Allow the wholesaler to manage their retail shelf prices; customize their own price changes; or use price optimization to base prices on historical movement patterns.

The system will enable retailers to see the impact of movement and price on margin and gross profit.

“It will give retailers much more information for decision-making,” said Miller.

Related Stores: The Virtues of Virtualization

One of the hot trends in computing over the past few years is virtualization, which lets one computer do the job of multiple computers. Since joining Associated Grocers, Baton Rouge, in June 2005 as senior vice president of strategic planning, projects and information services, Steven A. Miller has applied this concept to the company's headquarters systems.

“It allows you to run multiple instances of an operating system on one physical device,” said Miller. In Associated's case, dozens of operating systems operate over three servers, allowing for immediate failover.

“If you do maintenance on one physical server, you can move operating systems and applications to another server on the fly,” he noted. “There's a tremendous reduction in hardware needed.” In addition, it's a much “greener” solution, he said.

Associated Grocer's virtualization technology is provided by VMware, Palo Alto, Calif.

Business Intelligence on the Cheap

In addition to his role as senior vice president of strategic planning, projects and information services at Associated Grocers, Baton Rouge, Steven A. Miller does a little freelance technology writing.

He recently contributed an article called “Business Intelligence (BI) for Less Than $25K” to CIO magazine, which posted it in late April on its website at www.cio.com/article342514.

The article details how Miller went about bringing to the wholesaler BI capabilities, which typically run well into six figures, at a much lower cost.

“I wondered what was buried deep in our data,” he wrote. To answer that question, he initially learned at a local BI presentation how to leverage Microsoft tools such as SQL 2005, report services and analysis services to create a BI tool using Excel as a means for display.

After generating some interest in that process, he decided to move on to another product called Report Portal, from XMLA Consulting, Tampa, Fla. This proved to be well accepted at Associated Grocers, including by its chief financial officer. “The users may not know all the inner workings of the system, but they have begun to adopt the technology,” he wrote.

After noting the limitations of the system, he described the cost breakdown: $10,000 on Report Portal, $10,000 on professional services and less than $5,000 on licensing. “One year later, BI for less than $25K,” he concluded.