As consolidation continues to reshape the supermarket industry, companies looking to connect two or more disparate organizations, so they function as one, need to focus on systems integration.
"In an industry that seems to be consolidating at an hourly rate, systems integration enables companies to get the most efficiency out of all information systems -- from store level through the supply chain," said Mike Brown, director of retail technology for United Grocers, Portland, Ore.
"Systems integration allows us to squeeze our [investment] dollars as much as we can, but still use our systems to their maximum, and generate revenue and as many sales as possible," he added.
Systems integration enables retailers to flow data from a variety of systems, both at headquarters and store level, and access data from a common repository.
To achieve integration of disparate systems, some companies opt for implementing "best-of-breed" applications, as well as creating and deploying relational databases to store and connect immense amounts of company data.
Other companies, however, are turning to enterprise resource planning systems, which provide a suite of applications that connect all functions, from the store level to the warehouse on a common infrastructure. These systems provide a standard data model that functions on the platform.
Both approaches to systems integration require a companywide strategy to work effectively, sources told SN.
Not everyone is sold on the strengths of enterprise-wide solutions, especially wholesalers who are working with numerous independents that themselves use a variety of systems ranging from store to store.
Retailers and wholesalers do agree, however, that systems integration is necessary. While aware that all companies are different, information-technology executives continue to search for the best solution to achieve a seamless connection of corporate systems. "The higher the degree of systems integration, the more effective the ability to respond rapidly to business changes, in a less expensive manner," said Skip Smith, president of Smith Technology Consulting, Minneapolis. Smith is the former senior vice president of information systems for Supervalu, Minneapolis.
"Companies that do not focus on integration will tend to see a higher cost factor due to a redundancy of stored data and additional lines of code, as well as programming costs," he added. "Redundant data and lines of code also provide a greater opportunity for errors. Companies should be doing systems integration."
Most companies believe that systems integration is a natural and necessary progression. "We all want one common repository for information," said United's Brown. "We need to use some type of data structure that brings all disparate systems into one core location."
The key areas that most companies are interested in connecting are both core and back-office functions like point-of-sale systems, time and attendance software, financial applications and inventory management.
Minyard Food Stores, Coppell, Texas, is in the early stages of "unifying our software applications onto a universal platform to better flow data through the company, rather than relying on independent PCs," said George Spears, vice president of retail information systems at Minyard.
The 83-store retailer will begin linking its POS, time and attendance, labor-scheduling, direct-store delivery and order-entry systems in June, he said. "Data will be fed directly into a specific database, decreasing the time it takes us to get access to the information," he added.
While Minyard will be empowered by a variety of applications, other retailers are enamored by the power generated by ERP systems. Nash Finch, Minneapolis; Save Mart Supermarkets, Modesto, Calif.; and Marsh Supermarkets, Indianapolis, are among the trailblazers beginning to use a suite of applications to connect various functions across their organizations. "I see them as replacing legacy systems," said Smith. "Some organizations may also be viewing them as year-2000 solutions."
In addition to emerging as a year-2000 "quick fix," some sources feel the Efficient Consumer Response initiative could be another driver of this infrastructure.
"Through ECR, retailers started looking more closely at the supply chain, both internally and externally," said Bob Drury, vice president of management information systems for Schnuck Markets, St. Louis. "For ECR to work, retailers need a very efficient internal and external supply chain; to achieve this, integrated systems are necessary."
The all-encompassing technology, however, is not yet considered a "silver-bullet" solution for all corporations, according to United's Brown. "Wholesalers in the marketplace may find it harder to buy into the 'canned solutions,' " Brown said.
"It is different for wholesalers because we are dealing with so many independents using a variety of systems, and we need to be flexible for them," he added. "I am not saying it is right or wrong to use these, but for us it would be difficult to get an all-inclusive system to manage our operations."
However, some argue that the technology, which is still in early versions, may not be truly connecting enterprises from top to bottom. "Systems integration is a desirable end state, but it is difficult to achieve fully," said Smith. "From what I have seen, no one solution has everything."
"ERP systems are supposed to replace everything from financial systems to merchandise systems to in-store systems -- there is a lot of ground to cover," said Drury. "Even though it sounds like nirvana from a technology standpoint, it is a huge amount of work that takes coordination throughout the enterprise.
"Through ERP, all parts of the organization are supposed to fit together," he added. "There could be an undetected disconnect in logistics, but the rest of the organization could run smoothly. An inefficiency in logistics can put a company at risk. You need an exact fit to use this system, and that is tough to achieve."
More specifically, there could be a specific warehousing application that an ERP does not support. "If that application requires specific item information that it cannot access, retailers need to decide if they will make an application change or create an interface," Smith said. "Companies need an integration strategy from the start."
While ERP seems to be a hot topic for system integration today, new trends are continuing to emerge.
"Web-based database architecture is one trend that we are leaning toward," said United's Brown. "We will be able to go through a browser, simply input an address to reach a store's database, and analyze data elements for sales, inventory and so on. We will no longer need to create subsystems to look at data."
