Despite the fact that the millennium bug has already caused computer glitches in a few distributors' forward-looking systems, some companies are still stuck in the early phases of understanding the year-2000 problem and formulating plans to mitigate its effects.
Many small and medium-size retailers are simply not ready for the year-2000's effect on software, hardware and overall operations, sources told SN.
"I can't say enough that it's an awareness problem," said Pat Cox, year-2000 project manager at Spartan Stores, Grand Rapids, Mich. "We will have our legacy systems done by the end of the year. The next thing is getting retailers aware and assisting them in getting their internal operations ready."
One of Spartan's top priorities is helping retailers with embedded microprocessors. "There are an estimated 50 billion microprocessors in existence and an estimated 5% are going to fail," he said. "The biggest way that is going to hit retailers is the lighting, cooking and air conditioning systems, and the list goes on."
Distributors who are further ahead in dealing with the year-2000 problem are focusing on relationships with vendors and other trading partners. Many are testing the millennium's effect on electronic data interchange systems, for example.
Some retailers and wholesalers are already having trouble with dates past 2000 in their inventory and point-of-sale systems. Wholesalers say they are already receiving products with package codes past the year 2000, and their systems cannot easily handle them.
However, it has not yet caused major snags for retailers and wholesalers. "There is not a lot of inventory [past 2000] in the pipeline to be concerned with. I guess people are coding at less than the year 2000," said James Crouch, director of information technology at Topco Associates, Skokie, Ill.
Topco executives had identified inventory-control systems as a top priority when the wholesaler began an active year-2000 program three years ago. Topco then assessed its order-processing and purchasing systems, upgrading some software and changing some files, but did not purchase new equipment. "It was a significant investment, but everything is relative," Crouch said.
Carr Gottstein Foods, Anchorage, Alaska, is working with an inventory-control vendor to upgrade equipment by the end of this year, in order to ensure proper shelf rotation based on a product's code date. "We don't typically buy more than a year in advance, but next year it will become more and more of an issue," said Larry Walsh, vice president of management information systems at Carr Gottstein.
Although customers are using credit cards with expiration dates past 2000, that is not causing a problem for the retailer. "We just had to make software changes to recognize the date," Walsh said. When Carr Gottstein executives noticed a "bug" in the POS systems, they contacted the software vendor, who agreed to fix the problem.
Many distributors, especially larger ones, are already in the midst of testing their systems. In September, Topco will start testing EDI and all internal systems, including local and wide area networks.
When problems are found, Crouch expects the company to upgrade software rather than replace hardware, because Topco has gradually been upgrading to "state-of-the-art" equipment.
At the same time, many retailers are seizing this opportunity to replace old equipment. Early in its year-2000 project, Carr Gottstein identified a mainframe computer used for financial and warehouse purchasing as the most difficult piece of equipment to make compliant. It replaced the mainframe with client-server technology.
Carr Gottstein will also replace or upgrade its video rental and time clock systems with year-2000 compliant software by the end of this year.
Year-2000 remediation efforts take many forms. The problem was originally caused by programmers attempting to save space by using only the last two digits to indicate the year. Different systems will react differently if they mistake the year 2000 for 1900, according to experts, ranging from locking up to providing inaccurate data to requiring only simple corrections.
Some retailers are looking at temporary fixes in EDI and other systems. For example, many are using windowing, in which lower-date numbers (30, for example) are assumed to be preceded by a "20," and higher-date numbers are assumed to be preceded by a "19." Thus, 30 would indicate the year 2030, but 31 would indicate 1931.
"The benefits are that there's no need for data conversion, and it can take less time to implement. It essentially buys time for companies who are planning to retire software shortly after the millennium anyway," according to a new report from the National Retail Federation, Washington.
However, this method will not work for everyone. Health care companies, for example, cover individuals of all ages, so "windowing" does not make sense for them, according to the NRF report.
Most supermarket executives point out they will only use "windowing" where necessary, including some EDI areas. "We're going to use that system in some techniques where it is appropriate, but the preference is to convert to a four-digit year, so everyone is on the same page," Walsh said.
"We're making everything, for the most part, four-digit dates. Everybody's got to be on the same standard," said Topco's Crouch.
"We're windowing everything we can, but that's not perfect protection. You're taking a chance when one person is different from the other," said Spartan's Cox.
Retailers would also like trading partners to use the same versions of EDI software to minimize problems in the year 2000. Version 4010 is 2000 compliant, because it requires an 8-digit date field, according to the NRF.
The NRF offers a complimentary test of EDI, designed to determine whether EDI documents with "00" in the date field can pass through a partner's translator. The test can be downloaded from the NRF's Web site, at www.nrf.com. Retailers and vendors can post their names on the site after their EDI tests are successful.
Many retailers are opting to test EDI systems on their own and share the results only with their trading partners, however, believing this will minimize future legal problems.
Retailers and industry suppliers agree that litigation over the year-2000 problem should be avoided, so they are trying to work in cooperation with each other and software companies. For example, Carr Gottstein had software vendors sign agreements with a year-2000 clause, stipulating that their systems are 2000 compliant, and that they are responsible for correcting problems that may arise. "We haven't had any vendors balk at signing the clause," Walsh said.
Documenting every partner and software supplier a company communicates with about the problem may also ward off future legal problems, according to Cox.
Some IT executives say awareness and education about the problem is still one of the major roadblocks to fixing the millennium bug.
"We're most concerned with getting to the vendor community and making them aware -- everything from assessing their plans to one-on-one meetings," Crouch said.
He is most concerned about manufacturers who have embedded chips in their plant or robotics systems. "I'm not sure they're going to have time to get everything done, and the process control equipment is a major investment," he said.