Associated Wholesale Grocers: Accommodating Rapid Growth

When a company undergoes dramatic expansion, it’s up to the IT department to support the additional pieces. Fortunately for Associated Wholesale Grocers, Kansas City, Kan., its IT department, led by Keith Martin, vice president and chief information officer, has been able to accommodate the wholesaler’s considerable growth over the past few years.

Much of AWG’s growth came from its acquisition of six Fleming distribution centers in 2004, of which three were kept, two were closed and one was sold. AWG now operates seven warehouses in all, including five grocery facilities and two GM/HBC depots. In addition, in 2004, 225 member stores were added to the wholesale cooperative’s membership roster, which now numbers about 1,450 stores operated by about 500 retail members. AWG is now the second-largest cooperative grocery wholesaler in the U.S.

With that level of growth in 2004, Martin faced a major integration challenge, in 2005, to provide “consistency and standardization across all [warehouse] divisions,” he said. He was already upgrading AWG’s technology infrastructure when the acquisitions took place. But there was still a great deal of work to do, including the implementation of new applications for order management, procurement, billing and data synchronization.

Martin expects the rollouts to be largely completed this year. “By the end of the year, we will have replaced every transaction-based processing system we have other than accounting,” he said.

In data synchronization, not only is AWG synchronizing basic item data, but it also plans to synchronize price and promotion data this year, putting AWG at the forefront of the industry. Martin is also working on extending the data sync process from suppliers to the retail store level. “There’s a huge benefit to having data synchronization flow all the way down to the retailer,” he said.

In moving on all of these fronts, Martin has put great emphasis on aligning AWG with industry standards rather than using proprietary in-house processes. And through his efforts AWG has been recognized by two technology publications for collaborating with vendor and supplier partners in support of common technical goals.

For managing its expansion via new standards-based applications that will streamline its supply chain, AWG has been selected as the winner of SN’s Technology Excellence Award in the wholesaler category.

Big on Data Sync

One of AWG’s first implementations was a procurement system for buyers and category managers, which lays a foundation for data synchronization. The procurement system, from AquiTec, Chicago, was designed to be driven by standard global trade item numbers (GTINs), rather than the AWG-specific product codes used in the past. “Last year, we made a massive effort to go to common item codes in all divisions,” Martin said.

Martin is also working with AquiTec on data synchronization with trading partners, using AquiTec’s Supply Chain Management system. The cooperative started last year on a pilot involving General Mills, Kraft and Nestlé, with 1SYNC as its data pool.

This year, while still ramping up its pilot, AWG plans to extend data synchronization to another 10 suppliers, beginning in the first quarter. The wholesaler made its intentions clear last fall in a letter co-signed by several other food distributors urging suppliers to use the Global Data Synchronization Network (GDSN) when synchronizing item data. “We’re focusing on the 10 data attributes we think are most important,” Martin said.

Included in AquiTec’s supply chain system is a price and trade promotion portal called Pavilion that allows synchronization of new-item and promotional price information with trading partners. This capability is beyond what is currently available as a standard from the GDSN, though GDSN is expected to release price standards this year. Martin said he plans to put the Pavilion piece in place by April.

AWG expects to derive an return on investment for data sync from gains in data accuracy, especially measurements of product dimensions. “That’s where we think the dollar benefits are,” said Martin, adding that AWG sees more than half of item data riddled with errors.

Another new piece of the supply-chain puzzle for AWG is a billing system for its retailers, also from AquiTec, which takes in retail orders and channels them to the warehouse for fulfillment. It also provides an interface to outbound transportation, while creating a shipping manifest and invoice. In addition, AWG is implementing a new warehouse management system, among other applications, from RedPrairie, Waukesha, Wis.

In the Loop

On the retail side of its supply chain, AWG has also been actively pursuing standard solutions to bring its retail member community into the loop. For example, in 2004, the cooperative partnered with TCI Solutions (now part of Retalix), IBM and AquiTec to synchronize the flow of item data between the TCI item file on the retail side and the warehouse item file.

This year, to promote “complete deal visibility” with retailers, AWG is linking an ad planning system to its procurement system, Martin said. This will “give retailers the capability to do their own deals.” A pilot is set for the first quarter.

AWG received a GEM (Global Electronic Marketing) award in the wholesaler category from Ogden Associates at the GEMCON show in Las Vegas last fall. The award was for working with VRMS, Shelton, Conn., to redesign VRMS’ MarketExpert loyalty marketing system.