Running the technology for a chain of 245 supermarkets may not require the derring-do of a secret agent like MacGyver, the star of the 1980s TV series. But James Sims, vice president and chief information officer for Save Mart Supermarkets , Modesto, Calif., sees some similarities between his IT operation and the action-adventure hero.
Faced with a perilous situation, MacGyver would apply his scientific knowledge and make use of everyday items — a cigarette lighter, ammonia under a sink — to extricate himself. “MacGyver would pull a rabbit out of a hat,” Sims said. “We relate to that. We pull things together in unusual ways.”
Since joining Save Mart in February 2005, Sims has pursued a wide-ranging agenda that sometimes borrows from the MacGyver playbook in its willingness to try unconventional solutions. Sims' inventiveness was put to the test in 2007, when he was charged with integrating the IT operations of 128 stores and two distribution centers acquired from Albertsons LLC in Northern California and Northern Nevada. The acquisition doubled privately held Save Mart's store count — its banners include Save Mart, S-Mart Foods, Lucky and FoodMaxx — and brought its annual sales volume to about $5 billion.
In running Save Mart's IT infrastructure, Sims and his team are “particularly thoughtful about costs,” he said. This is reflected in the percentage of sales spent on basic IT functionality — “keeping the lights on” — which for Save Mart is 0.33%, compared with 0.75% for the average $5 billion food retailer, he said. And when implementing new IT investments, the chain looks for an ROI of under a year — or something that is nearly cost-free on the Internet.
Over the past few years, Sims has not hesitated to leverage new technology, adopting configuration management tools, virtual computing systems, open-source operating systems and databases, and supply chain management applications. The result has been a thinner and more dynamic IT architecture that has enabled Save Mart to cut costs while absorbing a large number of stores, warehouses and other facilities. For these accomplishments, SN selected Save Mart to receive the 2010 Technology Excellence Award in the chain category.
One of the tools Sims has implemented over the past two years to maintain a lean IT operation is Zenworks Configuration Management, from Novell, Waltham, Mass., a longtime Save Mart vendor. Zenworks allows the chain to manage IT assets — such as desktops, laptops and handheld devices — across its corporate and distribution centers, which greatly expanded with the Albertsons acquisition. The system has become “an important tool for reducing IT overhead,” said Louie Yan, a Save Mart spokesman.
For example, Zenworks' remote control functionality allows tech support technicians to take over a user's machine and make corrective decisions, rather than traveling all day to a site. “We use this capability to solve problems 150 miles away from a technician's desk,” Sims said. “We service employees sooner and get them back up and running while they're on the phone.”
Zenworks also allows Save Mart to remotely distribute operating system and application updates, install new applications and on-board new PCs. “If a new standard is required to support more stringent PCI [Payment Card Industry] guidelines, we can effectuate that standard through Zenworks,” Sims said. “Otherwise, a desktop technician would be doing updates manually.”
Save Mart is also deploying Zenworks Endpoint Security Management to protect sensitive customer data and allow employees to access only authorized information. Sims is planning to use the Zenworks Asset Management system to inventory assets and identify idle software that would be “reallocated to a desktop that could use it,” he said.
The 128 stores that came with the Albertsons acquisition did not include any application software, so Save Mart had to install a bevy of new store systems, comparable to what it had in existing stores, including POS, pharmacy, time-and-attendance and back-door receiving. “We replaced everything short of the light switches and wall sockets,” said Sims, noting that changes were made in four stores at a time over a 48-hour period.
But rather than duplicate the hardware used at its existing stores in the acquired locations, Sims decided to employ cost-saving “virtual servers” from VMware, Palo Alto, Calif. In each store, the chain installed two VMware servers, which did the work of four conventional servers, running everything from item management and tag printing to POS and back-door receiving. Sims has been able to persuade most vendors to take the unorthodox step of running their applications on VMware. “We haven't found anything that wouldn't run reasonably on VMware,” he said.
The two virtual servers act as back-ups to each other; if one fails, the other takes over. This far exceeds the redundancy built into conventional servers, which could require two days to recover from a failure, Sims said. By balancing the workload in the servers, VMware provides better performance as well, Sims said. VMware is now used in all 245 stores.
Another cost-cutting strategy employed by Sims in the acquired stores as well as throughout the chain has been to leverage “open source” operating systems and databases, which are available at no or low cost on the Internet. These include the Linux operating system (SUSE Linux) and the MySQL database.
Save Mart runs its in-store pharmacy software as well as its back-door receiving system on Linux. The MySQL database supports back-door receiving, while the Ingres open source database serves as the platform for a time-and-attendance application used by 23,000 employees; in addition to maintaining the database, Ingress, Redwood City, Calif., has also helped shore up the time-and-attendance application, Sims said.
Another free open source application adopted by Save Mart is Xymon, for monitoring 6,500 devices, including servers, receipt printers and databases, and sending out alerts when attention is required. Sims is still tweaking the application to garner more information about the devices. He is also looking into an open source application for automated call dispatching at Save Mart's call center.
Sims acknowledged that an open source application may not come with a manual or vendor support. “But it may have a brilliant user community that will collaborate with you and answer questions,” he said. “It does take more elbow grease.”
Still, open source “suits our culture,” said Sims, who built an open source knowledge base using Wikimedia “to illustrate that it's free and strengthen my own knowledge.” Moreover, open source reflects the MacGyver credo of “I can make this work.” And despite arguments from other CIOs that traditional architectures offer lower support costs, with open source “we're cheaper than those guys,” he said. If something is too safe, he added, “then you're not really looking for the ultimate value — that you can do it better for less money.”
SUPPLY CHAIN OVERHAUL
Save Mart's acquisition of Albertsons' two distribution centers — an 850,000-square-foot grocery warehouse in Vacaville, Calif., and a 450,000-square-foot perishables warehouse in Roseville, Calif. — led the chain to seek a new supply chain management system for those warehouses as well as its existing 250,000-square-foot perishables and nonfood warehouse in Merced, Calif. (Save Mart also shares a grocery and frozen food facility with Raley's Supermarkets in Lathrop, Calif., that is run by a third-party operator.)
After an extensive technology and vendor evaluation, Save Mart selected the SCM suite from Dallas-based Retalix USA, which includes four major modules: Biceps (purchasing and inventory management), Prompt (payment reconciliation), ABS (ordering and billing management) and Triceps (warehouse management).
Save Mart spokesman Yan said the Retalix application has resulted in an improvement of inventory turnover and service levels; better investment buy decisions and bracket buying; and a reduction in DC labor and equipment.
Sims said that although the Retalix solution is old, it is time-tested. “It's an incredibly lean and efficient platform that absolutely nails business-user requirements,” he said, adding that it meets the chain's litmus test: It helps sell groceries.
Sims pointed out that when the two Albertsons DCs were acquired, they were linked to proprietary owner Supervalu's datacenter, and had to remain that way for the foreseeable future. “We couldn't just turn it off, so we signed a transition services agreement.” Under that agreement the DCs ran on dual networks, one connected to Supervalu and one to Save Mart.
The two DCs gradually transitioned from Supervalu to Save Mart. At the same time, Save Mart implemented the Retalix systems at those DCs, and the chain plans to install Retalix in its Merced facility this summer. “There will be a huge synergy in buying, logistics and inventory management when all DCs are integrated into the same solution,” Sims said. This includes balancing inventory between DCs.
Other new supply chain systems adopted by Save Mart during this period include transportation management from Manugistics, voice-based selection from Vocollect, Qualcomm wireless communication, and iTrade for real-time buying of perishables. Save Mart also acquired an ad-demand tool from Albertsons that it rebuilt to allow stores to order additional quantities for promotions.