Wegmans Cuts Shrink With BI System

NEW YORK — Wegmans Food Markets was able to not only cap the growth of shrink but lower it in many perishables departments as a result of the implementation of a business-intelligence (BI) system. As our product mix shifted to more perishables and prepared-food items, that's where we started to see the increase in shrink, said Paul Wawrzyniak, director of IT for the Rochester, N.Y.-based Wegmans,

NEW YORK Wegmans Food Markets [2] was able to not only cap the growth of shrink but lower it in many perishables departments as a result of the implementation of a business-intelligence (BI) system.

“As our product mix shifted to more perishables and prepared-food items, that's where we started to see the increase in shrink,” said Paul Wawrzyniak, director of IT for the Rochester, N.Y.-based Wegmans, earlier this month at the National Retail Federation's 100th Annual Convention & Expo here. “We were able to reduce that dramatically.” CPG Center Store products were also impacted, but “perishables was where we saw the quickest turnaround.”

Wawrzyniak described Wegmans' application of the BI system, from iVedix, Rochester, N.Y., at an NRF session along with Rajesh Kutty, chief solutions officer for iVedix. Wegmans, which operates 77 stores in five states and has annual revenues of close to $5 billion, has made the BI tool — dubbed the WISE (Wegmans Inventory and Shrink Exception) system — available to employees throughout the chain to address shrink and unsellable products. Wawrzyniak did not provide specific shrink-reduction figures or the cost of the system.

One of the structural problems Wegmans needed to solve was the existence of separate systems with different metrics and financial reports. With WISE, Wegmans has been able to connect 15 systems, including warehousing, supply chain, sales and accounting into one database. “We're providing the same version of the truth, standardizing the data and bringing it from many disparate systems,” said Wawrzyniak. WISE pulls in 9 million item-level records in less than two hours on a daily basis.

Now, all 2,400 “knowledge workers” at Wegmans — everyone from corporate executives to store department heads — have access to the same data and metrics through one application. The system registers 15,000 log-ins per week.

One of the keys to Wegmans' deployment of the BI system is “store-level empowerment,” said Wawrzyniak. “We want our employees to use our BI analytics.” But the emphasis is not for them to become “great knowledge workers,” he noted, but to engage in “action-oriented analytics” involving about five minutes of involvement with the system. “As issues come up we want them to access the BI analytics, do the research and analysis and get back to the sales floor.”

For example, the system allows a store employee managing 30 to 40 feet of display space to quickly access data on those products “with a few mouse clicks,” he said. One produce manager increased sales of berries by 300% by tracking inventory and preventing waste.

“He looked at all movement trends and had such confidence in the accuracy of the data that he quadrupled the display space and brought in a tremendous amount of product over four to five weeks,” said Wawryzniak. The move raised eyebrows at Wegmans' headquarters in Rochester. “A category merchant quizzed him, saying, ‘This has to be a mistake; you're not going to go through this much product,’” said Wawryzniak.

In addition to reducing shrink, the system has helped stores cut out-of-stocks and offer “fresher stock on shelves,” he said. “Our out-of-stock position started to improve on certain items because we're focused on the volume and velocity of our highest-moving items and our slowest-moving items.” The system has also “improved employees' attitude and competitiveness,” he added.