For a retail company to excel in the application of IT, it usually needs support from the top — from a chief executive officer who appreciates the value of technology.
In that regard, Wegmans Food Markets, Rochester, N.Y., a longtime industry leader in the use of IT, has been especially fortunate. Its current CEO, Danny Wegman, and its previous CEO, Robert Wegman, Danny's father, have been two of the more technology-minded chief executives in the history of food retailing.
The senior Wegman, who died last year at 87, was influential in the adoption of bar-code scanning by the food industry. Danny Wegman has followed a similar path, helping develop the Efficient Consumer Response (ECR) initiative of the early 1990s and, more recently, driving the implementation of data synchronization both at Wegmans and in the industry at large. He is now chairman of GS1, Brussels, the global standards body responsible for everything from bar codes to electronic product codes, having already served as chairman of the U.S. division, GS1 US (formerly the Uniform Code Council).
“It runs in the family,” said Don Reeve, senior vice president and chief information officer at Wegmans since 1986, who has worked closely with both Robert and Danny Wegman during his 36-year career at the company.
Reeve oversees a 200-person IT department that has helped develop the 71-store chain's data synchronization capabilities, along with a wide range of other technology initiatives, including recent work on RFID, online auctions, a demand forecasting system, a transportation network for inbound and outbound warehouse shipments, and a new command center, among others.
But it is in the area of data synchronization — the matching of a retailer's product data with that of its suppliers — that Wegmans has truly distinguished itself. The company now synchronizes item-level product data for all of the products it receives from 82% of its suppliers; Supervalu, Minneapolis, is the only other food retailer with a comparable record in the food industry.
More than just serving its own interests, Wegmans, led by its CEO, has helped make data synchronization an industrywide and global standard for trading partner communication. The company's supply chain executives, including Marianne Timmons, Mike Bargmann and Brad Papietro, have given countless presentations at industry events in support of this initiative, while offering individual counsel to other retail companies on how to navigate its tricky waters. Wegmans has also participated in industry pilots that have documented the benefits of data synchronization.
For its mastery of data synchronization and related supply chain technologies, and for its uncommon industry leadership, Wegmans has been selected to receive SN's 2007 Technology Excellence Award in the Chain Retailer category.
A Business Sponsor
Reeve said he and Wegman first became “excited about the possibilities of data synchronization” in 1998. While data sync is heavily dependent on technology, Reeve, as is his wont, early on sought the involvement of the business side of Wegmans. “I tend to want to move things to a sponsorship approach from the business side,” he said. “Even before you do work with systems, you need to understand [the business issues].”
The question, though, was which part of the business would most benefit from data synchronization? The answer — which has been borne out by Wegmans' study last year with Accenture — was the supply chain. So Bargmann, senior vice president, distribution & manufacturing, and chief logistics officer, took on the sponsorship of the initiative. The Accenture study reported a $3.5 million savings in transportation costs alone that Wegmans has derived from data synchronization.
On the IT side, Reeve put together a four-person team — including one business systems analyst and three programmers — that works on “nothing but business-to-business, particularly data synchronization and now data accuracy,” he said.
While it is possible to set up a quick data synchronization relationship with a supplier, the initiative requires a long-term commitment to retrofitting a company's system infrastructure to receive and distribute data from suppliers. That process, which required building interfaces to older legacy systems such as purchasing, billing and warehouse management, took Wegmans about three years. “We were doing a lot of work besides [data synchronization],” noted Reeve. “We had to keep the train moving while we were building a new concept that was not only new to us but new to the industry.”
One of the advantages Wegmans had was its early involvement with the Internet. “We established our website and also the infrastructure that allowed us to be ready for [data synchronization],” Reeve said. “Without the Internet, data synchronization doesn't fly.”
Wegmans also worked with its vendors as well as with UCCnet, the original organization established by the Uniform Code Council (now GS1 US) to support data synchronization. UCCnet merged in 2005 with Transora to form 1Sync, now the data pool for Wegmans.
In an industry as competitive as food retailing, Wegmans has made itself remarkably available to other retailers seeking help with data synchronization and data accuracy. Retailers have visited Wegmans at its Rochester headquarters for a half-day primer on the subject. “IT would always be involved so we could cover all parts of the business,” said Reeve.
No less a competitor than Wal-Mart Stores has been one of those visitors, and Wegmans has also been to its Bentonville, Ark., headquarters. “We take our competitor hat off, because we're working on how to remove waste and make things more exciting and efficient in the industry,” Reeve said.
Of course, helping to build a critical mass of support for data synchronization ultimately redounds to the benefit of industry leaders like Wegmans. “There's so much to gain from being close to the industry and helping shape the industry, which always comes back to helping our own company,” Reeve noted.
Reeve acknowledged that while many suppliers have signed on to do data synchronization, it is taking much longer for the initiative to “penetrate the masses” of retailers. “That does not mean,” he added, “that it's not important to see that [the industry] has come a lot farther in the past three years than we did in the previous five.” In particular, the establishment of the Global Data Synchronization Network represents “huge progress,” he said.
Wegmans is now engaged in two areas aimed at taking data synchronization to the next level. One is data accuracy — making sure product items and cases are measured and weighed correctly. As with data synchronization, Wegmans is addressing data accuracy with a large and growing percentage of its suppliers.
The other new initiative, which leverages data synchronization, has been dubbed the “New Generation Sales Call,” or “Common Goals, Common Measures.” At the Food Marketing Institute's Distribution/Supply Chain Conference in March, Wegman urged suppliers to start engaging in this new type of sales call with retailers, in which there is a “strategic focus on growing sales without disruptions” such as invoice deductions and delivery delays.
As he did with data synchronization, Reeve has selected an individual from the business side — Marty Gardner, senior vice president of merchandising — to sponsor the work on the New Generation Sales Call.
To refine the New Generation Sales Call, Wegmans is taking part in a three-month proof-of-concept pilot with Procter & Gamble and Smucker's. The pilot, expected to be completed in early June, uses an Oracle decision-support system hosted by Wegmans. The system allows Wegmans and the two suppliers to share metrics on supply chain practices in order to make sales calls more valuable. “We hope this will help us with the journey to what we think will be a new way of working together,” Reeve said.