U.S. retailers take unfettered expansion for granted, but when Venezuelan pharmacy giant Farmatodo set its sights beyond its national border, the company faced a major technological hurdle. To comply with Venezuela's unique commerce law, Farmatodo used a highly modified retail suite that required costly and labor intensive maintenance and upgrades, draining corporate resources and slowing expansion.
To implement an expansion strategy that called for adding 10 to 15 stores annually throughout South America (the chain currently includes 121 locations across Venezuela), Farmatodo needed to upgrade its core merchandising system and related retail applications. In May of 2006, the
company deployed Oracle's Retail Merchandising System as part of a major upgrade initiative that included store design, brand management, pricing, merchandising, supply chain operations, and logistics.
Keeping IT Simple
Farmatodo's primary goal for the deployment was to streamline and simplify IT across the enterprise. "Now," explains Erasmo Moreno, Farmatodo vice president of IT, "no new releases of any software application can be installed without clearing it with me and the IT department. We do as little software development internally as possible."
In addition to simplifying processes, Farmatodo is looking to reduce overall costs. Already, the company reports that increasing warehouse automation has improved volume and speed creating shipments, allowing in-store inventory levels to drop while keeping out-of-stocks minimal. The automation has also allowed the reallocation of warehouse staff.
Moreno admits that the deployment represented a substantial capital investment, but he believes it's an investment that will pay major dividends. "When you spend on IT," Moreno says, "you may not achieve a reduction of IT costs at today's revenue levels. But as the company grows, the software can accommodate the increased load so costs come down."