Remaking Retailers

RIS News has reported on ROI with virtually every story we've published since January. But industry insiders have told us there's much more to the business than ROI and that sometimes it isn't possible to get ROI on an otherwise business-savvy tech investment. It is fitting that we introduce a new series of articles on returns other than ROI in the issue that goes to the Retail Systems conference in Chicago. Let us know what you think, and if you measure success with benchmarks other than ROI, drop an e-mail to [email protected].

What would you pay to turn every back room inventory clerk into a business decision-maker? And suppose you could turn buyers from hunch-players to virtual market-makers? Or make the supply chain meet the goals set out in your company mission statement.

None of these things are traditional ROI, but at Price Choppers, where ROI is demanded on most technology projects, these three issues are where the real returns are coming from since the purchase of IMI Americas' enterprise suite.

"We are primarily ROI driven," says Price Chopper CIO, Tom Nowak, a 30-year company veteran who has done everything from store management to accounts payable. "Ultimately everything has to deliver a return on investment, but there are infrastructure pieces that must be in place before you can expect returns, and they require some investment."

Price Chopper went with the IMI solution partly because they could launch it in phases, a virtue made popular in recent years by companies like Retek, which emphasizes phased installations, and Siebel, which encourages phased setups. The Price Chopper-IMI approach was to go with automated online ordering first, then perpetual inventory and finally demand forecasting. "We expected benefit from each phase," says Nowak.

Although new technology is never easy to introduce, Nowak says this implementation was straightforward. "We piloted it in a few stores and saw an immediate improvement in in-stock position and a lower back-room inventory," he says. And Price Chopper has reaped an unexpected reward: "With the IMI system, you don't need to rely on the experience at a particular store," he says. "The system guides the decision-maker. It tells you when you over-ordered or when you missed a promotion and ordered too little. Without the IMI system, only an experienced buyer would catch these things."

In the second phase, Price Chopper went after perpetual inventory. "We expected this phase to deliver little in the way of ROI but were pleasantly surprised," says Nowak.

"We found the real payoff is in accurately defining and attacking shrink. With perpetual inventory you can focus shrink containment on specific items and locations. For instance, laundry detergent might get hidden at the bottom of the basket and not get rung up, a fact that perpetual inventory identifies immediately."

In the final phase, Nowak expects to see inventory staffers change their career paths. "They will be transformed from order takers and makers to inventory control people."

For Nowak, the biggest bang comes from lining up technology with the corporate mission statement. "I start every project looking at our critical corporate goals," he says. "They were created to guide us in running the business. Even if you're having difficulty pin pointing the dollar value of a system, making sure the technology investment addresses key corporate goals really moves you in the right direction."

For Price Chopper, the inventory issues surround the company's focus on perishable items. "We envision ourselves as perishable leaders. So a lot of the energy in planning systems is focused on perishable operations."