EAI software helps grocer streamline business processes, save money |
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By Linda Tucci, Senior News Writer
28 Nov 2006 | SearchCIO.com |
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Wholesale grocer Smart & Final Inc. bills itself as the faster, smaller big-box warehouse club. Its 20,000-square-foot format lets customers "get in and out and not destroy the family budget," said Zeke Duge, CIO for the Los Angeles-based chain. IT operations strive for the same efficiency.
"My boss drives change through IT, because we're the only one who talks to everyone," Duge said. The problem was he "had data up the kazoo, but no single points of truth." The legacy systems used flat-file FTP integration, an approach that made it hard for the resilient 125-year-old retailer to share data or change applications quickly. In the micro-margin grocery business, information bottlenecks can put a company out of business.
Duge looked to middleware for help, ultimately choosing enterprise application integration (EAI) software from Palo Alto, Calif.-based Tibco Software Inc. Now, Duge said, the company can maintain single points of truth -- or SPOTs as he calls them -- and all applications can access that "gold standard" data through the Tibco bus software. "They look like the same database to the bus." Unlike information-sharing in the ante-bus era, when programmers needed to know both applications to transport data, now they simply write a new connection. New applications are added easily; day-to-day operational costs are down.
"Point-to-point communication was cut drastically. My maintenance staff is down from 10 people to three. By the end of 2007, it will shrink to two," Duge said.
The system has streamlined labor-intensive business processes. By automating Accounts/Receivables, for example, Smart & Final has reduced the time to collect payment by almost half, from 67 days to 34 days, Duge said. "Nobody goes to the warehouse and looks for the empty box anymore."
The Iceman cometh
The EAI software technology solution is paying off in other interesting ways. When Smart & Final was challenged by the state of Washington for allegedly not collecting enough sales tax, the company gave the state a browser and access to four years' worth of business.
"Knock yourself out, we said. Forty-five days later, the state of Washington says, 'Never mind,'" Duge bragged. "That was a savings of $2.7 million, over 10% of my budget, and it took no time."
The new automated EAI software systems also gave new meaning to customer service at the 251-store chain. Customer business rules are written right into the account. For example, the city of Los Angeles, a valued patron, does not allow employees to buy alcohol. So when an L.A. staffer recently came in and bought picnic food and sundries, including a case of beer, for a city celebration the Microsoft Exchange server sent email messages to the person's boss, the auditor and to the accounts person for the city of L.A. "I don't know what happened, but I know that 11 minutes later there was a refund for one case of beer in that store," Duge said.
The Tibco technology is contributing to top-line sales, too. Smart & Final sells scads of ice, buying it by the metric ton. Ice is a high-margin product, so the more that's sold, the better for the bottom line. But restocking was a problem. The suppliers would fill the bins to the roof at night and wait until someone said, "Help, I need ice," Duge said. Now, every time someone buys ice, the transaction is conveyed to its appropriate SPOT and the vendor is able to see real-time, sell-through data for each store on a browser. Ice sales have increased 40% year over year. "That's how much we were out of ice."
The investment has helped keep IT in the catbird's seat, Duge said. When it comes to getting money for IT operations, he refuses to go hat-in-hand to his board of directors. "I say you need to give me more money. And when they ask me, 'When are you going to stop spending money?' I tell them when IT stops making money for you. I'm doing better and better with more and more."
One word of caution on middleware: "Don't write it yourself," Duge said, urging CIOs to go with one of the vendors -- a Tibco or webMethods Inc. or Microsoft -- that plays in the space for a living. He advised CIOs to start by looking at their data systems for degrees of isolation. "If the data is isolated, it is obsolete."
Let us know what you think about the story; email: Linda Tucci, Senior News Writer
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