The state of Utah Department of Alcoholic Beverage Control gained wider reporting capabilities, improved inventory management, and a more reliable point of sale operation by installing a retail enterprise solution.
It's not often that an IT department gets a chance to completely gut a company's retail infrastructure and start from scratch. This is just what happened to the state of Utah's Department of Alcoholic Beverage Control (DABC) in 1997. Utah is one of 19 jurisdictions in the United States that at the end of prohibition in 1933 elected to be in the business of distributing alcoholic beverages to its citizens. In Utah, the state controls the sale of more than 5,000 kinds of alcoholic beverages (beers greater than 3.2 in alcohol content, wine, and distilled spirits) through 36 state retail stores and 100 contract agencies. The state used the profit on approximately $138 million in gross retail sales in fiscal year 2000 to fund state programs such as the school lunch program.
Upgrade POS, Account For Inventory
In early 1997, the DABC began what Bradley Brown, IT manager at DABC, considered a five-year, enterprise-wide retail upgrade. With the threat of Y2K at his heels, Brown and his staff needed to complete the project in less than three years.
At the time, the DABC ran 286 class machines and 8086 class cash registers. Even if the operation purchased new point of sale (POS) hardware, the TWIX software system was so old that it was not compatible with any recent hardware. The outdated POS system was just one of the DABC's concerns.
Though the state ultimately purchases, warehouses, and distributes the alcohol through its retail stores, its warehouse inventory does not always belong to the state. "Approximately 80% of our inventory is not owned by the state of Utah, yet we must account for it," Brown said. Utah allows suppliers to store products in the state-run warehouse, but does not charge them to do so. Once the product is picked for distribution into the state's retail outlets, it is then purchased by the state.
Until then, the stock is referred to as bailment inventory. "If you want to bail someone out of jail, you pay a fee and they are released," Brown explained. "Similarly, if we want to send the alcohol to a retail store, the state must pay the supplier at that time." Bailment inventory was a significant aspect of the DABC retail operation that needed to be addressed with an enterprise-wide system. "When we are sitting on $6 to $8 million worth of our vendors' product in our warehouse, our vendors want to know that it is being well-managed," Brown said.
Wide Area Network Connects The Enterprise
The DABC chose to work with GERS Retail Systems (San Diego) because it offered an enterprise-wide solution as well as a POS partnership with Triversity Inc. (Toronto). "Ultimately, we wanted to get away from disparate systems with a catwalk between them," Brown said. "We wanted to look at everything we do as a business – the warehousing, the distribution, and the sales analysis. We also needed to consider the licensing and compliance issues with our restaurants, clubs, and bars. All of it is now tied together and interfaces with the state's financial system." The licensing and compliance system tracks the purchasing activities of the state-licensed establishments. "If a licensee walks into any one of our stores, we are aware of what products are being purchased by the bars, clubs, and restaurants," Brown said.
To support all 36 stores on the new system, the DABC also implemented a wide area network (WAN) with 56-kilobit circuits to each store. With the WAN in place, the DABC was able to implement the enterprise-wide solution that included new computer hardware and GERS' POS, merchandising, and radio frequency-controlled warehousing applications.
Endless IT Possibilities
Although the pressing issue in 1997 was the outdated POS system, Brown said the DABC is pleased with the functionality it gained with an enterprise-wide upgrade. The thrill of the initial IT endeavor may be over, but the DABC is not stopping there. Brown said the state plans an e-commerce initiative that will allow its licensees to order products online and Utah citizens to place special orders. Brown also hopes the Internet connection will encourage electronic data interchange (EDI) with its suppliers.