Case Study: Improve Your In-Stock Position

In 2004, Anthony Longo presented John Charleson with a challenging exercise. Longo, CEO of the Toronto grocery chain that bears his name, was interviewing Charleson for the position of director of IT. "We're replacing our legacy ERP [enterprise resource planning] system," said Longo. "Analyze its problems, and create an RFP we can use to procure its replacement."

Anticipating it would eventually garner him the position (and a paycheck), Charleson rolled up his sleeves and dug into the ERP-related issues Longo's faced. What he found were data disparity issues bred from too many loosely guarded, one-to-one points of integration. "We were in a bad situation because we had inconsistent and inaccurate data due to poor data synchronization," says Charleson. "For example, our ERP system would exchange data with our scales via a specific interface built for that, it would exchange data with the POS using another interface, and it would use still another interface to communicate with the WMS [warehouse management system]." As a result, Charleson says IT staffers at Longo's spent roughly 30% of their time managing interface issues. Business efficiency problems aside, data disparity became apparent to consumers.

Business efficiency problems aside, data disparity became apparent to consumers when items either weren't on file, were assigned different prices in different systems, or were out of stock. "The way our WMS and the ERP system talked to each other, the ERP system might not have known when an item was out of stock because the WMS didn't automate shipping notices, so we had higher out-of-stocks than what we considered acceptable," Charleson says. The price management problem could cause items to ring up inaccurately at the POS or cause them to be promoted at the wrong price point in sales flyers. In some cases, price changes were pushed to some stores, but not others. What these instances of data inaccuracy all have in common is their potentially negative effect on margins and profit. At best, Longo's didn't know how pricing inaccuracy would impact margins. At worst, margins could suffer significantly. These issues continued to create inefficiency when they were identified, causing time-consuming manual investigation and correction.