| The Challenge |
Centralise purchasing and stock management to
eliminate process redundancies; Reduce logistics and warehouse costs and
inventory levels; Respond faster to consumer demand; build integrated
information management solution |
The Solution |
Industry: Retail
Application: SAP Retail
Implementation of
a unified logistics, procurement, sales and reporting standard application
system.
Services: IBM Business Consulting
Services |
The Benefits |
Enhanced category management estimated to have
delivered 3 per cent sales increase; In-store stock outages all but eliminated;
Automated replenishment dramatically improved order processes plus reduced
ordering errors; Reduced inventory levels and warehousing costs; ¦all delivered
within planned timeframe and
budget |
Founded in
Switzerland in 1925, Migros is a leading supermarket retailer, with 600 stores
throughout the country.
Migros sells almost
one-quarter of Switzerland food, employs around 83,000 people, and has sales
of more than CHF20 billion (US$16 billion).
Retail success is won through a combination of low operating costs
and attention to detail. In 1998, the Migros board agreed on a new strategy
which involved central purchasing, logistics and sales management for selected
ranges of dry foods ?the socalled Colonial goods such as chocolate, biscuits,
soups, spices and beverages. The fundamental objective was to drive down
operational costs by replacing inefficient, costly-to-maintain systems with new
technologies, and take the opportunity to remodel business and workflow
processes to streamline operations.
Rudolf
Schwarz, Chief Information Officer at Migros, explains the challenges: œThe
scale and complexity of the project created skepticism initially. We were
consolidating systems from ten Migros co-operatives, changing our processes and
setting our digital strategy for future growth. At this point we made a
fundamental decision in favour of SAP R/3.?
Finding the best SAP partner
Having
decided the strategy, Migros set about choosing its SAP project partner, and
engaged IBM Business Consulting Services.
e
were looking for more than an IT partner; we were looking for an organization
that would provide support in defining the new processes. We chose IBM Business
Consulting Services because they evidently had the SAP Retail know-how that
would enable us to deliver genuine business results,?says Rudolf
Schwarz.
Just three years later, the new SAP
Retail solution has been completed on schedule and within budget. The system
integrates products from more than 600 suppliers into a single logistics chain
that serves more than 600 stores. The most recent addition has been near-food
products, such as hygiene, cosmetics and personal care, as well as frozen food
items.
ith SAP Retail, on a day-to-day basis we
can call up individual information such as sales information, stock, restocking
information and degrees of readiness to deliver."
e use the system for automated restocking, which eliminates the
ordering overhead in the branches. From an operational point of view, we have
taken an enormous step towards consistently available information,?says Rudolf
Schwarz.
Fresh thinking from
IBM
IBM Business Consulting Services assisted
Migros with the planning, system design and implementation of the SAP solution.
This included fresh thinking from IBM consultants able to give a new perspective
on Migros?operations. IBM Business Consulting Services helped map out new
business processes designed to reduce costs and improve business efficiencies,
based on the best practices and methodologies embedded in SAP
Retail.
ith the central stock inventory, we
have managed to jump right into networked stock inventory, from production all
the way to the checkout. In a manner of speaking, the system makes our flow of
goods transparent.
œOn any given day, we can say
precisely which products have been sold, and where they have been sold. We know
the stock levels of all articles, both in the distribution centers and the
stores, and SAP Retail enables us to automatically calculate ?overnight ?what
must be restocked and delivered the next day.?
Superb central stock management
The
central stock management system deployed by Migros, a dedicated application
called ZWW, required Migros managers and staff to undergo a significant amount
of retraining. IBM BCS both advised on and provided the training resources for
ZWW. This enabled Migros to take full advantage of the system ability to
deliver highly prized sales and marketing data. The information provides the
basis for detailed category management, based on the
assignment of shelf space and position to products.
Rudolf Schwarz comments, uch category management, as it is called
in retail, gives Migros a tremendous competitive advantage. In the categories
where we have already implemented ZWW, sales have risen on average by
3%.?
Error-free automated
restocking
SAP also provides automated shelf
restocking, dramatically reducing order errors. ithout a doubt, one of the
major innovations is that the branches no longer place orders. Rather, new
products are delivered automatically on the basis of what was sold the day
before. Automation lowers the error rate and massively reduces inventory. Today,
each central range of goods is one holistic responsibility, from procurement to
tracking sales,?says Rudolf Schwarz.
Migros
management estimates that automatic restocking has accelerated goods turnover in
the branches, a key measure of retail performance, by a factor of
three.
Return on SAP Retail
investment
could list dozens of other
advantages,?says Rudolf Schwarz. hat is abundantly clear is that our
investment in SAP Retail has produced significant cost and sales benefits. The
IBM Business Consulting Team made an excellent SAP contribution here. Without
their good performance in project management, we would not be where we are
today."
BM proved itself during every phase of
the implementation to be a uperintendent?that did not shirk responsibility.
With this skilled assistance from IBM, we have delivered a solution that has
produced a positive effect on the bottom line ?the decisive
variable.?
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