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Modern Technology provides the alternative.

One of the interesting themes that dominated discussion groups at the FMI mid-winter conference last January was the role of modern technology in supermarketing, its current position and, most significantly, its impact on decision-making in upcoming years. While ideas and points of view differed, the one unyielding position was that technology was going to play a major role, and that those chains that do not react accordingly will be at a competitive disadvantage.

While this is most certainly true, I found it quite interesting that follow-up questions related specifically to merchandising problems (scanners) and the entire range of subjects that analyzed the relationship between MIS (Management Information Systems) and operations.

So there we had it. Merchandising and operations, the two forces that dominate the management focus of chain stores. After all, it is on the broad backs of these disciplines that the basic decision processes that run this industry rest. However, the interesting part to me was the lack of reference to another aspect of modern technology: technical (computer) control of the operating equipment within the store.

As an active member of the technical side of supermarketing (not of merchandising or operations, and therefore, not in the management mainstream), I am curious why the role of operating equipment and its value to operators and merchandisers is not perceived as more of a factor in the upcoming decade. In fact, I feel the greatest competition our "side" of the business faces is the result of the poor educational job we've done over the last several years.

We too easily assume the position of commodity type suppliers, selling equipment that is carefully engineered and must be operated with significant skill. Yet we allow our customers to reduce us to low bidders, not responding to claims of operational successes and failures as much as planning how to be low bidder on the next go-around. So when we complain that we've not been given accurate consideration, we really have to ask how much of our situation was caused by our contribution.

Is that statement too extreme, too self-serving? I think not. Like no other industry, supermarkets work on razor thin profits with top management keenly aware of margins on a weekly basis. If those of us supplying equipment and technology privately grumble to ourselves that full advantage is not taken of some of our technical progress and its results on profit margins, I say that the problem is ours because of a lack of a progressive educational process.

What then is the technology of the next 10 years going to see except a continuance of this malaise? One answer, and a potentially powerful one, might be provided by the rapidly growing presence of microprocessors and minicomputers controlling equipment at store level. Most of these systems not only provide controls, but also provide data access from multiple stores to a single remote operating center. Beyond that, they also build up a data base, which can be a very powerful tool that should not be undervalued as an information source of the future.

Let's take a hypothetical situation in existence now and its projection two years hence. Chain X has 100 (or 50 or 500) stores. All have some type of microprocessor-based energy control system feeding information back to a central location. Since Chain X is very progressive, it uses this information for equipment maintenance, working in concert with service contractors and vendor warranties on operating equipment.

It is now 1986 and Chain X has been operating the above program for two years. If there were any mysteries about "good" and "bad" operational stores, they are long past as the significance of the data being used has allowed the chain to redevelop excellent store maintenance programs and, at the same time, accurately analyze the efficiency of outside or its own service personnel.

And a significant by-product of this operation has been a 15% energy reduction and some backup security in major access areas.

In 1986, let's assume one of two things happens: 1--Management decides a major building program is necessary to maintain a competitive market position; or, 2--Middle East unrest creates a small version of the 1973 oil embargo and significant utility price increases are imminent. How can this chain use its technologically aggressive posture of 1984 to its advantage in 1986? Are all the operations and merchandising people going to disappear and have the business run by a bunch of engineers? Hardly.

But Chain X is going to have one tremendous weapon in its arsenal, the exact knowledge of the price and availability of alternatives.

In the first situation, we can access the data base for the following: the types of equipment that are the most energy efficient in our stores; the variations in lighting that are the most economical; the types of stores that have the least disruptive sales area temperature variations; any pattern that may be visible in maintenance cost per type of store, and so on. The detail that can be provided is relative to the imagination of the data search.

Who will make decisions from this information at Chain X? The operations people and merchandisers will do so, just like before. After all, this is still a business of the public. All we're doing is providing accurate information on the cost of the alternatives--the same type of precise data made available on product turns from scanners or general operating data emanating from MIS systems.

In the second situation, an energy crisis followed by significant utility price increases, Chain X is positioned for action.

First, since it has an on-going energy controls system, the chain can re-examine its operation for the potential of greater savings efficiency. Maybe lessons learned from especially successful stores now are cost justifiable to promote equal savings elsewhere. Chain X has a system that can project the theoretical environment of maximum efficiency and can compare that to "real world" operating variation. It is positioned to make correct decisions because of carefully analyzed alternatives. And the chain is capable of working with its utility source on programs such as peak usage cutback and commercial pooling for rate reduction.

None of this engineering technology means that the stores will be any less humanized or that merchandising and operations people will be servants to the equipment used. Successful operations will be run by people who will demand accurate alternatives to fortify the quality of their decisions. The information potential available from the engineering and maintenance side of the industry will find its place as a valuable tool among market leaders.
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Author:Adams, Byron H.
Publication:Progressive Grocer
Article Type:column
Date:Jun 1, 1984
Words:1089
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