Automercados Plaza’s

Smart is…

Leveraging information across the enterprise to understandconsumer buying patterns and needs

By integrating information across all divisions and functions, executives atAutomercados Plaza’s were able to gainbetter insight into how its customersshopped—critical knowledge that helpedthem increase revenue by 30 percent andimprove profits by US$7 million annually.Now, staff can see which products andpromotions are most profitable toimprove contract negotiations with suppliers and identify which items toplace on sale each week. Company staff also has concrete information tohelp guide the placement of new stores,enabling the company to successfullygrow its business.

What if you had a daily pulse on your business and saw immediately which sales promotions were working, which products delivered the highest profitability and which locations offered the most promise for new stores? Executives at Automercados Plaza’s, a family-owned chain of grocery stores in Venezuela with more than 1,000 employees, knew that this type of insight could help them grow the business to become a US$1 billion company. However, with more than 6 TB of product and customer data spread across different systems and databases, they could not easily assess operations at each store.

“We had a big mess related to pricing, inventory, sales, distribution and merchandizing,” says Jesus Romero, CIO, Automercados Plaza’s. “We have nearly US$20 million in inventory and we tracked related information in different systems and compiled it manually. We needed an integrated view to understand exactly what we have.”

Integrating information across the enterprise
Working with IBM and IBM Premier Business Partner IT Consultings, Automercados integrated data across its 15 stores and corporate systems to enable the sharing of trusted information and gain greater insight into operations. Doing so now enables corporate personnel to quickly review daily inventory levels, store sales, and cost of goods to see which products are selling, which are most profitable and which promotions are most successful. For example, staff can use information collected from the point-of-sale systems to see which products customers buy together and develop product promotions with suppliers accordingly.

“We have the right tool to talk with our suppliers and provide them with facts to discuss what kind of promotions we want to deliver to our customers,” says Romero. “This helps us better negotiate prices with our suppliers.”

In Venezuela, the government mandates prices for many grocery staples, such as milk, eggs and bread. The seamless flow of information between the company’s SAP and point-of-sale systems also enables Automercados to quickly update prices across all stores, as needed, and more easily confirm compliance with government requirements.

“Everyday, we have to update prices in our point-of-sale systems, and now it’s much simpler to ensure we place the right price on products,” says Romero.

Increasing revenue by 30 percent
By integrating information across the enterprise, the grocery chain has realized a nearly 30 percent increase in revenue and a US$7 million increase in annual profitability. Romero attributes these increases to better inventory management and the ability to more quickly adjust to changing market conditions. For example, the company has prevented losses for about 35 percent of its products now that it can schedule price reductions to sell perishable products before they spoil.

Savings are also being realized with improved staff productivity. Previously, it could take nearly a month for finance staff to manually compile sales tax information. Now, the information is immediately available in the SAP system with a simple query—a more than 98 percent improvement.

Additionally, new insight has helped corporate personnel better understand sales by location to determine where to build new stores. In fact, in the past year, the company has successfully opened four new locations—including a new “supercenter”—based on consumer behavior and buying patterns.

“In the next two years, we plan to increase our income by nearly 55 percent to become a US$1 billion company,” says Romero. “IBM and SAP provide us with the capability to drive our business in a more proactive and productive way to help us realize our goal.”

Smarter solutions for retail Assessing customer buying patterns to increase sales and profits

Instrumented
Sales information captured from each register in its 15 locations is automatically uploaded to the company’s SAP business managementsystem and data warehouse

Interconnected
Inventory, pricing, sales, customer and supplier information is integrated and shared among the company’s business management,point-of-sale and data warehousing systems

Intelligent
Staff can review daily inventory levels, pricing changes, store sales, and customer buying patterns to identify successful promotions anddetermine where to build new stores

The inside story: Getting there
To enable growth at the retail chain, IT Consultings first helped the company migrate from a legacy enterprise resource planning system to SAP ECC and SAP for Retail software running on IBM® System x® servers with Red Hat Enterprise Linux®. This change enabled staff to manage supplier relationships, inventory, sales and customer information on a single high-performance system.

Next, Automercados Plaza’s leveraged IBM InfoSphere® Information Server software to enable the sharing of trusted information across the enterprise. IBM InfoSphere Information Analyzer helped staff profile and assess data to identify any anomalies, such as inconsistent customer information across different databases. InfoSphere QualityStage™ then helped standardize and cleanse customer data. InfoSphere DataStage® is used to integrate data daily across the company’s SAP, point-of-sale and data warehousing systems. For example, using InfoSphere DataStage, data from each point-of-sale system in every store is loaded daily into the company’s IBM Informix®-based sales consolidation system, helping company executives more quickly spot increasing demand for specific products.

With the InfoSphere Information Server Pack for SAP R/3, no manual coding was required for repeatable, reusable connectivity to SAP applications—key in helping reduce data integration time and costs.

“IBM InfoSphere software helps us consolidate information so we can more easily comply with government requirements and better work with our suppliers and stores to apply the right prices at the right time,” says Romero. “We now have greater confidence in our information and can make better decisions.”

For more information
To learn more about how IBM can help you transform your business, please contact your IBM sales representative or IBM Business Partner.

Visit us at: ibm.com/software/data/integration.

For more information about Automercados Plaza’s, visit: www.elplazas.com.

For more information about IT Consultings, visit: www.itconsultings.net.