E Business Strategy: The Producer Company TPC

1
E Business Strategy The Produce-r Company
(TPC)

• BT 630 E-Business, CRM and ERP
• Section 201
• Winter Quarter, 2001
• 2/12/01
• De Fina, Dave (DD)
• Shoults, Bill (WS)

2
TPC Who? (DD)

• Who are they?
• Fourth Largest Supermarket Chain in SE
• Established presence through quality produce
• 4 Business Units
• Driven by product storage environment
  requirements
• Produce (45F and 58F)
• Meats/Dairy/Deli (33F)
• Poultry (28F)
• Frozen (-18F)
• Total Revenues 2B per year
• Market Share 15
• Technology Savvy and Committed

3
TPC Present Position? (DD)

• What is their present e-business panoramic
  position?

4
TPC Present Position (DD)

• ERP
• Fully integrated at BU level
• Infrastructure in place to handle volume for
  future e-business transactions (_at_ BU level)
• Linkage across BUs not well established
• Synergies not opportunized
• E-Business
• Embryonic stages of
• selling over web
• Weak linkage to back office
• Indirect procurement

5
TPC Future Position? (DD)

• What is their future e-business panoramic
  position goal?

6
TPC Future Position (DD)

• ERP
• Integrated enterprise
• Ability to show one face to customer
• Ability to fulfill/deliver on web promises
• Available to promise
• Order fulfillment (Primary Consideration)
• Manage supplier material flow
• Synergy/leverage across BUs
• E-Business
• Industry Transformation
• Opportunity to maximize shareholder value
• Greater linkage with partners

7
TPC How? (DD)

• How can they get to their future state?

8
Competitor Position (WS)

• Wal-Mart
• Heavy focus on information systems already
  integrated most of these proposals nation wide
• Krogers, Safeway
• Large highly leveraged organizations large
  customer segmentation info large advantages in
  cost of products nation wide
• Mom Pop Stores
• Negligible technology in use small customer
  throughput may actually know customer because
  of intimate nature of store

9
TPC Business Components (WS)

• What are the business components that are
  applicable to our class studies which can be
  leveraged to achieve e-business position?
• ERP allows for accurate tracking of sales and
  productivity
• CRM - know the customer segments and product
  demanded
• SCM - establish inventory levels to suppliers
  for just in time supply shipments

10
TPC ERP Initiatives/Considerations (DD)

• Goal
• Centralize BU-specific ERP systems into one
  corporate-based system
• Support front face Web presence
• Key Support Order fulfillment
• Increased volumes and transactions will strain
  distribution/logistics/inventory and warehouse
  management
• One face
• Enable greater enterprise visibility into
  supporting functional areas
• HR
• Supplier Management
• Pricing

11
TPC ERP Initiatives/Considerations (DD)

• Goal (cont)
• Once accomplished
• Focus can be placed on CRM and SCM initiatives
• Extending the enterprise
• Partnerships/Consortiums
• Shared services
• Serve as outsourcer
• Transactional costs are greatly reduced
• Establish the backbone (foundation) from which
  e-business strategies can be launched supported

12
TPC ERP Initiatives/Considerations (DD)

• How to accomplish?
• Migrate data from BU based instances of SAP ERP
  to centralized client/server based instance of
  SAP
• Interface with SAP.com
• In theory a tighter interface
• Existing Warehouse management, inventory control,
  transportation management and MRP II systems
  would feed centralized SAP system
• maintain local database backup to operate in case
  corporate system goes down
• BU flexibility and control accomplished through
  existing legacy systems
• CRM, SCM interfaces established

13
TPC CRM Initiatives/Considerations (WS)

• Goal
• Know the customer (profile)
• Provide one-to-one marketing
• Focus on profitable customers

14
TPC CRM Initiatives/Considerations (WS)

• How to accomplish?
• Profitable SKUs across Full line of BU products
• E-fulfillment center, delivery node store pick
  up
• Home delivery approach
• Attended delivery
• Lower productivity
• Higher customer presence
• Minimal food safety risk
• Team with suppliers to market products to select
  customers, i.e. new mothers, college students
• Allow customers to purchase in comfortable
  setting web based, cashier, or self scanners

15
TPC SCM Initiatives/Considerations (WS)

• Lower inventory in stores scanned inventory at
  point of sale
• Increase inventory turns in warehouses
• Allow for new product introductions at most
  promise able store locations

16
TPC SCM Initiatives/Considerations (WS)

• Integrate inventory levels with suppliers
• Share market information from and to suppliers
• Better selection of stocked products from
  customer segment information
• Sharper targeting of customer for promotional
  opportunities

17
TPC Just an Aside (WS)

• Fundamental Fulfillment Design Issues Industry
  Wide
• Product and Services provided
• Full line, partial line, partial line
  supplemented by partner store
• E-Fulfillment Center Volume
• Average order characteristics (piece/order?)
• Start up and full production mode yearly volumes
• Inventory levels
• Own, consignment (scanner based payment)
• Fulfillment Network
• E-fulfillment center
• E-fulfillment center delivery node
• E-fulfillment center, delivery node store pick
  up

18
TPC Just an Aside (DD)

• Fundamental Fulfillment Design Issues Industry
  Wide
• Home delivery Approach
• Attended delivery
• Lower productivity, higher customer presence,
  minimal food safety risk
• Unattended delivery
• Higher productivity, lower customer presence,
  some food safety risks
• Order delivery container
• Totes (standard, chilled) vs Paper, plastic
• Home delivery fleet
• Fleet ownership
• Fleet operation
• Fleet design standard, refrigerated, capacity?

19
Where is HEB? (DD)

• Contacted HEB e-commerce and distribution
  personnel
• Dropped plans (on hold) for a modernized
  e-fulfillment center
• Explanation due to strength of market share in
  Texas/Mexico area, initiative did not provide
  significant
• Competitive advantage
• Return
• Other explanation from knowledgeable outsider
• Amass and conserve existing capital to fend off
  incoming and strong competitor