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Technology, Productivity and Profits

By Steve Simmerman | 09/08/2013 | 12:15 PM

According to a story in the LA Times this morning, "the $518 billion grocery store industry hasn't made a major leap forward since the bar code scanner was introduced in the 1970's".  Well, there seems to be lots of new ideas being implemented and research being done to help increase productivity at the grocery store and to help improve the overall customer experience.  According to the LA Times story, 'Grocers have to invest.  Their business models have been under so much pressure, they're fighting for their lives." It's easy to see this in any local grocery store, especially with increased competition from big-box retailers and on-line grocery shopping/delivery alternatives available today.  The LA Times story goes on to say that grocery industry revenue has declined 0.4% in each of the last five years - thus increasing the pressure to improve top line revenue, cost savings, productivity and customer experience.  Technology is clearly seen as being an enabler to drive these improvements.

Ralphs, one of the Kroger banner stores, has been installing infrared cameras to track body heat in order to direct checkout clerks to the cash registers in response to the foot traffic in the store. The system, QueVision from irisys, has trimmed the average time it takes to get to the front of the line to roughly 30 seconds from the national average of four minutes according to a Ralph's spokesperson.

British retailer, Tesco, is said to have more than 5,000 technologists working in its Bangalore, India technology center working on new ideas to improve store operations and performance in what CEO Philip Clarke calls "a new wave of creativity" that has been unleashed.

The article talks about a host of other technologies such as fingerprint scanners for payments from technology firms such as PayTango. France's Auchon and Leroy Merlin stores did a fingerprint scanner trial involving nearly 5,000 transactions.  94% of participants said they would be willing to use the payment option for future purchases.

One firm, Chaotic Moon, is developing SmarterCart technology along with Whole Foods to optimize the shopping experience including integrated real-time food safety information so that SmarterCart can notify shoppers if they have a recalled item. Imagine the impact on overall productivity, responsiveness and reach into the market for any food manufacturer or retailer in the event of a recall!

While the LA Times story focuses on the grocery market, there are all sorts of innovative technology developments happening across multiple industries. It was fascinating to read this story and think about how some of this technology can be applied to other areas of supply chain.  Technology, people, process improvements must all work together to help drive operations and business results. As the story concludes, "technology can be useful but it is not a replacement for the old-fashioned values of good prices, strong service and quality products" in the grocery, or any market.




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About Steve Simmerman

Steve Simmerman

Steve Simmerman is a Senior Director with JDA. Simmerman has more than 25 years of experience in the supply chain industry including software, consulting and material handling. He has focused his efforts on working with clients to achieve high performance supply chain results through partnerships and creative solutions. He is a member of CSCMP, WERC, and MHIA and is a regular contributor to several industry publications and events. Simmerman holds his undergraduate and MBA degrees from The University of Notre Dame.


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