Case Study: Kroger Tactical Operations
The Kroger Company had a time-consuming, labor-intensive process for gathering weekly sales information, sales forecasts and other information. The process of gathering the information involved many manual operations and required weekly mandatory Saturday overtime for the mid-level and senior analysts in the finance department in order to produce the weekly operations report for executive management. The report is used by executive management to manage the operations for 3,500 stores. Using the Dodeca Spreadsheet Management System, the process for building the operations report, which contains over 250 separate Essbase retrievals from 8 different Essbase databases, was automated and is produced in less than one minute. The automation eliminated the mandatory overtime and ensures the report is built consistently and accurately every time.
The Kroger Company has experienced strong growth due to its acquisition strategy and have expanded their footprint to cover much of the continental United States. Kroger now operates in 31 states under 24 banners including Kroger, Ralphs, Smith’s, Fred Meyer, King Soopers, and QFC among others. During this time, the company has also expanded past its core grocery business to include hundreds of convenience stores under 5 banners and 167 jewelry locations under 2 banners. Kroger also operates 37 manufacturing plants producing grocery items sold in both Kroger and non-Kroger retail outlets. Grocery retailing is a traditionally a low-margin business, so successful retailers today must rely on information and, more specifically, on thorough, accurate and timely analysis of that information to optimize their bottom line. However, the increased volume of data gathered using modern systems meant that more effort is required to gather, classify and validate the information. Like many companies, Kroger did alot of number-crunching in spreadsheets which, despite being a standard monthly process, still required a great deal of manual processing.
One high-profile example of a highly manual process was the tactical operations report. This report provides sales and cost information for the prior week, month-to-date, quarter-to-date, and year-to-date actuals, and forecast information provided by every division. This report is prepared based on information provided by 18 operating divisions and is used by executive management every Monday morning to guide the operations of Kroger for that week. For many years, this report was prepared manually using information submitted late in the week. Due to both the timing of the submissions and the high volume of information required on the report, mid-level and senior level personnel in the finance department were required to work overtime every Saturday to prepare the report.
Reporting and analysis for executive management was not the only challenge that Kroger faced. Local store-level management required detailed information to better optimize their operations. In retail operations, store managers are in a position to directly affect profitability. Store managers need to be able to get just the right level of actionable information so they can effectively manage their stores, but they need a way to get this information easily and without significant training.
One of the divisions acquired by Kroger used Essbase and the predecessor to Dodeca, ActiveOLAP for Essbase, for reporting at the store level. It didn’t take long before the value of Essbase was seen at the corporate level and the footprint of Essbase began to expand within Kroger. One of the keys to the expansion was the introduction of the Dodeca Spreadsheet Management System that made it easy for Kroger to provide planning, reporting and analysis and planning to users throughout the company. Dodeca made it easy for Kroger to leverage the flexible layout and powerful calculation capabilities of the spreadsheet format combined with information coming from their Essbase and other corporate data systems.
The combination of Dodeca and Essbase grew quickly within Kroger as many other areas of the company saw value in the combination. Kroger currently uses Dodeca and Essbase for a number of applications including:
- Executive and operational management
- Store reporting
- Weekly forecasting
- Merchandise planning
- Labor planning
Kroger has leveraged the power of information to put the right information into the hands of the people in the company who can use this information to directly increase profitability on a daily basis. In turn, their Essbase footprint has increased from 250 users to a 50 processor Essbase license and Dodeca usage is expected to increase from the current 10,000 users to over 17,000 users in the next year.
The Dodeca Spreadsheet Management System has enabled Kroger to put the right information into the hands of people in the company who can use the information to influence corporate profitability every day. The weekly operations report, which required weekly, weekend overtime by mid-level and senior level employees, is now automated. This complex report, which features over 250 separate Essbase retrievals from 8 different Essbase databases, runs in less than one minute. Elizabeth Ferrell, Director of the Kroger Essbase Center of Excellence, commented that those users “would painstakingly type the numbers out because they couldn’t believe that they could do this report in 10 seconds. After three or four months of that”, she continued, they were saying “I guess we don’t have to come in this weekend, right?” This is just one example of how Kroger has better leveraged their information resources using Essbase and Dodeca.
In Kroger’s Words
“Like most companies, we have a few really skilled business users who can easily navigate our systems to get the information they need. But in Dodeca, you can have lots and lots of people that have that same power at their fingertips.”
~ Elizabeth Ferrell
Kroger Essbase Center of Excellence