Metzger, who before he was appointed CIO in February headed the company’s tech revitalization program dubbed Evergreen, notes that a lot of activity has occurred in terms of supply chain investment in the industry, but that legacy systems are slowing down the process in some cases. Still, grocery industry CIOs agree that supply chain renovations remain an urgent priority, even if it won’t mean catching up with Wal-Mart. Bill Homa, CIO at Hannaford Bros. in Scarborough, Maine, says that all grocers need to work on the supply chain in order to increase efficiencies and cut costs. "You don’t have to be as good or better than Wal-Mart, but you better be in the ballpark," Homa says.

Hannaford Bros., like other grocery chains, took its first steps into supply chain automation with a warehouse management system (WMS) that allowed distribution centers to keep better track of inventory. In a typical scenario, a WMS is used in conjunction with bar coding and radio frequency scanners so that workers in a distribution center can use the RF scanners to locate the right merchandise for the right store.

In order to compete with Wal-Mart, grocers need to go several steps further with supply chain management and automated replenishment systems that can increase communication with suppliers and ensure that products remain in stock. Hannaford, for its part, is now focusing on demand-driven replenishment with wireless technology from Symbol Technologies of Holtsville, N.Y. Using the Symbol units, store employees can communicate with the warehouse through a mainframe system in Scarborough and order grocery items that more closely fit the needs of individual stores. All of Hannaford’s 115 stores are using the system for grocery items, and two stores are piloting it for perishables. "It’s hard to beat Wal-Mart at their own game, which is price," says Homa. "If we focus on service as well as price, we have a chance."

Wal-Mart’s RetailLink private exchange has allowed the company to reduce the cost of transactions within the supply chain by providing daily scan-data to suppliers, creating a system in which items are rarely out of stock. By contrast, many grocery retailers have 8 percent to 12 percent out-of-stocks because partners can’t see the demand levels, says AMR Research’s Abell.

Tom Nowak, senior vice president of IS and CIO at the Price Chopper Supermarkets chain based in Schenectady, N.Y., is working on that problem by implementing retail software that promises to reduce out-of-stock product levels and help the company maintain inventory levels based on customer demand. Price Chopper is in the first phase of implementing the software, from Industri-Matematik International, with the goal of having computerized ordering. "We’ll have a better sense of our stock, and we’re aiming for perpetual inventory," Nowak says. "At that point, the computer can take over ordering for the store people."