Why IT leaders are embracing best-in-class solutions for fresh

Nathan Fenner

Why IT leaders are embracing best-in-class solutions for fresh

Nathan Fenner

Historically, IT in grocery was viewed as a cost-center; IT leaders were tasked with ensuring the business could run, while minimizing costs. Not an easy job by any means (in fact, extremely difficult), but a straightforward mandate. 

Today, however, the task is far more complex: IT teams are still expected to keep the lights on with a very tight budget. But, in addition, in order to help grocers compete in the evolving digital landscape, IT leaders are also expected to unlock huge ROI via innovation and more broadly drive the strategic digital transformation of the business. It’s an incredibly tough needle to thread. 

This tension manifests when IT teams are faced with choosing between all-in-one systems vs. best-in-class, purpose-built solutions. As a rule, when all else is equal, IT architecture with fewer systems is better. If the one system does two jobs as well as two systems, fewer systems require less maintenance, simpler architecture, and fewer failure points. Fewer systems tend to be concurrent with minimizing complexity and costs. But all else is rarely equal — naturally, best-in-class, purpose-built solutions perform their specific task better than generalized solutions. This is uncontroversial — the right tool for the right job is nearly always superior. The tension comes in weighing the trade-offs of the benefits of fewer systems vs. the benefits of the best possible solution.

A new decision: All-in-one vs. best-in-class for supply chain and inventory management

One emerging area of this tension is in the world of supply chain and inventory management software. Historically, grocers have only had one option: all-in-one solutions. Frankly, all-in-one is a misnomer in this particular context: every solution available for managing tasks like replenishment is actually built upon a center store/ non-perishable approach to solving the problem. Despite this center store approach, these systems have been billed as all-in-one solutions that grocers can adopt for both their center store and fresh departments. Unsurprisingly, these all-in-one solutions, while functional in center store, have consistently underperformed and under-delivered in fresh: from regional to national chains, rollouts of these all-in-one solutions have taken 3+ years to get to fresh departments, have stalled out completely, get installed but misused by the stores, and ultimately have never delivered on their promises.

But grocers have continued to adopt these all-in-one solutions because the allure of a singular system for an underwater IT department is high, and there really hasn’t been another option.

This is why Afresh built a purpose-built solution for fresh. Afresh leverages novel AI and ML to build intuitive fresh-specific solutions that are easy for IT teams to implement and even easier for store teams to adopt. Look no further than Albertsons, which completed their fastest-ever chainwide rollout with Afresh in less than 7 months. Afresh’s store-level ordering solution for produce has had exponential adoption in the industry: over 3,000 grocery stores in the US order all of their produce through the solution. Beyond produce, the ordering and inventory product has now expanded into meat, seafood, deli, foodservice, and other fresh departments, and will soon expand more vertically up the fresh supply chain.

So with the emergence of this technology, grocers are now confronted with a question that they’ve never before faced: when choosing their supply chain and inventory management software solutions, should they adopt an all-in-one or a best-in-class approach? We believe — admittedly with just a little bias — that the ROI, the strategic enablement, and the surprisingly simple maintenance of our best-in-class, purpose-built tool make this an easy decision.

Unlocking transformational bottom-line value

For IT leaders looking for big wins, Afresh is proven to drive transformative business value – the ROI of Afresh’s best-in-class solution is staggering. Across 3,000+ stores with the Afresh Store Ordering solution for produce, we have seen an average shrink reduction of 25% and a sales lift of 3%. These aren’t cherry-picked numbers; these aren’t the clever marketing numbers that say “up to” in fine print beneath them. These are our average numbers, across full departments, over longitudinal periods of time. All but one of these partners had already installed an all-in-one system (the one outlier partner had a homegrown system). 

Grocers are inured to marketing numbers like 25% reduction and 3% sales lift — other vendors spuriously throw these and larger numbers around, and their solutions never drive these results. But actually achieving these numbers at scale across entire departments results in a staggering amount of value. For an average 100 store chain with 5% shrink and $600M in fresh sales, this represents $13.1M to the bottom line. For a 250 store chain, it’s $32.8M. For 500, it’s $65.6M.

James McCann, the former CEO of Ahold USA remarked, “The value that Afresh is driving with its partners would have been the single biggest return on any IT investment I oversaw during my time as the CEO of Ahold USA. And that's just in produce, let alone their entire solution across all of fresh.”

Afresh drives a step-change in the profitability of its partners that grocers can’t afford to not capitalize on.

Critically enabling digital transformation of fresh

Beyond transformative bottom-line value, Afresh’s system enables IT leaders’ digital strategy and mandate: bringing their organizations online. With the entrance of digitally native companies like Amazon into the grocery space and the explosion of online shopping during the pandemic, the digital transformation of grocery has accelerated. Grocers are playing catch-up and are expected to have seamless experiences between their online shopping experience and what’s in the stores. IT systems must navigate an omni-channel landscape that has Instacart, click-&-collect, micro fulfillment centers, dark stores, and in-store shoppers. This is a tall order and the only way it’s achievable is if the data is reliable. 

Unfortunately, in the most strategic categories — the fresh departments — the data is the worst. All-in-one systems (AKA systems built for center store) aren’t built to handle these errors and gaps in the data and thus actually impede IT’s digital strategy. 

Take inventory, for example. Inventory is one of, if not the, most important data sources for a digital strategy — it critically powers e-comm, and is used throughout the supply chain. Center store systems rely on a brittle approach for maintaining an understanding of inventory. These systems calculate today’s inventory by taking yesterday’s inventory, adding shipments, subtracting sales, and subtracting scan-outs. They require frequent cycle counts and correcting “ones and nones” on an ad hoc basis. Any errors in the sales data, shipment data, or scan-out data immediately throws off the inventory; errors aren’t fixed until the corrective behaviors are reactively taken; or, given the challenges with labor, they never get fixed at all. As anyone who has worked in fresh knows, the perpetual is always wrong.

In contrast, the Afresh solution leverages machine learning to model the inventory position of each item in the store. As opposed to simple arithmetic, we model the uncertainty of each of the critical inputs in the calculation and account for perishability and remaining shelf life. Instead of a simple point value for inventory, we understand the probability distribution of the inventory position of each item in every store every day. 

This is a far more accurate system, a far more robust system that is not susceptible to going off the rails, and a system that takes FAR less human effort to maintain. A robust, reliable understanding of inventory in turn powers much of the downstream digital strategy. Think what you could do with inventory data for fresh items that you actually trust!

Inventory is just one example. As a purpose-built solution for fresh, Afresh digitizes a variety of previously uncaptured information that better supports a robust digital strategy. This includes, but is not limited to, display sizes, shelf life, and perishability. 

In addition, Afresh’s Store Operations Suite provides functionality that historically has lived in the disconnected world of Excel spreadsheets. For example, Afresh digitizes store-level order guides and provides corporate tools to customize store-specific assortment. As a result, store-specific assortment can be understood digitally and dynamically across the organization. In short, beyond ROI, adopting Afresh forms the foundation for IT leaders to drive digital transformation across their most strategic categories.

Reduced complexity with more systems!?!?

While superficially counterintuitive as it is more systems, using Afresh in parallel with a center store system, as opposed to attempting to employ an all-in-one solution, actually reduces technology system complexity. 

Managing the fresh supply chain is a fundamentally different challenge than managing center store, and all-in-one (AKA center store) systems are terribly equipped to handle fresh. Center store systems require perfect data; data is never perfect in fresh (far from it!). Attempts to bend center store systems into fresh consequently involve costly and extensive data cleanup efforts that can sometimes take years to complete, and more often just never get finished. 

Beyond that, at both corporate and the store levels, fresh has a litany of unique operational requirements that center store systems don’t cover: dynamic merchandising, recipe management and production planning, fragmented supply chains, and much, much more. As a result, corporate and store teams rely heavily on Excel sheets and manual workarounds to the systems. This, in turn, causes a ton of problems: proliferation of where critical data lives, the creation of data silos and disconnected systems, bespoke workflows that rely on individual expertise, brittle technological solutions that aren’t adequately governed by IT, and so on. 

Afresh, on the other hand, is the right tool for the job, and as such, is easy to implement, and drives a much cleaner system architecture.

The Afresh system is built on data feeds and does not require any deeper system changes or complex integration. As opposed to needing to change out your ERP, we sit on top of it and are agnostic to whichever database you use. To utilize Afresh, the IT team only needs to send Afresh off-the-shelf, standard data feeds – sales, shipments, pricing, etc. Afresh does all the data transformation, so there is no required IT lift to transform existing data to conform to a spec. In turn, Afresh configures output files to match the outputs of the existing systems. For example, with Afresh’s Store Ordering solution, Afresh will configure the output to match the output of the current existing system used to transmit orders from the stores to the warehouse (or corporate) today, making the switch to incorporating Afresh into the broader IT system straightforward.  

Critically enabling these simpler integrations is the fact that Afresh is built for the flawed nature of fresh data. Afresh is designed to expect and flexibly deal with the gaps and errors, so, when onboarding onto Afresh, grocers aren’t required to do the excruciating cleanup of the long-tail of data issues. All in all, the average Afresh integration at scale takes 3 months, and the overwhelming majority of that work is on the Afresh side. 

Once onboarded, Afresh doesn’t require the maintenance that typical forecast and replenishment solutions do. For some all-in-one systems, grocers actually retain a team of analysts to monitor and adjust forecasts. Afresh, as a best-in-class solution, is completely set-it and forget it from the grocer’s perspective. There is no analyst team required, and, as Software as a Service, all the system maintenance is done by Afresh.

In addition, given the purpose-built nature of the Afresh solution, corporate and store users of the system have a consolidated platform that meets all their needs, and thus eliminates the need for Excel sheets, fragmented and siloed tools, and manual and bespoke processes. Afresh provides the functionality necessary to deal with all sorts of things like dynamic display changes at the store, or weekly changes to the order guide that are made at corporate. As a result, data flows throughout the entire system in a connected ecosystem and everything can be more easily governed by IT. Thus, in practice, having a purpose-built solution for fresh reduces the complexity of the overall system.

An ultimately easy decision

Netting out all these considerations, as all-in-one vs. best-in-class decisions go, we believe this one strongly tilts in favor of Afresh. While superficially a similar challenge to manage your center store and fresh supply chains, they are fundamentally such different problems that using a best-in-class, purpose-built solution is transformatively better, both for the bottom line and for enabling the digital strategy. And, in this instance, having the right tool for the job actually reduces complexity. Given all of that, it’s no surprise that more and more IT leaders are opting for Afresh’s purpose-built approach, driving our exponential growth across the industry.

Interested? Book a demo today. 

What does it take to lead transformational change? Find out in our webinar, Grocery Transformation in 2023: How IT Can Create True, Bottom-Line Change, featuring CIOs Luke Anderson from Cub and Shoppers and Todd Renaud from Southeastern Grocers.

About the author

Nathan Fenner is President and co-founder of Afresh, the world’s leading fresh technology company. Nathan received his BS and MS in Engineering from Stanford University and his MBA from the Stanford Graduate School of Business. Before starting Afresh, Nathan spent his career as a robotics engineer in Silicon Valley and as a lecturer at the Stanford Engineering School. His mission is to apply true innovation in pragmatic ways to solve real-world problems and drive tangible impact.

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