Getting Even at the Back End

Big rental players in the grocery industry have always enjoyed the best deals from its suppliers especially on pricing and terms. But with the near implementation of retail trade liberalization law and the continuous expansion of the big retail players, will our small-and medium-sized entities be burned soon with Goliath’s technology, clout, and expertise? Fortunately, our SME grocery retailers are not allowing itself to be left behind despite the limited resources it may have. In 1995, several medium-sized retailers have banded together to share common facilities and agreed to form Grocers Central Alliance Inc. (Grocent). Jose Albert is the brain behind it. Its incorporators believed in having a distribution center (DC) to promote efficiency and lower acquisition cost due to economies of scale. At the same time, Albert immediately envisioned the E-commerce side of the business and rolled it out for the benefit of its members. Through Grocent, members can avail of lower cost due to volume discounts, more efficient distribution, and higher availability of inventory due to buffer stocks in distribution center. It has lower investment in IT since they share the resources for the warehouse management system. It has a central warehouse complete with staff for warehouse management, distribution management, and purchasing. All the member companies pay a subscription fee and membership dues to sustain the operation of Grocent. Grocent's financial considerations based on cost benefit were hardware, software, and maintenance cost vs. substantial inventory reduction, lower documentation cost, plus speed and accuracy in serving customer orders. When Grocent started its system, it was all EDI but now it has decided to move on to an Internet-based solution. Grocent expects more competition especially with retail trade liberalization in the country. But the president is confident that Grocent members will be better positioned for competition in terms of stock availability and cost of acquisition. At present, Grocent has 47 grocery partners and 23 supplier partners. Only the multinationals are co-evolving with Grocent but its president, Cabochan, sees the need for local companies to get into the system. Trading partners are enthusiastic particularly those with the capability and are working on their systems to be able to link to Grocent.

Question 01. Discuss how IT is helping Grocent not to be left behind by big retail players in the grocery industry.

Question 02. Explain how IT is changing the way of doing business.

Question 03. Give suggestions how Grocent can further enhance E-trading among members, suppliers, and customers.