Making it Right
FreshDirect, the New York-based online grocery delivery company, makes big promises to its customers — all the way down to rectifying the occasional and inevitable broken egg in the carton.
To replace that egg, cover missing items in grocery boxes or provide a credit for late deliveries, FreshDirect aggressively employs business intelligence technologies as the linchpin of a focused, corporate-driven operational strategy that help it keep its service promises.
“First and foremost, at FreshDirect we are committed to delivering the highest quality, freshest foods in New York City and the tri-state [New York, New Jersey, Connecticut] area,” says Brandon Arbiter, business intelligence manager for Fresh Direct LLC. “That’s actually a guarantee we have for our customers, and we back that up with the guarantee that if you’re not totally satisfied, our customer service team will make it right.”
FreshDirect distributes more than 3,000 varieties of fresh food products to residences and offices throughout its target market area. Its pitch: FreshDirect buys directly from sources like farms with a just-in-time process that bypasses distributors to get the goods to customers four to seven days earlier than when buying from typical supermarkets. Company employees — butchers, packagers and others — start during early morning hours preparing fresh meats, produce and other foods in FreshDirect’s 300,000-sq.-ft. warehouse, distribution center and offices in Long Island City, N.Y.
When things go right or wrong with product, service or delivery, FreshDirect wants to know about it, Arbiter says.
“This guarantee has actually turned into a very rich source of data,” he says. “Our customers tell us exactly how we’re doing and help us to find better ways to meet their expectations. We take that feedback and organize it into various reports that are customized for every department and every level of management.”
Business intelligence is essential technology for today’s data-driven corporate environments. For retailers pursuing cross-channel selling opportunities, mining and understanding that rich data and how it can affect business operations is paramount.
Arbiter says FreshDirect’s purpose in going to a business intelligence platform was to find a way for company executives, managers and analysts to identify parts of the operation that were working well — and those that need attention. The goal was to meld various corporate applications through a business intelligence platform as a means for getting more precise feedback and metrics.
FreshDirect adopted SAP AG’s BusinessObjects portfolio in 2010 to drive its data operations and improve insight into performance metrics for product quality, service and delivery. BusinessObjects supports more than 20 web-based applications on the FreshDirect computing enterprise that are powered by other SAP software solutions.
With data gleaned by the platform, FreshDirect was able to take customer feedback reports and identify trends by product and service and determine how distinct categories affected the business. Executives saw immediate improvements in product quality and a reduction in customer credits as compensation for packaging or delivery errors.
“We are operating three businesses simultaneously,” Arbiter says, “a grocery, an online merchant and a transportation company. Executing each of these on a daily basis, every department needs to use the most up-to-date information and have that information at their fingertips.”
Operational feedback at FreshDirect begins by funneling data down through varying levels of the organization. Each morning, senior department managers meet to review a single report that combines performance metrics from 15 different corporate systems, offering information at a glance to identify issues occurring across the organization. As a result of this focus on sharing and analyzing business intelligence, negative business issues have been reduced by more than 50 percent, Arbiter says.
Russ Hill, SAP senior director of retail, says business intelligence is designed to provide retailers with the critical data required to differentiate their products and services by attributes like brand, format and channel.
“You can take point-of-sale data and leverage that in such a way to provide it to the different users within the organization,” Hill says. “You can make it more pervasive. You can manipulate that information to where you can make it actionable.”
Emerging technologies and tools like social media and smartphones are altering the retail marketplace and the scope of consumer demand, Hill says. Retailers have to respond quickly to these rapid changes in consumer demand.
“You’ve got all of this unstructured data out there now relative to social media,” he says. “What stands out is what I call the ‘emotional factor.’ This emotional factor can have a big impact on who you are — it can have a big impact on the brand. Customers are not necessarily buying less, they’re buying differently.”
For retail organizations, true opportunity lies in the ability to apply business intelligence data in real-time, Hill says. SAP’s new In-Memory Appliance, used with the BusinessObjects platform, dramatically decreases query time for business analysis by optimizing data from operational systems, data warehouses, real-time events and the Internet. The in-memory process connects corporate information technology systems seamlessly to located data and prepares it for use in real-time.
Early BI platforms focused on summary data, with users having to delve into archives for specifics. Today, data is needed much more rapidly to make business decisions as consumers have greater access to information through technology, Hill says.
“What’s important is aligning that business intelligence relative to addressing business issues by line of business,” he says. “Where business intelligence is successful, it is getting it out of the silo.”
Additionally, as BI software is enhanced, retailers are able to extend the functionality of the platform to drive performance management of business functions like supply chain and inventory, promotions, labor and sales analysis, Hill says.
Arbiter says one only need look at FreshDirect’s transportation function in metropolitan New York City to appreciate the positive impact BI is having on the business. Since going live with the platform, late deliveries have been reduced by more than 80 percent.
“We are using BI to monitor the rate of delivery in the field throughout each day,” he says. “We find exceptions. Did the truck get a flat tire? Is there traffic because [President] Obama is in town? When an event occurs that puts an order at risk of being delivered late, we actually put it on our dashboard an hour before the order is late. That allows us to send another team out into the field to help out.”
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