Grocery Wholesale Group Vital Transforms with SAP S/4HANA
Vital is in the midst of a digital transformation focused on moving to SAP S/4HANA. The biggest grocery wholesale group in Argentina is developing a clean core strategy and using analytics to drive the business while democratizing data access throughout the company.
In addition to groceries and food, the group sells electronics services and has around 400,000 customers, along with 80,000 business clients and more than 1,800 suppliers, according to Vital CIO and CTO Alexander Gonzalez.
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Gonzalez is part of a new executive committee that is leading with the purpose of seeking to expand company reach, improve efficiency, and strengthen its market position.
“It all started in 2018, when we decided to have an analytics system and a clean core SAP system to make all the data available to all the different parts of the company so they can make real-time decisions on purchasing and pricing for our customers,” he said.
Gonzalez explained that this is particularly important in a nation like Argentina because prices are extremely volatile. “It’s important for us to have that information readily available because Argentina is a highly inflationary country, where prices change really quickly,” he said. For example, during the COVID-19 pandemic Vital sometimes had to change 20,000 product prices in less than a day, “so we have to do all of that analysis really fast.”
Vital was a long-time SAP customer, but when it came to choosing a digital transformation technology partner, the company did its due diligence.
“One of the main reasons we chose SAP [S/4HANA] is we were used to using SAP,” says Gonzalez. “But we did do our homework. We analyzed our business and processes for a year, then we took six months to talk with a lot of suppliers, SAP included, and another three.”
Ultimately, he said Vital decided on SAP S/4HANA because it offered the potential to integrate a customer activity repository with its basic financial and core systems.
It took Vital 18 months to implement, but Gonzalez said the system “integrated with our providers on the first day and we had all this real-time data within a week of going live. So that was great for us.”
As a result, analytics that used to take three to four days can now be done in two hours and Vital can have a new pricing structure implemented in less three hours. Instead of employees wrangling Excel spreadsheets, Gonzalez said decisions are now based on real-time data and “are not influenced by what a person wants, but by what the data is telling them to do.”
Because all the company’s data — including customer data and POS data — are stored in a centralized customer activity repository, Vital now has complete visibility into that data and can use algorithms to predict sales and set prices and distribution priorities. “We can change our pricing policy based on reception of goods and new purchase orders and adopt new pricing in real time,” said Gonzalez.
Over the last year, he says, Vital saved around $35 million on perishables after the system warned managers that they would not be able to sell products on time. “We negotiated with our suppliers; we made offers and made predictions of how it would work out and it turned into a real savings — that’s what technology is doing for our company.”
Just as importantly, Gonzalez said Vital now works with one version of the truth. “In all of the applications every user sees the same data, be it clustered by store or by department. The result is the same for everyone. There’s no difference in what the financial department sees, what operations see, what our buying department sees, or what our pricing department sees. All the data is clustered in one huge data center.”
“The technology has really advanced how our users in the company experience data and decision making,” Gonzalez added. Instead of spending time pouring over spreadsheets and reports, much of the analytical work is now done by the system, enabling users to make decisions in real time, for example, while they are negotiating with a supplier.
Now Vital is in the process of migrating all its applications, including its ERP, to the cloud. “All our applications are cloud-ready, and we maintain a clean core, so we can upgrade really fast,” said Gonzalez, who expects to be ready to make that the move by the end of the year.
The Vital CIO and CTO is also looking to AI to help the company’s employees make even better purchase and pricing decisions. “We don’t see AI as replacing our personnel or people in the industry,” he said. “We see it at enhancement, we see it as turbocharging our system and making the data more reliable and useful.”
Gonzalez believes that other companies can learn from Vital’s experience democratizing access to data.
“A lot of companies regard their data as really private and don’t share it with everyone in the company,” he noted. “We are open with the data. We tell everyone– from our people in the stores to our managers and our directors — that they have all the same data. This has really opened us up to be a really integrated and group-friendly company.”
