"Intelligent enterprise" February 21, 2003

The choice of the RBC Trade system for IceBit was made accidentally, to some extent, however, there was some intentional calculation as well.

"Oh Lord, why is life so complicated!" Ivan Akhmetyev.

There is no need to describe counters of stores filled with foodstuffs. The range of offered sausages, cheeses, yogurts and even ordinary milk is huge, which makes the choice of a product a difficult task. Moreover, practically every store and even small shopping stalls near metro stations are equipped with cooling counters, which enables everyone to purchase quick-frozen vegetables and half-prepared products at any time. Today we will talk about one of the suppliers of quick-frozen goods, the IceBit company.

A few words about retail trade

Experts describe the situation on the retail food market as two-sided. On the one hand, Russia has not achieved the European norm in the number of supermarkets per 1,000 residents (even in Moscow, not to mention Russian regions). This means it is too early to say that the market is saturated. On the other hand, large chain stores and shopping centers are involved in a hot competitive struggle, assuming that the market was saturated and divided long ago.

Naturally, suppliers of foodstuffs, i.e. distributors, get involved in this competition too. They have to work under quite complicated conditions. It is clear that every store needs regular and compulsory deliveries along with a stable range of goods. It is not that easy to meet these requirements even for a single shopping center. Meanwhile, the Perekriostok trading house, for example, includes 47 stores and each of them requires supplies of goods at least twice a week, which makes a total of a little less than 100 supplies a week. Lines for unloading in this chain store last up to six hours. A similar situation is observed in other chain stores: Seventh Continent, Ramstore, Paterson and so on. A distributing company, that has, for instance, only 10 special trucks, will not be able to function under such circumstances. As a result, a distributor has to work only with several small stores and not with large chains. Moreover, the abovementioned situation is not the only limitation.

The problem is that relations between distributors and trading companies have different purposes. All trading companies need not only high-quality products, which is fair, but also cheap products and large commodity credits. This means that a distributor must have a sufficient reserve of goods and floating assets, which make up a part of distributor's expenses. Moreover, high-quality services also require certain expenditures from a distributor, such as high salaries to employees, as poor and hungry employees will never be polite or dutiful. In addition, a distributor needs opportunities for development and purchases of new transport means. All these factors lead to an increase in expenses reflected in trade markup.

Meanwhile, large trading companies are trying to implement financial policies in relations with distributors that enable the latter only to buy gasoline and new tires for trucks. "Nobody wants to purchase goods at a higher price, and trading companies do not want to set a reasonable trade margin to remain in distributing firms," IceBit General Director Igor Smetanin stressed. It becomes clear that a distributing firm that will provide high-quality services, regular supplies, large commodity credits and small trade markup will not be able to function at all because its expenses will surpass revenues. Sometimes, the only possibility to receive revenues for a distributor is well-run logistics.

Distributor

We have just described the uneasy situation on the market that the IceBit distributing company has been working on since 1995. It started its business with the purchase of frozen vegetables from producers and supplying them to the Moscow retail network. At that time, frozen vegetables were not produced in Russia, and IceBit partners were western companies. Currently, imports account for a small share of IceBit trade.

IceBit remained a purely distributing company until 2000. In 1997, the company purchased a vegetable facility and decided to organize a production department there. Construction operations were started at the vegetable facility in September 1998 and the first refrigerator with a capacity of 1,000 tons was put into operation in February and March 1999. "At that time, we were very proud of our construction achievements," Igor Smetanin recalled. Some time later, the company acquired one more refrigerator and then another one. Using these production facilities, IceBit started to produce frozen vegetables under the Four Seasons trademark. The company was increasing its production volumes, from 4,500 tons of vegetables in 2000 and 2001 to about 10,000 tons in 2001 and 2002.

Apart from the vegetable business, IceBit was developing as a distributor as well. By 2002, the company's transport means increased to 50 motor vehicles that delivered goods around Moscow seven days a week and often 24 hours a day. Currently, IceBit sells its own goods together with products from the largest domestic and western producers. It sold about 500 tons of Four Seasons vegetables in the peak period of 2001 (April) compared to 150,000 tons of vegetables in one-week time in December 2002 on the Moscow market. In addition, IceBit cooperates with producers of half-prepared goods, such as Daria, Ravioli, MLM and others.

Automation

Until the year 2001, IceBit was operating with an automation system that had been developed in 1993 by a talented programmer. There is no need to say that more than one generation of computer equipment has changed over the past seven years, new technologies pushed out outdated ones and the developer of the automation system left Russia. Nevertheless, the system he created continued to function despite some problems: it was complicated to adjust this system to frequent changes in Russian legislation.

It is not surprising that IceBit management was thinking about a new automation system. They planned to automate the whole technological process, including interactions with supplies, the management of accounts payable and receivable, stock control and other operations.

According to Igor Smetanin, to some extent, the RBC Trade system was chosen at random. "… we saw a banner, made a phone call, held a meeting and then signed a contract"

Introduction

The introduction of the new system continued for seven months. During this period, the following IceBit departments were automated: the receipt of orders, sales and delivery departments, the purchasing department and the remote warehouse. A total of 50 automated work stations have been introduced.

The new system was launched in IceBit in May 2002. "When people returned to work after May holidays, they saw that something had changed on their computer monitors, and they had nothing to do but start working with a new system," Igor Smetanin recalled. There was no pause in the company's work after the system's introduction. With special gateway software, all information accumulated by the company over the previous years of work was downloaded in the new system.

This switch to a new automation system was relatively painless since it was introduced in stages. In addition, representatives of RBC Soft were introducing the system with as little distraction to IceBit employees from their main activities as possible. For example, when consultants came across a non-optimized business process while installing the system, they offered ways of optimization to IceBit, so the latter only had to choose the method of optimization.

First, the company's central office was automated and then the remote warehouse. IceBit employees had the possibility to practice the main operations in the new system two months before putting the system into operation. To provide this option, the contractor installed demo versions of the system at work stations at IceBit.

Results

The first visible result achieved with the new system is that all business processes of IceBit are reflected in a unified system. The synchronization of the planning system with the delivery and accounting systems was adjusted. This allowed for avoiding the transfer of data from one system into another manually, which means no losses of information was allowed and information remained coordinated. From now on, all routine operations will be performed automatically.

The new system allows for consignment stock inventory, which enables users of the system to estimate the profitability of certain goods and consignment of goods. In addition, the system offers a non-standard business process of weight processing. Before the introduction of the system, IceBit keeping records using average prices and could not receive precise information about the profitability of specific goods. The introduction of real-time stock-in-trade helped IceBit solve the problem with overstock or incomplete fulfillment of orders. This led to a reduction in stock-in-trade and, correspondingly, enabled IceBit to have additional funds.

Another important consequence of introducing the RBC-Trade system is that IceBit became capable of promptly detecting problems with clients and monitoring real-time dynamics of payments as well as dispatching goods. This helped the company withdraw some "frozen" assets from its turnover. Moreover, the new system provided IceBit clients with an opportunity to make an order and reserve goods via the Internet at any time convenient to the client. In the future, when the corporate site of IceBit is launched, the system will allow for the complete processing of all client orders.

Finally, there is one more important achievement. Before the new system was brought into operation, IceBit could not provide exact prices while accepting orders from clients, as there was no unified registration of contracts, and this led to problems with mutual settlements. From now on, the operator accepting orders will have all the necessary information on his monitor screen, including prices set in specified contracts with clients, limitations on the order, messages from managers to clients and so on.

In fact, the functions of the new system can be expanded. "We are trying to teach it everything we know," Igor Smetanin was quoted as saying. "How is this accomplished? With difficulties, of course… Probably, this is partially because we do not always know what we want, but we want it to be good."

Afterword

IceBit supplies fast frozen goods not only to stores in Moscow and the Moscow region but also to other parts of Russia. So far, these are small projects that do not lead to the opening of branches and offices in Russian regions.

Another project on the list of the company's plans for the future is a test production of half-prepared goods. "The fact that we have our own products helps our distribution company a lot," Igor Smetanin stressed. "We stand out on the market with our own trademark Four Seasons." It is a well-known fact that our own production facilities allow companies to avoid direct external competition in prices. Competition with other producers remains but this is another issue.

Coming back to the situation on the retail food market, we would like to quote Igor Smetanin, "This market is very tough, however, it has not reached its limits yet. The situation will become even more complicated in the future, but this period will be followed by certain stability and rules of this market will finally be set." IceBit hopes not only to survive by adequate adjustment to the changing competitive environment but also to continue developing its business and fit this market.

By Yelena Shashenkova