Gerber Develops System to Manage Customers’ Inventory

The Gerber story started in the kitchen of Daniel Gerber in the summer of 1927.  Following the advice of a pediatrician, his wife had been hand-straining solid food for their seven-month-old daughter. After many evenings of repeating this chore, Dorothy Gerber suggested that her husband try it. After watching him make several attempts, she pointed out that the work could be easily done at the Fremont Canning Company, where the Gerber family produced a line of canned fruits and vegetables.     Experiments with strained baby foods began shortly. Soon workers in the plant requested samples for their babies. By late 1928, strained peas, prunes, carrots and spinach, not to mention beef vegetable soup, were ready for the national market.  Gerber has continued to grow throughout the years. Today nearly 190 food products are labeled in 16 languages and distributed to 80 countries.     

            Tightening inventory management is a top priority for cost-conscious retailers and their suppliers.  Retailers want their products to be available for customers to buy, but they don’t want too much.  Gerber has convinced 40 major grocery chains to allow the company to manage their inventory of Gerber products. During systems analysis, project participants defined the system objectives — reduce both Gerber’s and the customers’ inventory costs and provides a strong incentive for store managers to buy from Gerber. The company also decided not to charge for the inventory management service, treating it instead as a way to build customer loyalty and get sales data that can be used to fine-tune baby food production plans.  Gerber believes it can gain a competitive advantage with superior forecasting and planning.

An electronic data interchange (EDI) setup was designed and implemented to feed information on sales of Gerber products from the grocery stores to the Freemont, Michigan, company. The data is input to Manugistics software to schedule new deliveries. Manugistics, Inc. is a manufacturer of software for supply chain management. The company's solutions improve the flow of product within and among companies from raw materials or parts through manufacturing to delivery of product to the end customer. With Manugistics software, Gerber makes informed operational decisions, resulting in increased revenues, reduced inventories, improved customer service, better relationships among trading partners, greater speed to market and lower overall costs throughout the supply chain.

While the Gerber-Manugistics system worked fairly well, the need to translate all of the EDI messages from various grocery chains into a common format slowed down Gerber’s ability to add grocers. And custom-built software for sending alerts and other messages to Gerber’s inventory planners gave them only the minimum data they need.   Planners often had to resort to searching through raw EDI transmissions to find important data. Thus, Gerber requested Manugistics to perform a systems analysis and design a simpler and improved EDI process.

Manugistics’ formed a partnership with Frontec AMT, a company that specializes in integrating applications. The alliance created the Intelligent Messenger for Vendor Managed Inventory, a software product to format and prepare customer product activity data for input into Manugistics. The software was designed to present data to Manugistics that is consistent and complete in terms of product identification, unit of measure conversion, data validation and sequence checking.  Additional features were identified based on user requirements — intelligent routing of messages, event-driven notifications, and predefined trading partner business processes.

Gerber plans to be the first company to implement the new data transformation and messaging software.  It has established objectives for this system to dramatically increase the amount of inventory it manages for grocery stores.  Gerber sells around $700 million worth of baby food in the U.S. each year; however, it only manages about 27% of base sales.  Its goal is to manage inventory for 80% of sales within two years. 

Discussion questions:

1.   What are the stages of an information systems project and what are the objectives of each stage? 

2.  Who are the various players that need to be involved in an information system development project and what are their roles?