What a lot of people don’t know is that Jean Coutu franchise holders do take most of the back-office and accounting software, local area network support and hardware his department has developed for them, realizing just as executives at headquarters do that computerization and use of the latest POS systems technology is necessary to thrive in the world of retailing today.
The information system at the heart of Coutu’s operation is its pharmacy program. First implemented in the late 1970s and only used in the company’s 195 Quebec stores, it has been upgraded three times since it was first installed. The continual increase in computer sophistication since that time made developing new systems inevitable, Boucher says.
“I think I can say that the current system is meeting the needs of the franchises very well,” he says about the pharmacy computers. “It is a bit more expensive in certain respects than other pharmacy systems but that’s because it is centralized and does everything for the stores. It is worth the price.”
The program sets all pharmacy pricing and price changes, transmitting them to the stores’ computers via telephone lines. An enhancement that is expected to be made next month will allow franchisees to use the system to order prescription drugs from the company’s distribution center here. “It is not going to be automatic because I don’t believe in that,” notes Boucher. “Someone will still have to approve generated orders and push a button.”
The enhancements to Coutu’s prescription drug program are being done simultaneously with the company’s rollout of point-of-sale (P-O-S) scanning technology.
Already in about 30 outlets in Quebec, Ontario and New Brunswick, Coutu’s POS system can be a hard sell to franchisees, Boucher admits, because many provinces continue to require price stickers on all products and store owners often fail to see the economic advantages of the technology.
“It’s just a question of better understanding all of the benefits POS can provide,” he says. “Many of the franchisees have been out in the field for 25 years and doing very well without this. But they’re coming around.”
Executives at Coutu have decided to bring users into the POS system in two phases. Phase one will let them familiarize themselves with the technology by collecting just sales data. The second phase will allow franchisees to delve deeper into the reports generated by the system and better control their inventories.
When the system is fully operational, Coutu franchisees and executives at headquarters will also be able to get a clear picture of what is being sold and who is buying it.
“The benefits are many,” explains Boucher. “You can remodel your planogram. The realities in the rural areas are not the same as in Montreal. By using this and knowing better what you are selling, you will surely adjust your inventory to fit the desires of your customers. Rather than measuring the dust on the item to see the turnover, they can now look in the computer.”
The other side of the inventory equation for Coutu franchisees is electronic data interchange (EDI). A series of pilot sites have already been established with five of the company’s largest suppliers, and the system is expected to be extended to the stores within a few years.
“When the whole network with the vendors is finished we will work with the stores,” he says.
The retailer’s EDI link with manufacturers will initially be used to eliminate paper purchase orders, with the eventual goal being the creation of a paperless and completely electronic ordering and receiving process.
Coutu’s two distribution centers are also the beneficiaries of one of the company’s most ambitious projects – a radio frequency system that will scan the universal product codes on products to ensure that the orders that go to the stores are filled more accurately (see the stow at the top of this page).
Boucher and his team have developed Coutu’s information systems to such a point that they were implemented at the Brooks Pharmacy chain almost immediately (four months) after the company acquired the Rhode Island-based retailer last fall.
“Our systems are accurate for the business we do,” he notes. “We worked very hard on the development of them, and they were ready to go. We have the knowledge, and if they are good for us, they are probably good for Brooks.”
The host computers at both Coutu headquarters here and at Brooks’ main office in Warwick, R.I. are currently linked through high-speed telecommunications lines. Currently, all transactions involving prescription medications at the latter are transferred here into a “hot site,” a back-up system at Coutu’s Canadian headquarters.