Seeking To Say No. 1, Rona Turns To ITSeeking To Say No. 1, Rona Turns To IT

Rona Inc. is turning to IT for help in its battle to remain No. 1 against Home Depot Inc. in the Canadian home-improvement market. The Montreal retailer plans to make suppliers more responsible for keeping its shelves stocked. Starting in September, Rona's 15 major suppliers, which account for as much as 30% of its inventory, will access Rona's inventory-management system through the Internet to determine when to ship more products based on parameters set by Rona. The software will give each supplier access only to data pertaining to its own products.

Privately held Rona has used software from E3 Corp. for five years to manage inventory in its warehouse-size stores and its Montreal distribution center, which supplies Rona's smaller outlets. Inventory data is fed daily to Rona's 19 buyers, who access E3's inventory-management software from their Windows desktops.

Each big-box store carries as many as 45,000 products; the distribution center holds 35,000 items. Without the software, says Pierre Pelletier, Rona's VP of distribution and logistics, "No one could handle this many [stock-keeping units] for each store and the distribution center." The software's preset parameters, such as acceptable inventory levels based on sales projections and how fast a product moves, notify buyers when to call suppliers for more products.

Rona expects to be able to cut its staff of buyers, though it wouldn't detail its savings. Suppliers also will be able to get data on promotions. A supplier "is going to be able to do a much better job than we do because he knows his own production [requirements]," Pelletier says.

Home Depot, with 10% of the Canadian home-improvement market, was an early adopter of supplier-collaboration technology. Rona, with 13% marketshare, paid E3 $50,000 for deployment, training, and the software license. Its suppliers must pay $50,000 for software licenses, deployment, and training the first year, and $12,000 in each subsequent year for software licenses. Pelletier says suppliers will see a payback in three to four months.