ALBERTSONS INC.
ERP SOLUTION
IT4 Consulting Team
Reza Edalat (Financial Analyst)
Mike Darmo (Operations Analyst)
Arbi Torasian (ERP Specialist)
Francisco Flores (CEO)
Preview of Main Points
 Introduction
 Brief History of Albertsons
 Industrial Analysis
 Porter Five Model
 Implementing ERP
 SWOT Analysis
 Weighed Scoring Model
 Financial Considerations
 Conclusion
Brief History of Albertsons
 Albertson was originated in Idaho, 1939
Family Run Joe Albertson
 by 1947 it operated six stores in Idaho

 Co-founder Albertson died in 1993 at age 86
 In 2001 Larry Johnston, former CEO , took over as
chairman
 Online Stores
 Today Albertson is one of the biggest food stores,
bought Bristol Farms
Industrial Analysis
 Albertson’s Company is starting as the food
and drug retailer worldwide.
 Albertson’s need to analyze the growing
markets and customer behaviors to be able to
compete
 Albertson’s has the third rank on the Grocery
markets in US
Porter Model
 Porter model for Albertsons





Rivalry among Competitive Industry: Costco
and Wal-Mart, traders Joe’s and whole foods
The Bargaining Power of Customer: regular
American households
Threat of New Entrance: unlikely
Threat of Substitutes: Ralph, Vons, and long
drugs
The bargaining power of suppliers: fresh fruit
and vegetable grower, food corporations; Johnson
and Johnson
Porter’s Five Forces
Implementing ERP
 Functional Areas that would Benefit with ERP

Accounting and Finance

Human Resources

Marketing and Sales
Implementing ERP Cont.
 Connectivity requirements:
Secured database that is stable and fast
 Integration with other systems
 Support multiple administrators, users, accounts,
banks, and organizations
 Must be database independent (SQL, Oracle)
 Web/E-Commerce requirements:
 Client web browser support
 Must have easy configuration
 Support minimal technology requirements on
clients end.
 Powerful software to perform manual processes

SWOT Analysis

STRENGTHS





Second food-grocery Industry
leader among its competitors.
Growth of Albertson is based on
its expansion and joint venture
to similar industries.
Numerous awards and
recognition for product quality
and great recycling process.
Multiple services in one stop
makes easier for customers to
shop at Albertson.
New software technologies such
as hand held scanners and selfcheckout lanes.

WEAKNESSES





Drop of the company profit
due strikes and company
overall performance.
Decline of the value of its
stock price.
Challenge to regain
customers back after the
firm went on strike.
Lack of up to date
information of shipping,
purchases, and delivery
orders.
Lack of employee
organizational skills.
SWOT Analysis Cont.

OPPORTUNITIES




To be able to increase the
demand of regular and no
regular shoppers.
To follow the trend of
competitors in selling variety
of product to be able to attract
new customers.
The challenge of attracting
some of the Whole Food
shoppers by implementing
natural and organic food
products, public relations, and
employment education.
The implementation of online
shopping, order deliveries,
and scanner devices.

THREATHS





The sell of Albertson stores
in Idaho due to competition
The economy downturn is
affecting tremendously the
flow of the business is some
areas.
The joint venture of other
firms within the same
industry.
The location or relocation
of firms in the same
industry in a radius close-by
to Albertson stores hurts the
business.
The growth competition of
similar industries such as
Wal-Mart
Payback Analysis for ERP Project:
Assume the project is completed the first year 0
Discount rate
10%
Year 0
Year 1
Cost
-$32,485,000
Discount factor
Year 4
Total
-$1,894,500 -$1,894,500 -$1,894,500
-$1,894,500
-40,063,000
0.91
0.83
0.62
Discounted costs
-$29,561,350
-$1,572,435 -$1,420,875 -$1,288,260
-$1,174,590
-$35,017,510
Benefits
$0
$70,000,000 $70,000,0 00 $70,000,000
$70,000,000
$280,000,000
Discount factor
0.91
0.83
0.62
Discounted benefits
$0
$58,100,000 $52,500,000 $47,600,000
$43,400,000
$201,600,000
-$29,561,350
$56,527,565 $51,079,125 $46,311,740
$42,225,410
$166,582,490
-$29,561,350
$26,966,215 $78,045,340 $124,357,080 $166,582,490
Discounted benefits +
costs
Cumulative benefits +
costs
ROI
Payback
475%
Payback
year 1
in
Year 2
0.75
0.75
Year 3
0.68
0.68
WEIGHTED SCORING MODEL FOR
ASP vs. ERP
WEIGHTED SCORING MODEL FOR ASP vs. ERP
WEIGHT
ASP
Option 1
ERP
Option 2
Supports key business objectives
10%
95
95
Has strong internal sponsor
9%
79
91
Has strong customer support
6%
85
85
Can be implemented in one year or less
8%
90
80
Provides positive NPV
7%
90
92
Has low risk
6%
75
89
Introduces new technology
5%
85
95
Increased business productivity
10%
90
90
Provides greater quality assurance
14%
90
92
Meets budget constraints
8%
95
85
Increases shareholder wealth
9%
92
94
Increases business operations
8%
91
93
100%
88.72
90.3
CRITERIA
WEIGHTED SCORES
Conclusion




We consider really important the fact buying the
ERP system with the SAP R/3 software would help
us accomplish our goals, such as:
Organize our filing system by departments,
branches and headquarter
Maintain up to date information of shipping,
purchases, and delivery orders
Enable us new levels of business process and
technology integration
Allow us to upgrade to any of the full range of SAP
Solutions, so management can:
Conclusion
Deploy the functionally for
 Customers
 Product life cycle
 Supply chain management
 Supplier relationship management