When a retail giant, like Dagrofa, puts a communication network out to tender, both process and results must match the specific needs of the company. Read about Dagrofa’s tender process, experiences and results.
Retail is currently undergoing intense digitalization, and for Dagrofa, one of the absolute giants in the industry, it was time for a new framework agreement for the communication network. “The market is constantly changing, and over time capacity has increased dramatically. As a result, there are constantly new demands on the efficiency of our data connections.” explains Michael Rasmussen, IT Operations Manager at Dagrofa. The company employs approximately 7,000 people in Denmark and has a turnover of over 19 billion Danish Kroner (approx. 2.5 billion euros).
Today, we have significantly better capacity and quality in our network, and this is crucial.
The retail giant has about 650 stores in its communication network, including the chain stores MENY, SPAR and KIWI. “At present, there is a huge amont of activity in retail payment solutions, which of course affects us. Soon, a lot will be propelled by consumption patterns in the stores, which should enable us to follow the customers and produce customized offers. As an integrated part of the infrastructure, we already have loyalty programs through an app that requires wireless data connections in the stores. So we are facing huge changes, which often happen in leaps, and require a stable and flexible network at all locations, including remote areas.”
Merchants on a journey
Dagrofa decided to put its network out to a tender in order to get a new supplier agreement and needed special expertise in the process. “We chose Devoteam because of their in-depth insight into the market and the area, as well as their broad experience with similar tasks. Furthermore, they were quick to understand our particular business and our needs.”
Retail is not like any other industry, and suppliers have to understand this. “We are merchants, margins are often small, and we are constantly looking at price and quality. Therefore, we needed a solution that could grow with our needs and a supplier who understands our cost structure, and with it, the journey we are on.”
At the same time, retail is an industry where changes occur often and fast, which requires great flexibility in the network. “We have to be able to shut down quickly and start up quickly. We close a store, we open a store, or transform a store from a KIWI to a SPAR. Our network is dynamic and complex with many businesses connected.”
Easy comparison across suppliers
The first step in the process was to identify the right suppliers to participate in the tender. “Our communication network is a large operation taht requires a certain footprint. Finding the right handful of suppliers was therefore relatively easy.”
The next step for Dagrofa was to prepare materials for the tender with the appropriate efficiency and quality. “First, Devoteam made sure that our own resource consumption was limited. We didn’t have to reinvent the wheel, but got involved when it was relevant. Secondly, the materials were meticulously prepared and manageable, which made it quite simple to make the necessary comparison, when potential suppliers responded.”
Balance in staffing
In the next phase, Dagrofa established closer dialogue with selected suppliers to find the best possible model. “There were several good solutions, but in the end, not all were a match. Some of them were ideal, but would only be relevant in three to four years, and that’s a long time in the retail industry.”
Another aspect that had to be taken into account in the dialogue with suppliers was the staffing. “We needed a supplier that matched our organization, so we could communicate effectively. If the supplier has many large customers, there are often many highly specialized employees, and they do not necessarily fit the way we are organized. We needed the right balance with the supplier, also in relation to size.”
Economy, technology, people
The carefully planned tender process resulted in a solution that fits Dagrofa Group today, and at the same time allows room to manoeuvre, in order to follow the ongoing development, and perhaps even be at the cutting edge of the development. “Today, we have significantly better capacity and quality in our network, and this is crucial.”
A tender process may seem like a simple mechanical exercise, but it’s more complicated than that, and not something that companies do every day, says Michael Rasmussen. “You need to have an eye for both the technicalities and the economic aspect, which makes it more than a table top exercise. Of course, it is also about understanding people and getting them to cooperate in the best possible way, also in the long run.”
“We are very happy about the collaboration with Dagrofa and proud of the selected solution that provides quality and flexibility to support Dagrofa’s business.”
Niels Adler-Nissen
Devoteam