1989-1980

Interview with Silvester Macho, Chief Information Officer (CIO) of METRO GROUP, about the merchandise management system of METRO Cash & Carry.

"THE MERCHANDISE MANAGEMENT SYSTEM IS THE BACKBONE OF A RETAIL COMPANY"


METRO Cash & Carry acted at an early stage to introduce an IT-supported, "closed" merchandise management system and moved to the forefront of the European trade industry in the process. "Closed" means that the system tracks products from the time that an order is placed until it is received and sold. Silvester Macho, now CIO of METRO GROUP, was a member of the core team that was tasked at the end of the 1980s with the job of developing a new merchandise management system.

In the beginning, stacks of punch cards helped to run the wholesale stores' business operations. But times have changed. PCs and laptops are now the norm in every department. An interview about the importance of "closed" merchandise management systems, the devilish details of the IT integration of new companies - and the job profile of a data typist.


Portrait of Silvester Macho Silvester Macho, Chief Information Officer (CIO) of METRO GROUP

Mr. Macho, what were things like at METRO Cash & Carry when you arrived in 1987? What sort of status did the merchandise management system have back then?

It had a closed merchandise management system that was based on mainframe computer technology: an IBM/360 that initially had a computing capacity of 4 KB. Closed merchandise management systems were not common in all retail companies at the time. METRO saw benefits in the approach – even if much still had to be done by hand. 

For example?


To place orders, every department head in the wholesale store went down the aisles with his or her list, recorded the inventory and determined the order volume. The department head then gave the list of data to the store computing centre, where the needs were recorded and passed on to headquarters. Two to three data typists - or "key punchers", as they were known — worked in each store. Their job was to enter inventory levels and orders onto punch cards. Employees at headquarters then consolidated, ordered and delivered the products. The incoming goods department in each store registered the item and then warehoused it.

From punch cards to PC

Was everything done by hand?

Yes, it was all done by hand: processing the receipt of incoming goods, making corrections and price labelling. When the ordered items were delivered, the computer centre printed out the price tags that employees then placed on the shelves. As a result, employees had a pretty good bit of manual labour to do. This, too, was a goal of the IT-supported merchandise management system: employees should spend less time with the products and more time with customers. Today, we have things like electronic price tags. The IT system constantly transmits the latest prices to the store shelves. 

Whole worlds appear to separate punch cards from electronic price tags. How did the change actually occur?


In the past, most store employees had nothing to do with data processing. Every store had cash registers and a computing centre. Few store employees knew much about them. In a "batch" process, product movements were documented overnight – and, every morning, long lists were driven from the computing centre to the departments. Employees there used the lists to take care of their assessments, statistics and orders. We changed the processes step by step and brought in client server technology to replace the big mainframes. Technical advances helped us as well: In 1986, the fastest computer was as big as a tennis court and cost more than $50 million. Today, a Sony PlayStation has four times the power and costs just $400. A revolution that you also see in our company: Today, all store employees have access to a PC in their departments and maybe even a tablet computer. They can use these devices to obtain all information around the clock. Everything is done online, using mobile devices, scanners, electronic shelf labels and all sorts of other technologies.  

A proprietary merchandise management system

Which technical milestones come to your mind?

The first major change was made in the 1980s with the introduction of online processing - that is, a move from punch cards towards data input using online forms, or masks. At the same time, data began to be stored in databases. The next milestone was the introduction of the PC: the first generation with two floppy-disk drives and 320 KB as well as black and white - you really ought to say black and green - monitors entered the marketplace.

And then came the great leap - a proprietary merchandise management system...

First, a system called "central merchandise management" (CMM) for Cash & Carry Germany was created on the basis of the latest technologies. Later, it became known as the "new merchandise management" (NMM) system and formed the foundation for today's international "METRO Merchandising System" (MMS), something that many people in the industry are acquainted with today. The system has a major strength: it was designed with the wholesale business in mind. But when we integrated the first retailing companies into it, we were also able to link them to our merchandise management system. This was a great accomplishment because retailers have a number of completely different needs from the wholesale industry.

Metro Pasta Shop Assistant Punch cards are now a thing of the past. The digital merchandise management system used today ensures that the wholesale stores of METRO Cash & Carry always have enough products on hand

Many challenges

For instance?

In the wholesale business, prices do not include value-added tax. But retail prices do. In addition, packaging sizes vary tremendously. It may sound trivial. But it is quite a technical challenge. 

But there have been many other challenges as well...

That's true. In 1998/99, we faced the challenge of technically integrating the European national organisations of MAKRO after the merger. Another issue was the international MMS roll-out. The merchandise management system was indeed designed specifically for METRO Cash & Carry Germany. But we have gradually implemented the system in countries like Poland, Russia and Turkey. And we have done so with other languages and other currencies while considering a number of different legal requirements and country-specific business processes as well as receiving support from local product ranges and prices. We have also worked on many different projects: we set up a data warehouse, which was the largest in European retailing at the time. We were the first to develop a supplier portal, and we introduced it at the CeBIT in 2006: a platform that we used to exchange data with our suppliers, including product sales figures and category information.

"It started out as a hobby"

You know the ins and outs of all processes and developments - did you study computer science?

No, I came in through the back door. I have a business degree, and I discovered my passion for information technology while serving in the German military. It started out as a hobby. It was the time of the Commodore 64, and I learned the programming languages Cobol, Fortran and Assembler at work.

How did you end up as an IT expert in merchandise management systems?

In the beginning, it was something like a chance occurrence that arose on the basis of my first projects. Little by little, it became a passion because merchandise management systems are the backbone of a retail company. When we were working to integrate other companies and countries, the central question for me was: how can we integrate the company in terms of merchandise management? I really enjoyed doing this. After all, such questions always are closely related to business. This was also a challenge for my work.

You have now been at the company for more than 25 years. What fascinates you about METRO Cash & Carry?

In the beginning, I was intrigued in particular by the company's size and internationality. At an early stage, I also had an opportunity to work on acquisitions and the integration of international companies as well as on other exciting issues. I was fortunate enough or had the ability to be involved in these projects and also had a chance to work at times with decision makers.

Mr Macho, thank you for talking with us.


Old Keyboard 
The Commodore 64: Silvester Macho learned programming on this early personal computer

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