Last week I interviewed my old friend Tom Stewart, formerly editor-in-chief of Harvard Business Review, and currently Chief Marketing and Knowledge Officer of Booz and Co, for a piece in CPA Australia’s magazine InTheBlack. I’ll share the article, on the role of financial executives in business strategy, on this blog later in the year.
Tom mentioned the fact that Frito-Lay, the most profitable division of Pepsico, introduced hand-held computers for real-time inventory management back in 1989. I had a look and found a fascinating article from 1990 in the New York Times titled Frito-Lay’s Speedy Data Network, focusing on the information the system provided. It says:
Frito-Lay’s electronic network has already led to a sweeping change in the company’s competitive strategy. As the network developed, the company realized it could now shift from a national marketing strategy to one that emphasized local responses, so-called micro-marketing.
While most companies didn’t implement email until the mid-1990s, Frito-Lay was there ahead:
Another feature soon to be added: a form of electronic mail that will allow Mrs. Johnson to add her comments or questions to the reported data and then send it electronically to subordinates or superiors.
“This is wonderful,” Mrs. Johnson said to David B. Bugg, the operations and systems expert Frito-Lay had dispatched from Plano to train her to use the newest tool of her trade.
The details of the system are obviously dated, but the thrust of what they did over 20 years ago echoes what technology vendors are trying to sell today, using dedicated hand-held devices, or sometimes Blackberries, iPhones, or iPads.
Although the vision of electronic data entry from the sales force dated back to the late 1970’s, nearly a decade lapsed before Frito-Lay had the technology to do the job reliably: a hand-held computer developed with Fujitsu.
By June 1989, the company had equipped more than 10,000 sales representatives with the brick-sized computers at a cost of more than $40 million. The small computers are used to track inventories at every retail store and to enter orders. The devices are also connected in delivery trucks to mini-printers that prepare invoices telling the sales representative which items are to be restocked at each stop on their route, as well as the prices and promotional discounts if any.
At the end of the day, the hand-held computer is connected to an I.B.M. minicomputer at a Frito-Lay distribution center so that results can be sent to headquarters. Afterward, the central computer sends to the hand-held computers information on switches in pricing and promotions for use the next day. And each Monday, it gives sales representatives a review of the previous week’s results on their routes.
The hand-held computers were installed because they saved sales representatives an average of five hours a week in record-keeping, freeing them to make new sales calls, Mr. Feld said. They also reduced the number of accounting discrepancies between the sales force and headquarters, which had risen to $4 million annually.
As an additional benefit, Frito-Lay realized, data pouring into headquarters every 24 hours could be used to put senior management in much closer contact with the marketplace. So Mr. Feld’s group began work on a program that brought together the information from the hand-held computers and other data bases in simple, easily accessible packages.
The executive information system allows any of 40 or so senior executives to call up status reports by region or product — or the Dow Jones New Service — simply by touching the computer screen on their desks. By pressing an image of a book labeled “Briefing Book,” they can select maps, charts and other graphics providing more detailed information. Pressing an image of a green gremlin calls up information about competitors. The same terminal is used for electronic mail and maintaining a calendar.
So while the iPad and its ilk are marvellous devices, lets also remember that mobile computing for business is far from new.