Tender in Balance – Dagrofa Gets Network in Time

When a retail giant, like Dagrofa, sends a communication network in tender, both process and results must match the specific needs of the company. Read about Dagrofa’s tender process, experiences and results.

Retailing is undergoing severe digitalization these years, 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 continuously 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).

 

The retail giant has about 650 stores in their communication network, among the chain stores MENY, SPAR and KIWI. “At present, a lot is going on regarding payment solutions in retailing 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 make 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 jerks, and require a stable and flexible network on all locations, including remote areas.”

Merchants on a Journey

Dagrofa decided to request for a tender in order to get a new supplier agreement and needed special expertise in the process. “We chose Devoteam because of their deep insight in 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 was able to 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 big task which 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 right 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 scrupulous and manageable, which made it quite simple to make the necessary comparison, when potential suppliers replied.”

Balance in Staffing

In the next phase, Dagrofa went into 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 first 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 gives 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 economical aspect, which makes it more than a tabletop exercise. Of course, it is also about understanding people and to get them to cooperate in the best possible way, also in the long run.”