Taking the guesswork out of inventory control

Business intelligence may still be expensive and hard to implement, but retailers are seeing its value

Retail companies could improve financial and supply-chain planning, and thus increase profits, by using business intelligence systems, according to speakers and some attendees at the National Retail Federation 2007 conference, held in New York last week.

Although IT officials from some retailers said business intelligence (BI) systems remain too expensive and too hard to implement for their operations, others maintained that the benefits would likely outweigh the costs.

Specialty apparel retailer Tween Brands is in the process of replacing an analytics system that used Microsoft Excel spreadsheets and mainframe applications with an integrated system made up of products from multiple vendors, said Roy Deegan, vice president of IT solutions delivery and process engineering at the New Albany, Ohio-based retailer.

The new analytics system includes an Oracle 10g database, application server and portal; Oracle Retail Price Management software; and merchandising intelligence applications from SAS Institute, all running on IBM p595 Unix servers, he said.

The project began in 2004, when the retailer launched a plan to upgrade its BI capabilities as part of an effort to boost efficiency, cut costs and create a better buying experience for customers, Deegan explained. The plan called for Tween to improve inventory planning and create “one version of the truth” for the company’s financial and inventory analysts.

“When it came to the technology we started with a clean sheet of paper,” said Deegan.

The Oracle Retail Price application went live last August. The company began rolling out the SAS software last spring, and that project is on-going, he said.

Deegan said its too early to project a specific return on investment, but Tween does expect that the rollout will lead to improved profit margins.

Kevin Stack, vice president and CIO at Jo-Ann Stores, a retailer of crafting, decorating and sewing products, said his firm is holding off implementing a BI system because of the high costs and the need for extensive manpower to implement it.

The Hudson, Ohio-based company is interested in evaluating new decision-support software from SAP, the supplier of its ERP software. However, any implementation of the software is at least three years away, he said.

“Before we can do it, and provide business value, we must make sure that the business will have [the analytical methods] infused into their processes,” Stack said.

“The people in the business need to understand what to do with the data and how the data impacts on other parts of the organisation.”

Keen Footwear, a Portland-based shoe designer and distributor, announced at the conference that it plans to roll out ERP software, and a BI application and dashboard from Lawson Software.

The US$1 million (NZ$1.43 million) project, slated to go live in June, will help Keen better share data and collaborate with retailers that sell its products, to ensure their stores have the right mix of footwear, said Joe Zitomer, Keen’s director of operations.

The company has been growing rapidly, and its legacy system and processes couldn’t handle new, more sophisticated planning requirements, he said.

The old system was a heavily customised application from LogOn Business Systems, a New York-based maker of apparel software. Managing inventory, Zitomer said, was becoming “guesswork”.

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