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Lead
An IT edge for retail
Having deployed ERP as the foundation of their IT set-ups,
organised retailers are exploring CRM, BI and RFID, writes Megha Banduni.
 Shopping
malls promise everything to the customer—a relaxed ambience, huge floor
space stacked with all the goods that your neighbourhood store offers and much
more. Behind the scenes, however, it’s another world, one where the organised
retail chain is rolling out IT systems in a frantic attempt to differentiate
itself from other organised retail companies and beat the neighbourhood store
in terms of depth and freshness of stock.
To date, it has always been the BFSI segment that has earned appreciation for
implementing cutting edge technology. Today much the same can be said about
the organised retail segment. Although this segment has been around for just
a few years most of these companies already have moved on from ERP to explore
the vistas of Supply Chain Management (SCM), Business Intelligence (BI), Customer
Relationship Management (CRM), Radio Frequency Identification (RFID) and innovative
models of Points of Sale (POS).
No more stock-outs
The thing that a retailer dreads the most is what’s known as a stock-out
situation where a product is in demand but isn’t available on the shelves.
This has ensured that SCM is a staple for the retail CIO. Besides monitoring
and tracking movement of goods, the technology helps in keeping track of the
shelf-life of products. It is also crucial as it helps forecast retail demand.
Realising the importance of real-time sales information, some companies are
spending extensively on redesigning their supply chain infrastructure.
Titan recently implemented SAP’s Advanced Planning and Optimisation (APO)
tool for SCM in 2005-06. When asked how the business benefitted after deploying
SAP APO, C S Ramesh, GM, IT, Titan explains, “Earlier, the demand planning
process involved manual collaborative planning with inputs from sales officers
on the field. The regional coordinators who represented the sales officers would
meet once a month and alter the demand before the final requirement would be
uploaded to SAP as stock transport requests.”
Moreover, the operations were dependent on a material resource planning system
that ran on SAP to execute downstream processes whereas capacity evaluation
and scheduling at the shop floor were carried out manually.
SAP APO has eliminated this dependence on shop floor planners to validate capacity
constraints arising out of indents and change schedules. The system now schedules
manufacturing plans based on finite capacity constraints related to vendors
or in-house resources and raw material availability to process production orders.
“Moreover with the help of SCM, the probabilities of achieving the targets
increases since constraints have already been considered before making the production
and dispatching schedules. Resource allocation is also based on evaluation of
various cost parameters for maximising profit,” he adds.
Smart retail
Understanding purchase patterns and coming out with displays
and products that get customers to buy is the driver behind the deployment of
BI tools.
"BI is an important tool for maximising invoices, replacing stock
and avoiding delays. It allows a first-in, first-out
procedure that prevents a stock or order from becoming out-dated"
- S Prabhakaran GM, IT, ColorPlus |
S Prabhakaran, GM, IT, ColorPlus comments: “BI is an
important tool for maximising invoices, replacing stock and avoiding delays.
It allows a first-in, first-out procedure that prevents a stock or order from
becoming out-dated. We use MIS to analyse data such as what was the top sale,
what was the lowest sale, and slow-moving and fast-moving items.”
Similarly Globus has Retail IDEAS (RI) running on Intel from JDA, a BI tool
for its core application MMS. Manoj Patel, Manager, IT, Globus points out, “BI
provides all the information about transactions, sales, production and so on
to the management at one shot. We have RI as our BI tool that runs on an Intel
server running Windows. This application talks to our transaction server, an
AS/400, creating templates to provide the information that’s required.”
Before you can run a BI tool to generate reports you must
first create data stores. Storage systems therefore become a key part of any
retail IT set-up. Retail companies take backup seriously.
For instance, Globus makes use of LTO (Linear Tape Open) tape
drives for backup. The company has implemented its first phase of DR where it
stores backup tapes off-site. A complete cycle of day, month and year is maintained.
At ColorPlus two types of backups are taken. One is tape backup and the other
is off-site backup that started in 2003. The mode of taking backup is disk-to-disk.
They use Windows NT OS for all backups.
| ERP: For its jewellery business, Titan implemented
Oracle-ERP in July 2006 integrating order processing management, purchase
order, inventory management, finance, and lot-costing.
For the Titan brand business, SAP was implemented
in 1999. It has modules such as sales, marketing, production, distribution,
investment, finance and costing.
Other IT details: Titan has an IT team of
50. It has deployed IBMPower 5 servers and has heterogeneous SAP Server
platforms—Digital Alpha, HP Itanium and IBMPower 5. Interoperability
has been addressed successfully. The company has a management reporting tool that automates
and sends daily MIS reports to the top management regarding sales, production
inventory and debtors.
Connectivity: Titan has a campus LAN at
each of its manufacturing locations, regional offices and the head office.
Fibre point-to-point connectivity between the corporate HQ and significant
manufacturing locations exists. IP VPN connectivity along with VSAT for
backup links regional offices and corporate or manufacturing locations.
The bandwidth used is 10 Mbps.
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Wireless tags
The organised retail sector has been experimenting with technology. RFID is
the most promising of the crop of technologies being evaluated at present. Having
caught the attention of retail giants worldwide, this technology is now being
piloted in India too. Many Indian retailers are in the process of deploying
RFID technology as it helps in reducing stock-outs and track customer preferences.
Cost of the tags remains the biggest barrier in RFID adoption.
Says Meheriar Patel, DGM and Head, IT, Globus: “Large
retailers are looking at RFID to tag their items but its costs remain on the
higher side. It is a well-integrated technology, like you have security features
and lot of other things. We want to explore this technology in the areas other
than standard merchandise identification functions. We are looking to deploy
RFID in CRM where we plan to enhance the shopping experience.”
Globus plans to add personalised services for its customers through embedding
RFID tags on their loyalty cards when they come to shop.
Agrees Prabhakaran, “RFID is expensive. As of now, we have a small Stock
Keeping Unit (SKU) and production is not huge. For now our bundle-tracking system
suffices.” ColorPlus uses a bundle-tracking system based on bar codes.
The company deployed the system six months ago. This technology helps in line-balancing
(collating different operations like collar-making and body-making of a shirt)
and shade-balancing (blending various shades to make a uniform one). It also
reduces manual intervention and helps bring down costs for the company. The
company plans to deploy RFID but only at the production level.
Titan is also planning to implement RFID into the business
to facilitate tracking of finished goods of watches and jewellery.
| As all of its showrooms and outlets are connected
using fibre optic cable, ERP was a must-have for ColorPlus. What is remarkable
about the leading apparel company’s deployment is that almost all its
IT applications have been developed in-house.
ERP: The system is called ColorSure ERP
and was deployed four years back. An SQL Server is at the back-end and
there’s a Visual Basic .NET at the front-end. The system encompasses
two processes—fabric procurement and garment retailing. ColorPlus
has 3,000 to 4,000 garments stocked at 51 showrooms and 250 outlets. ERP
takes care of merchandising, marketing, order management, warehousing,
production, PoS and MIS. Currently it has 80 people on the ERP system.
Hardware: Three IBM x-Series servers have
been deployed. One is the production server (IBM x225) that is the central
server for all locations. The second is a development server (IBM 5600)
and a mail server (IBM 5600).
D-Link and Cisco switches and routers are used.
The network linking all stores and showrooms to the head office consists
of fibre optic cables. All systems are connected to the production server.
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ERP remains top priority
Nearly all retail companies whether big or small have an
ERP solution in place because of the benefits that it brings to the table. An
ERP system integrates departments so that they can work in tandem. As each department
has a different way of functioning, the work processes differ and delays occur
on account of poor data integration. With an ERP system in place, these processes
are optimised and planning improves.
Take the example of Globus. In 1999, Globus deployed a Merchandising Management
System-MMS (AS/400) from JDA.
Meheriar Patel informs, “MMS is our back-end system that takes care of
all the retail SKUs, sales and distribution and warehouse management transactions.
It’s a complete transaction system that acts like an ERP. We have two ERP
systems; MMS and JDE. Presently we don’t have SCM as a separate module.
It is part of MMS. We also have some part of warehouse management integrated
into this application.”
Last year, the company deployed JDE from Oracle as an extension to their ERP
tool. All financial transactions are done here. Stores, and accountants use
JDE for finance. Part of sales and distribution is also done in JDE.
Titan deployed Oracle-ERP in July 2005. This particular ERP deployment was for
their jewellery line Tanishq. All the complex operations of Tanishq are mapped
onto the functionality of Oracle-ERP.
“The challenge included the specific requirement of jewellery business
to be mapped to the functionality of Oracle-ERP. Ours is a unique set-up as
we have been able to optimise two ERP systems i.e. SAP ERP for Titan implemented
in 1999 and Oracle-ERP for Tanishq,” says Ramesh.
At Titan the deployment of ERP has brought in visibility
of stocks spread across various locations of the company right from finished
goods to 60 showrooms, which has helped optimise inventory. “The lot-costing
module, which is part of the Oracle-ERP solution, has helped assess the actual
costing of every item enabling us to compute profitability,” he adds.
ColorPlus uses ERP broadly for two processes—fabric
procurement and garment retailing. According to Prabhakaran, “Of our total
production, 98 percent is for the domestic market. ERP takes care of all the
departments from top to bottom. It connects merchandising process, marketing
process, order management system, warehouse system, production, PoS and MIS.
ERP helps us to know which place what is lying, value of goods, quantity of
material, and availability of material.”
| The company operates 15 stores in India, four factory
outlets and four warehouses. It deployed ERP back in 1999. At that point
it deployed a Merchandising Management System-MMS (AS/400) that takes care
of all retail SKUs (Stock Keeping Units), sales and distribution and warehouse
management transactions. It’s a complete transaction system that acts
like an ERP system. The SCM at Globus is part of this system. It also has
warehouse management as part of this application. As of now, 50 concurrent
users are on the MMS system.
In 2005, the company deployed PeopleSoft (JDE)
from Oracle on three Intel servers. All financial transactions are conducted
on the PeopleSoft system. Stores and accounts use JDE for finance while
some of the sales and distribution is also done in this system which is
being used by 25 people.
During 2005, the company also deployed WinDSS (Point-of-Sales
system) from JDA on Windows-Intel servers. Information about cash, mode
of payment etc is scanned at all the stores and goes to the local server
from where it goes to the main MMS server. Users number 75.
FMS is an in-house Fabric Management System that
was deployed three years back. Earlier the company was using a FoxPro-based
system. FMS takes care of fabric, import tracking etc.
Connectivity: Globus has 1 Mbps of bandwidth
and all stores are connected to the HO using 64 Kbps links. The store
at Bandra, Mumbai is connected using a point-to-point leased line. Moreover,
Globus has a data centre where all its systems are stored. They have rack-mounted
servers, switches and routers there. All the servers are connected using
Gigabit switching. A SonicWALL 4060 firewall was recently deployed to
secure the data centre.
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Retail future
With ERP, SCM, storage and BI as their top IT requirements, retailers are planning
to deploy additional IT tools, especially CRM.
Globus is expanding the scope of its IT set-up. “Presently our SCM system
is an ERP module rather than a standalone solution. We intend to have a full-fledged
SCM system in place because our needs are growing and we want to reduce the
time taken before a product reaches the end-user. We also want to automate everything.
We are also looking at an e-commerce initiative and that will come up shortly,”
adds Meheriar Patel. Further the company is looking at a CRM solution that will
blend with its merchandising and PoS.
ColorPlus is also planning to invest in CRM. However Prabhakaran feels that
the current in-house PoS gives them all the information that a CRM system can.
That said, he feels, “A full-fledged CRM will help us ensure accuracy in
getting data such as age group using colour, design, customer preferences; why
a particular group or individual did not buy or did buy etc.”
Another technology that ColorPlus plans to deploy is Never
Out-of-Stock (NOS)—another name for SCM. NOS will be a pert of its existing
ERP set-up. The technology will help identify stock status and maintain minimum
stock levels of key garments in showrooms to increase retail turns without maintaining
unnecessary stock. Also, the company feels that NOS will help it reduce the
warehousing cost by disseminating information regarding stock availability and
balance of stock at its factories in Delhi, Chennai and Mumbai. Currently the
company has 125 nodes, and it plans to beef up its server and add nodes.
Titan has a host of servers supporting its line of business applications and
it wants to rationalise the same. The company also plans to put a BI system
in place to facilitate reporting and business analytics.
Organised retail is investing in IT with a vengeance. We haven’t seen this
kind of interest since the glory days of BFSI investments when large private
banks went whole hog for core banking. BI and CRM are the most popular technologies
that will be deployed in 2007.
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