Industry News for the week of August 1, 2006


Live from NRFtech
Wal-Mart CIO Address Supply Chain, RFID
Wal-Mart is opening five new distribution centers (DCs) by Spring 2007 and completing its Remix strategy within the next year, reports Rollin Ford, CIO, Wal-Mart, from the National Retail Federation leadership conference in Carlsbad, California.

With the five new DCs — in Wisconsin, Florida, Indiana, Wyoming and Pennsylvania — Wal-Mart will have 122 total DCs in the U.S. The company typically opens four to five DCs each year, note Ford, with a maximum of 12 opened in one year. "This is a huge undertaking," he notes, "considering the taxation on all your assets" when tackling a project this size.

The mega-retailer, with more than 6,600 stores worldwide, also is in the process of completing the rollout of a strategy termed Remix, in which the company is "moving from a category-based network to a velocity-based network," says Ford. This strategy pushes the fastest-moving, high-volume items out to the stores in one delivery. Remix is scheduled to be complete within the year, Ford says.

Wal-Mart's supply chain strategy focuses on the basic premise: "Right Product, Right Place, Right Time," Ford notes, which includes a long-term approach to logistics. "If a company's logistics network is not planned four to five years out, then they are behind and will find themselves chasing the business," he explains.

The retailer's focused supply chain efforts are facilitating an initiative called "Store of the Community," which is designed to distribute more unique product assortments to individual stores. "It is becoming more and more important to tailor assortments," Ford notes.

Ford also addressed Wal-Mart's RFID initiatives, noting that the company is maintaining its aggressive approach to implementation. He expects an additional 300 suppliers to be on board by January 2007, doubling the current supplier participation to more than 600. The company also phased out its Gen 1 RFID tags on June 30, 2006 and is re-focusing on Gen 2 tags which are able to be read in harsher environments.

Future goals for Wal-Mart are environment-oriented. The retailer plans to eventually achieve zero waste, be supplied by 100 percent sustainable energy and sell product that sustains the environment, according to Ford. Recently, for example, Wal-Mart has dramatically cut costs with new, more efficient store lighting. The retailer also is testing alternative fuels, such as hydrogen fuel cells, to run fork lifts.

These initiatives are common sense, Ford says, but "common sense in the retail industry is a phenomenon."


Circuit City Supports Customer Service
Circuit City, specialty retailer of consumer electronics with 630 stores, implements APT's software to support decisions in areas such as marketing, merchandising, operations and capital investment. The software is designed to help Circuit City test the impact of its ideas before implementation, with a goal of improving customer service.

Pep Boys Focuses on Improving Assortments
Pep Boys is using SPSS predictive analytics software to develop assortment planning models. SPSS allows Pep Boys to create forecast models for predicting future sales probability by part number and store to create store-specific assortments. The models are geared to provide better category management for parts and improved in-stocks.

The Beer Store Renews Managed Services
The Beer Store renews its relationship with NCR for continued managed service support. The agreement features support for The Beer Store's multi-vendor information technology environment that includes point-of-sale, server and networking equipment. The five-year contract renews the existing managed services agreement between the two companies and a services partnership that began more than 10 years ago.


Epicor Delivers Retail Integration
Epicor Software announces the availability of Epicor CRS Retail Integration, an integrated offering of its Epicor Enterprise Financials Suite and Epicor CRS Merchandising Suite. The integration is designed to enable retailers to receive invoices in the merchandising system and then match, process and pay the vendors directly from the financial system without any manual intervention. The result is streamlined operations, improved accuracy, and increased staff productivity.

Symbol Introduces LS3008
Symbol unveils the LS3008 handheld bar code scanner. The scanner helps retailers with back-end operations, warehouse workers with shipping and receiving products and associates can perform light assembly within a manufacturing environment. The scanner includes multi-lane rastering scan pattern to eliminate the need for exact aim and positioning. Users also can scan one dimensional bar codes, including those that are damaged, small or poorly printed.


Electrolux Enhance U.S. Service Business
With more than 55 million products sold globally each year, Electrolux implements a solution from Servigistics to plan and optimize the company's $30+ million worth of service parts inventory in the United States. The deployment is expected to enhance customer service levels and improve first-time fill rates. Servigistics will host the solution for Electrolux and integrate with its existing Legacy system.

Whirlpool Expands Longstanding Logistics Relationship
Whirlpool names Penkse Logstics as its lead logistics provider, responsible for managing and evaluating regional supply chain operations to ensure maximum efficiency, optimal visibility and increased cost savings. In addition, Whirlpool expands its existing contract with Penske Logistics for operational inbound and outbound supply chain needs, which means Penske will assume additional management and operational control over Whirlpool's private fleet and three regional distribution centers in Kent, Wash., Flower Mound, Texas, and Gouldsboro, Pa.


ATG and Accretive Commerce Join Forces
ATG and Accretive Commerce team up to offer online sellers direct-to-consumer options. Accretive Commerce will integrate ATG's eCommerce applications with Accretive's fulfillment and logistics solutions. The customized, integrated approach to both e-commerce and fulfillment is expected to speed time-to-market and increase overall company efficiency, while maintaining a fully functional online presence.

Thingmagic Partners with Sato America
ThingMagic partners with Sato America to certify the ThingMagic Mercur4e for use in the U.S. with Sato America's CL408e/CL412e RFID tabletop printers and M8485Se RFID OEM Print Engine. Sato plans expand into Europe and Asia.

Aeropostale July Sales Increase
Aeropostale announces that total net sales for the four-week period ending July 29, 2006 increased 13.1 percent to $94.9 million, compared to $83.9 million for the four-week period ending July 30, 2005. The company's comparable store sales decreased 1.9 percent for the month, versus a store sales decrease of 4.2 percent in the year-ago period.

Crocs Revenue Triples
Crocs revenue for the second quarter ending June 30, 2006 increases 231.8 percent to $85.6 million compared to revenues of $25.8 million for the second quarter ending June 30, 2005. Revenue for the six months, ending June 30, 2006, increased 255.6 percent to $130.5 million compared to revenues of $36.7 million for the six months ending June 30, 2005.


Technology Alone Is Not Enough for LP Success
by Tom O'Rourke, Vice President of Research and Information, Punch Integrated Communications

Like every area of retail, Loss Prevention is being transformed by a proliferation of new technologies. There are a host of exception-reporting software programs, digital video cameras that can be integrated to the POS, RFID solutions, digital audit tools and interfaces to ERP systems available for loss prevention.

While technology has given LP professionals increasingly sophisticated tools for fighting shrink, however, it's only a means to an end. It's the information produced by these technologies -- and the vastly improved speed and quality of data now available to LP managers -- that matters most.

To make real progress in lowering shrink and improving safety, retailers must capture relevant information, quickly get it in the hands of the people who can use it to make a difference (whether it's a vice president of loss prevention or a store manager), then put into place the necessary corrective actions.

Ultimately, of course, that involves changing the behavior of store associates. After all, all three types of shrink -- internal, external and error -- are directly affected by hourly associates. They are on the front lines to intervene with a shoplifter, report associate theft, decide for themselves not to steal or commit fraud and comply with policies and procedures. If you want to make a change, you must understand your associates' attitudes and behaviors, get a clear picture of what's going on in the stores, then use that information to implement change.

In order to do this, one of the nation's best-known retailers uses monthly audits that interface with the company's ERP system. These store-level audits measure the degree of each store's compliance with Key Performance Indicators (KPIs) and issues of regulatory compliance that closely influence shrink and safety. Key indicators must be relevant to the specific organization or environment, objectively measurable or quantifiable, applicable to everyone, actionable, and available in a regular, timely fashion. Indicators can include such things as program compliance, inventory shrink, incident rates and associate comprehension.

The audits are analyzed by a proprietary software system that produces metrics that analyze performance. The system also produces reports are sent out promptly each month, and managers at every level immediately understand which stores are underperforming, who needs help (and what kind) and how to put in place the necessary training and communications programs that are needed to improve associate behavior.

The retail industry is uniquely fast paced, and for retailers, the speed of delivering information, and taking corrective action, is essential for improvement. The sooner problems are diagnosed and addressed, the sooner the associates can begin improving behaviors.

In the past, retailers sometimes wouldn't discover problems until annual inventory, or when situations escalated enough to become really noticeable. Real, substantial improvements only take place with continual monitoring, fast and accurate delivery of information and rapid response.

Another well-known retailer uses an online safety certification program to drive continual improvement in each store. Audit information is gathered monthly from different parts of each store's operations, then analyzed to produce actionable reports. What makes this reporting unique is that, in the case of deficiencies, each store automatically receives a detailed checklist of corrective actions that need to be taken in order to improve their results moving forward.

Are you looking to get the most improvement out of the LP technologies in place in your stores? Then keep in mind these principles:

  • When justifying new LP technology purchases, consider carefully what you'll do with the information produced. It's great to have technology in place, but not if it's only used to produce reports that go unread and aren't actionable.
  • Remember that information is only good when it gets in the hands of the people who can do something with it. Deliver the information quickly, and to the people who need it the most in order to make improvements.
  • Continually measure, analyze and pinpoint how to improve performance. The most successful retailers have a very disciplined and systematic approach for doing this, and it is the key to continuous improvement in driving down shrink.

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