Planning Aggressive Growth
A total enterprise system is supporting aggressive growth by providing greater insight into customer data at the India-based multi-format Pantaloon Retail.
"The technology will enable us to see what products are selling where, which will help us merchandise more effectively," says Chinar Deshpande, CIO for Pantaloon. "Our customer base is incredibly diverse and every store has its own nuances." The fully integrated system will provide a more transparent value chain.
"The primary business need came from the company's great success in recent years," says Deshpande. "Aggressive growth, both organic and inorganic, including acquisitions and building stores across India, has drastically increased the complexity of the business. We needed an enterprise system that we could depend on."
After a four-month evaluation process, Pantaloon chose to go with SAP merchandise applications and integrate the system throughout the enterprise. In addition to operating a variety of retail stores, the company also operates shopping malls, an asset management company and an investment company. In addition to requiring a more robust system that would handle future business growth, Pantaloon also was looking for a solution that would allow it to become less dependent on internal resources.
"The business was vulnerable because most of our technology was developed in-house, and few employees were familiar with the architecture of the systems," says Deshpande. "We also wanted to develop a business relationship with a provider with proven expertise and industry best practices that would go along with the solution."
It was important that customization of the technology was minimized. And because of careful planning and testing processes, no major changes were made to the system before rollout.
Flexible Systems
The company's retail divisions were scheduled to go live on the SAP merchandise management and procurement systems December 1, 2005. The initial rollout also included SAP's supply chain and warehouse management applications, which will assist with managing the replenishment of warehouse and store inventories to meet projected customer needs while maintaining inventory requirements.
With increased visibility into the supply chain and a common information framework that supports communication and collaboration, the retailer is looking forward to being able to sense and respond more quickly to inventory changes and better adapt to meet customer demands.
Information transparency and real-time business intelligence can help reduce inventory levels, resulting in lower overall costs. In addition, Pantaloon also will be going live on SAP's ERP financials and back office applications. The financial tools will enable the retailer to quickly evaluate and respond to changing business conditions and help streamline process scheduling, workflow and collaboration. They also will provide broader support of accounting standards, federal regulations and improved administration of internal controls.
After the December 1 implementation, the next phase of rollout will include SAP human resources and payroll applications, and advanced planning, balance scorecard and management dashboard capabilities.
Because of the scale of this project, change management is being taken very seriously at the company, notes Deshpande. Strategies include appointing a mythological character as a project mascot, regular communication via newsletters and in-house radio. "The company is eagerly awaiting the new technology, in part because of the excitement that has been created," he says.
Planning for Growth
While the company's yearly sales figures will be approximately $500 million for 2005, Pantaloon anticipates $4 billion in sales by 2008. "The framework for this tremendous growth has already been set," says Deshpande. "Today we operate 2.5 million square feet of retail space. We have already signed up to 10 million square feet throughout India, which will be operational by December 2008."
Today the company operates 16 Pantaloon stores, 21 Big Bazaar hypermarkets, 33 Food Bazaar grocery stores and three malls across India. "It has been a remarkable journey for Pantaloon as it's evolved from a manufacturer to a completely integrated player controlling the entire value chain," says Deshpande.
The company also operates six factories to help sustain its private label business, which comprises approximately 70 to 80 percent of merchandise in stores under the Pantaloon banner.
In addition to operating other retail formats from value clothing retail stores to furniture and home improvement stores, Pantaloon also launched an asset management company, with a primary focus on acquiring smaller companies and developing private labels and an investment company, which focuses on constructing properties for retail, large malls and convention centers.