Amazing device ... things to come tomorrow

Imagine walking up to a book in a book shop, picking up a book which you think is interesting and then a image is projected on the book page from a device which you are wearing giving the books Amazon rating, its synopsis, details on the author etc … or imagine a scenario when you are in a electronics shop where you pick up a camera and the same device projects the pricing comparison with  5 other retail chains on your hand !

Or imagine walking in a city and having a GPS map with restaurant recommendations projected on your hand…  

 Yes .. this is all possible and not just in the distant future but in the near future …

 Check out this latest device by MIT’s research group…

 http://www.ted.com/talks/pattie_maes_demos_the_sixth_sense.html

 I believe this is a game changing device as the most important part of the device is the price! The research group believes that this device can be part of your cell phone soon with minimum cost implications… 

Importance of choosing the right POS hardware

As you tend cutting costs, its important to also see that there are places which you should not compromise. In retail its the POS hardware which cannot be compromised. Buying a low cost PC based system as it has a lower upfront cost looks tempting, but remember it’s the POS which differentiates your store service, it’s the POS which makes or breaks your brand.

 Going for a PC based POS terminal means that the POS machine especially in a supermarket / hypermarket environment is not going to last more than 2-3 years (lucky if it lasts more than 2 years). Then your PC vendor cannot support the hardware beyond 2 years as every month there is a new version of the hardware which is released in this segment. The savings which you envisage when you buy a cheap PC based POS is nullified if you count that the POS has to be replaced every 3 years compared to a retail hardened POS terminal. Same goes for the peripherals. With the power prices going thru the roof you also need to ensure that the power consumption of your POS machine is minimal. Imagine if you have 100 stores and over 500 POS machines (assuming at least 5 per store), the cost saving if the POS terminal consumed 50% less power than a PC based machine.    

 A retail hardened POS also means better customer service as the probability of a till going down in peak billing time is reduced. Customers are frustrated when they see large checkout queues and POS machines not working in a retail store.

 Point is … don’t compromise buying inferior POS machines! 

Simple things matter...

Information technology is a tool and its upto a skilled business user to find out ways to effectively use it.  As with all retailers we have classified our SKU's into different assortment categories, one of the categories is "cores" which mean that these SKU's are the fast selling SKU's in our store and are marked as "category killers". We need to have 100% shelf replenishment for these SKU's and any short supply by the vendor means that we are loosing sales.

 Again vendor monitoring and fill rate monitoring in the west is a basic implementation where retailers like Wallmart, Albertsons etc would penalize suppliers if their order fill rates are below a acceptable %.  This concept again is relatively new in India as the vendors are just learning how to work with organized retailers. 

 This is proved by one of our senior category managers who has found a simple yet effective way to improve "fill rates" of the deliveries he gets from his prime vendors.  He got our team to add a “fill rate” analysis in the Goods Receipt Note which our system generates whenever we get materials from our vendor. This additional page has a summary which gets printed whenever the vendor supplies goods that do not confirm to the original purchase order quantity. The idea is to highlight to the vendor that because of his “short supply” we have lost precious sales as the SKU’s are our cores and its imperative that these SKU’s supplies are as per our order quantity. The summary also has a “lost sale” figure  to highlight to the vendor that his inefficiency has cost us sales.

This has immediately given the category head a way to make our vendors more sensitive to their commitments.  

Thus small things matter … J

More areas to cut...

In addition to the business areas to concentrate on cutting costs, the I.T infrastructure is also being optimized. We run enterprise applications using a distributed architecture. This was primarily designed due to India's unreliable infrastructure for connectivity. The result of this architecture was that we had too many servers. Having too many servers means spending precious money on maintaining servers, space, licensing, administration time etc. Currently we are working on ways to reduce our servers to shave off our maintenance costs. This means compromising on some facilities which our users currently enjoy. For example since our servers are de-centralized the location can function by itself in case the connectivity goes down between our main head office and the location but if I centralize the location server and if the connectivity goes down, the location cannot access our application disrupting our business. Even after having primary data links and secondary data links our connectivity is still unreliable. Most of the unreliability comes from the lack of consist ant power supply at our warehouse locations which are typically away from towns in the rural areas. 

A lot of effort is spent on trying to reduce our connectivity costs and maintain reliablity. Lets see how to do it ....

Surviving the down

Spent the evening at our flagship store yesterday (Saturday).  I do this frequently as it helps me to be in touch with our customers. Yesterday was a slow day, the lines at the tills were missing which is normally the case on weekends. The store manager attributed it to the mid week in the month which is normally a slow week. We had a good first week with a good weekend number. I guess we are lucky to have our core categories as food and grocery where the sales have not yet dropped drastically. People still have to eat, I guess ;) . Sales at lifestyle stores in India are reported to be down by 20-30%.

So the theme for the coming week in my cost optimization plan is ... designing and implementing a efficient flowthru inventory distribution at our stores. Currently we indent stock from the stores to the distribution center and then replenish using weekly delivery windows. The idea now is to eliminate the flab from the DC on stock. I have been part of similar projects in the past with international retailers but this would be my first Indian experience. We have a excellent business team which makes my life simpler. Since the process maturity in retail is still in the infant stage, there are very few business leaders in the merchandising area who are aware of the best pratices in such processes. By enabling Flow-thru also known as cross docking we plan to shave off a substiantial part of the inventory pile in our DC. 

Lest see how this goes ... .  will post the updates ..

Cost cutting .... the mantra everywhere ...

2009... tough year for us all. Global meltdown, dwindling sales, nose diving profits ... need to survive.  Focus on cost cutting ... cost optimization, elimination of excess .. the works. 

How can information systems help .. in such scenario? 

My personal thoughts ... it can help a retailer differentiate themselves from competition without any doubt in my mind. 

Here in our organization this is precisely what we are working on.

Trying to optimize supply chain, reducing excess inventories out of the system , improving customer experience at the POS, enabling tighter execution of operations all with the help of information technology. This would surely help us survive the tough times. More tomorrow on how we are doing this ... Any thoughts from anyone appreciated on how others do this.