Squeezing More Value From Data

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Squeezing More Value From Data

By John Foley
Issue date: Dec. 9, 1996

There's an analog to Wal-Mart's size and power in the retail industry, and that's the company's huge influence in the database industry. With more than 7 terabytes of data on two fast-growing NCR systems, Wal-Mart manages one of the world's largest data warehouses. Now the retailer is about to squeeze even more value from those systems with a new data-mining application that will help it replace inventories in stores.

Wal-Mart's formula for suc cess--getting the right product on the appropriate shelf at the lowest price--owes much to the company's multimillion-dollar investment in data warehousing. "Wal-Mart can be more detailed than most of its competitors on what's going on by product, by store, by day--and act on it," says Richard Winter, a database consultant in Boston. "That's a tremendously powerful thing."

Besides the two NCR Teradata databases, which handle most decision-support applications, Wal-Mart has another 6 terabytes of data on IBM and Hitachi mainframes and 500 Gbytes on hundreds of servers running Informix's OnLine Dynamic Server database. Wal-Mart developed its own middleware to manage system priorities. "We drive the warehouse right to 100% utilization all of the time," says Rick Dalzell, Wal-Mart VP of application development.

The systems house data on point of sale, inventory, products in transit, market statistics, customer demographics, finance, product returns, and supplier performance. The data is used for three bro ad areas of decision support: analyzing trends, managing inventory, and understanding customers. What emerges are "personality traits" for each of Wal-Mart's 3,000 or so outlets, which Wal-Mart managers use to determine product mix and presentation for each store.

Data mining is next. Wal-Mart is beginning to roll out a demand-forecasting application, based on neural networking software and a 4,000-processor parallel computer from NeoVista Solutions Inc. in Cupertino, Calif. The application "looks at individual items for individual stores to decide the seasonal sales profile" of each item, Dalzell says. The NeoVista system keeps a year's worth of data on the sales of 100,000 products and predicts which items will be needed in each store.

Over the next six months, Wal-Mart plans to expand its use of market-basket analysis. Data will be collected on items that comprise a shopper's total purchase so that the company can analyze relationships and patterns in customer purchases. Dalzell says this collectio n of data could eventually triple the size of Wal-Mart's data warehouse.

In the spring, Wal-Mart will make its data warehouse available over the Web to its store managers and suppliers. Today, 3,500 users make 10,000 database queries a day. By the end of 1997, says Dalzell, those numbers could double.

"What Wal-Mart is doing is letting an army of people use the database to make tactical decisions," says consultant Winter. "The cumulative impact is immense."

See next related story: " Uncertainty: A Thing Of The Past? " or return to " Wal-Mart Ups The Pace "

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