Best Buy Pushes IT Systems To Improve Its Global Supply Chain

Best Buy Co. Inc. is revamping processes and IT systems to improve the flow of goods through its Asian purchasing office and import more products directly to its U.S. distribution centers and stores. The initiative follows a recent IT overhaul to replace Best Buy's legacy mainframes with Unix systems and install new enterprise applications.

The initiatives should go a long way toward improving supply-chain visibility, a top concern for Best Buy and many other retailers. Over the years, Best Buy had accumulated a number of disparate systems that included mainframes, Excel spreadsheets, and other aging technologies. For example, Best Buy used AS/400-based mainframe systems and had more than 13 tracking systems to process orders.

In the past three years Best Buy has replaced its mainframes with Unix systems to support its more than 780 stores in the U.S. and Canada, according to Chuck Dow, director of logistics at Best Buy. It also integrated with its core IT systems Retek Inc.'s transaction-processing system, Oracle's financial package, and i2 Technologies Inc.'s demand planning, replenishment planning, transportation management, and supply-chain management software.

Each of these plays an essential part in achieving end-to-end supply chain visibility at Best Buy, Dow says. For example, the Retek system lets Best Buy process purchase orders and manage inventory. The Oracle financial system tracks all of Best Buy's finances, and i2 Technologies' software supports inbound freight operations, carrier load rating, network analysis, carrier bids, and optimization of inbound freight movement.

Best Buy is now fine-tuning its IT systems and processes to improve visibility of its international supply chain. "We need to make sure that we can track all of our EDI documents from international carriers, transport authorities, and customs compliance," Dow says.

The retailer is working with its global-sourcing and direct-import group, which has a purchasing office in Asia, to develop imports based on feedback from Best Buy's customers. In the past, Best Buy relied on the "cookie-cutter" approach, where the same amount and the same type of product was sent to all of its stores, Dow says. That no longer works because the demographics and the demand is different for each location, he says. Increased visibility into the type of inventory Best Buy carries and sells has helped the retailer create a more optimized assortment for each store, Dow says.

Best Buy's direct-import strategy involves sharing this demographic and forecasting information with suppliers overseas and working with them to develop products and track them through various channels. The Retek purchase-order and inventory system will help Best Buy more closely monitor its assortment and replenishment processes so it can reroute products to prevent stock-outs or take advantage of a spike in demand. "It's all about collaboration between the different pieces of software that we've implemented over the last four to five years," Dow says.

The processes of booking container space, receiving goods at ports, and delivering products to the consolidation center will be tracked by i2 Technologies' supply-chain management software, which is the "overarching umbrella layer that gives everyone in the company visibility to the product," Dow says.

I2 Technologies' supply-chain management international component will replace Best Buy's interim visibility software from BridgePoint Inc. in September, according to Dow. "The supply-chain event-management system now tracks our orders, shipments, and inventory positions down to the [distribution center] level," Dow says. "Our next phase is to achieve this same visibility down to the store and SKU level."