ERP Vendors Battle For Retailers

I.T. purchases expected to increase as retailers seek more data on what customers want in order to reduce costs and increase loyalty

Laurie Sullivan, Contributor

June 11, 2005

3 Min Read

SAP for Retail will tie together sales data and inventory information across the 140 Fossil boutique stores and outlets worldwide that sell jeans, shirts, belts, and other accessories, with its wholesale and E-commerce businesses. "Many retailers that also have a wholesale business keep inventory in separate distribution centers, but ours is shared by retail, wholesale, and E-commerce," Jurica says. "SAP Retail and SAP Wholesale had the cleanest out-of-box integration without having to build custom code."

Success is determined by a retailer's ability to have products on store shelves as customers require them, says Andrew McGlasson, industry director for retail and third-party logistics at ERP vendor SSA Global Technologies Inc., which sells planning, retail supply management, and inventory and replenishment applications to the retail industry. "The challenge for retailers is to balance supply with demand across multiple distribution sites and geographies," he says.

Visibility into demand is a key ingredient for Wawa, which this month embarks on a two-year IT transformation that will affect nearly all company operations and cost as much as $30 million. SAP for Retail will replace several applications in place for eight years or longer, including inventory systems from Computouch, Coretech, and Radiant Systems.

Changes will enable Wawa to better manage store-level forecasting, replenishment, point-of-sale data, procurement processes, and back-office functions. "We start blueprinting the financial models this month," says Neil McCarthy, Wawa's VP and CIO. "We'll start running tests for the in-store applications at the end of summer 2006, and have the systems running by the beginning of 2007."

Wawa intends to track pricing, universal product codes, and other information on merchandise through point-of-sale software for the up to 5,000 items stocked on shelves at Wawa's 540 stores from New Jersey to Virginia. Either Oracle or SAP would have worked for financial applications, McCarthy says, but the retailer's return on investment won't come from financial apps. It will come from merchandising systems such as price optimization, profitability analysis, and the applications that can help stores correctly price and determine quantity, he explains. The company manufactures and self-distributes between 60% and 70% of the items it sells.

Today, when customers come into a Wawa store to buy something, a clerk scans it, and Wawa's point-of-sale platform tracks the items sold in a file format. For example, when a sandwich is sold, the information is sent both to an inventory and an accounting system that monitor sales. There are different data repositories for each application. SAP for Retail will give Wawa one main repository of information from which operations, purchasing, and accounting can draw.

This more-sophisticated technology platform will let Wawa transition toward a scan-based trading model, if it chooses, where it won't record other suppliers' products on its financial inventory books until the items are scanned at the register. For example, Frito-Lay would own the corn chips that sit on the retailer's shelves until a customer takes the product to the register and the clerk scans the UPC code to indicate a purchase has been made.

"By upgrading our technology platform, we can take advantage of different business models such as scan-based trading that can help us improve operations," McCarthy says, adding that he's interested in exploring SAP's ability to manage data collected by radio-frequency identification infrastructures. Wawa is considering an internally developed RFID project to track replenishment for items it manufactures, he says. All told, McCarthy says he's optimistic that the investments made in retail-specific SAP applications will help Wawa ring up sales.

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