Steady Supply

Retailers and manufacturers that have invested in smart supply-chain technology are dreaming of a green Christmas this year
Being able to review orders by simply querying Business Objects' business-intelligence system saves Atari execs from having to take requests to the IT department to write code for a report, a process that could take hours. That can make a big difference if Atari has a

tight deadline and wants to stage shipping so that all orders going to the farthest locations are sent first. Such capabilities came in handy last month, when Atari wanted to get a new release to retailers before the weekend; they're sure to come in handy again before the season's finished. "Before, I would've given all the distribution centers all the orders at once, and they would have had to manually figure out the shipping order," Curtis says. But that doesn't work well when the pressure is on.

To get to the point where Atari can share accurate information with all the manufacturers that actually produce its games, the company needs reliable data from the sources that sell its products, from Target to Best Buy, so it has linked electronically almost all of its retailers to its Oracle order-management system via EDI. The EDI order requests from retailers flow directly into the order-management system, where they're processed automatically and then passed on to the distribution centers, Atari CIO Glenn Magala says. When the system receives an alert from the distribution center that the products have shipped, the system then kicks off an advance shipping notice and an invoice.

In the spirit of holiday seasons now and to come, the combative relationship between retailers and manufacturers must become more collaborative. And it is, says Jeff Roster, Gartner's principal analyst for global industries, retail. "What you'll see is retailers continuing to focus on improving collaboration between themselves and manufacturers," Roster says. "Retailers are sharing point-of-sale and trend data, and manufacturers are sharing best practices and production schedules."

The mantra at electronics retailer Best Buy is "the first three-quarters of the year are for practice, and the last one is real," accounting for about 60% of its annual revenue, says Chuck Dow, director of logistics and transportation-support services. So it needed to coordinate activities between its 750 affiliated stores in North America, eight distribution centers, 14 delivery centers, two consolidation/deconsolidation centers, and two return centers. More recently, the company decided to increase its collaborative efforts, particularly with its 20 top vendors, which supply about 80% of its products.

"In preparation for the holidays, we now are working within our supply chain to create a collaborative transportation-management effort with many of our vendors," Dow says. In 2000, Best Buy implemented a back-office Oracle system, as well as transportation-management and supply-chain event-management systems from i2 Technologies Inc. Now it's completing implementation of an inventory-management system from Retek Inc. to improve collaboration between stores and headquarters for determining matters such as stock counts and replenishment. And it's working with its top vendors to establish a logistics effort that will take advantage of its customer-profile-modeling technology so specific products get shipped to a specific distribution center, based on regional buying factors, rather than a model in which all stores are sent the same number of the same products.

Already, Best Buy's software enables it to break down specific customer attributes and buying patterns by region, so that within its own organization Best Buy can redirect specific products to specific stores, "rather than trying a one-size-fits-all approach across the board as we did in the past," Dow says. By breaking down transactions at the store level, Best Buy can update inventories within 30 minutes.

Sears believes collaborative forecasting in conjunction with its manufacturers is the wave of the future. The retailer has already undertaken such an effort with its tire providers that has eliminated weeks of inventory from the system, and it's looking at doing the same in its appliance arena. Collaboration "allows us to get our product when we want it, allows manufacturers to get rid of inventory at the right time," and keeps customers happy, senior VP Pagonis says.

More and more customers will be happy, Gartner analyst Roster predicts. Holiday shoppers on the prowl for anything from Hokey Pokey Elmo to the Terminator III video game will benefit from all the efforts being made in the last few years to spruce up the supply chain. "You can just feel it. There's anticipation that this will be a better year," Roster says. "I don't expect to see any hiccups at all." --with Darrell Dunn

Illustration by Gordon Studer