Customer Solution Case Study
/ / Retail Major’s B2B Portal Brings Simplicity, Collaboration to Supply Chain Management
Overview
Country or Region: India
Industry: Retail
Customer Profile
Headquartered in Mumbai, Shoppers Stop, HyperCity and Crossword have retail stores across India. Together, they have more than 4,000 employees on the front end and backend.
Business Situation
Retailing more than a million types of products and more than 2,000 suppliers, Shoppers Stop required an integrated supply chain management solution that could cater to all retail formats, products and vendors.
Solution
Microsoft® Office SharePoint® Server 2007 helped in building an extensible, flexible, collaborative, highly customizable and secure platform that was easy to use and offered rich capabilities.
Benefits
n High ROI
n Integrated solution for all formats
n Reduced turnaround time for replenishment
n Contextual Collaboration
n Extensible, Scalable, Flexible, Customizable / “Our basic criterion for choosing Microsoft technologies was the lower total cost of ownership (TCO), as compared to technologies such as J2EE.”
Krishnamurthy Hegde, customer care associate and GM – Web solutions, solutions and technology team, Shoppers Stop Limited
Shoppers Stop Limited is among the largest retailers in India. Along with its sister brands and sub-brands, including HyperCity, Crossword, and Brio, Shoppers Stop deals in about 60 per cent of the consumer’s shopping basket. Accordingly, it retails more than one million types of products through its various retail formats and deals with about 2,000 partners both in India and overseas. For Shoppers Stop, supply chain management was becoming a big roadblock in conducting business efficiently. The company has now deployed a B2B portal, called as Spandhan B2B—based on Microsoft® Office SharePoint® Server 2007, to automate its backend processes and extend some of Shoppers Stop’s own processes to its partners. This has led to uniformity, consistency, clarity in communication and considerable time savings in processes related to the supply chain.
Situation
Shoppers Stop is a large fashion and lifestyle retail chain in India. Founded in 1991 by the K. Raheja Corp. group of companies, Shoppers Stop now includes Crossword, a retail chain that sells books, CDs and DVDs, toys and so on, and several other sub-brands, such as Brio and Desi Café. The promoter’s group also owns HyperCity, a hypermarket, and its sub-brands, such as GourmetCity and HyperCity Argos.
For large retail formats, the supply chain is critical to success. Shoppers Stop and their sister retail formats engage with 2000+ suppliers comprising brand owners, manufacturers, distributors, dealers, traders, and importers, across India and the globe. These suppliers supply a wide range of merchandise to the retail business formats, from food items to international brand fashion accessories. The suppliers are engaged in multiple transaction models such as Outright, Sale or Return (SOR), Consignment and Concessionaire, which created a complex supply chain scenario to manage.
This led to major supply chain challenges, including lack of supply chain visibility, high cost of supply chain operation, high order to cash turnaround time, poor replenishments, issues in tracking/managing requests from suppliers, lack of standard processes across retail formats and a failed legacy supply chain application, which provided sub-normal support. All of this created challenges to manage the supply chain and handle partner relations.
The heterogeneity involved made managing suppliers, invoices and inventory a mammoth task. Diverse formats means diverse products and diverse suppliers; different types of products require different procurement and inventory management processes, and even different payment models.
Moreover, prior to the implementation, each supplier had their own invoice format, which complicated matters further. Situations such as inaccurate invoices or discrepancies between what was mentioned in the purchase order and what was actually delivered to the distribution center were not unheard of.
Another supply-chain challenge came in the form of inventory management. Updating the host of suppliers about their sales and stock status on a weekly basis required employees to pull data from Shoppers Stop’s internal ERP systems, collate it and send it. Often, by the time the supplier got the data, it would be outdated, since the data changed on a daily or even hourly basis.
Communication between suppliers and employees was another task that left much to be desired. While employees had to field calls from suppliers all day long, there were times when not everybody involved in the process could be kept informed on a regular basis. Similarly, new suppliers or new employees at suppliers’ end found it difficult to know whom to contact for which issue.
Shoppers Stop had a legacy supply chain solution earlier, but it failed to support supply chain management effectively. The data provided by it was static and the solution could not validate this data; it covered only a few aspects of the supply chain; and there were issues related to extensibility and customization.
“We required a unified supply chain platform to support all our retail formats and the entire, heterogeneous chain of suppliers and products,” says Krishnamurthy Hegde, customer care associate and GM – Web solutions, solutions and technology team, Shoppers Stop Ltd.
Solution
Shoppers Stop took on this challenge in April 2007 and successfully delivered a high end unified B2B supply chain solutions platform, which had the capabilities to address supplier concerns and help build and nurture supplier relations. The solution stack was named Spandhan B2B.
The platform serves all retail formats and provides complete end-to-end supply chain visibility, EDI on various supply chain transactions, and synchronized product information. It provides a new framework for contextual collaboration and communication, extends supply chain processes to partners, and helps maintain high level of supplier relations.
“Before embarking on this initiative, we have experienced the pains of managing so many suppliers with such diverse and complex challenges. We discussed and elicited and analysed requirements from key suppliers, all sections of internal business users and senior management and arrived at the conclusion that no single packaged application would adequately serve our requirements. We, therefore, decided to custom develop the solutions stacks as per the end user requirements. We have worked through conceptualization, securing stakeholder buy-ins, solution architecture, design, project management, training and implementation,” says Hegde, stating that the actual development and testing was outsourced to a software services provider.
The company decided to base the platform on Microsoft® Office SharePoint® Server 2007, in addition to SQL Server and the .NET framework for development and customization.
“Our basic criterion for choosing Microsoft technologies for the custom development was the lower total cost of ownership (TCO), as compared to technologies such as J2EE,” states Hegde. He explains that post the introduction of .NET, the development cost of enterprise grade applications on Microsoft technologies entail a much lower TCO than using Java-based technologies. “In .NET, a developer would take about four hours to develop a function; while in J2EE, the same function would take two days to develop.”
Therefore, including the licensing, hardware, and custom development cost, the solution cost a fraction of what it would have cost using Java based technologies.
Hegde points out that many open source applications in the market today are available free of cost; however, support for such functionality comes at a steep cost.
The solution took about seven months to develop and was completed by October 2007. After a pilot run and incorporation of feedback for two months, it was rolled out to suppliers in January 2008.
More than 500 partners are using the solution currently, and another 600 will be added in the next two months.
Today, procurement in excess of US$ 100 million is managed on the platform and is expected to grow to US$ 300 million within the next year.
Spandhan B2B is an integrated platform for end-to-end supply chain management. Various modules enable suppliers to register as partners, manage their profile, update product information, view sales and stock information, provide advanced shipping notice, validate e-invoice, view all transaction reports, and communicate with Shoppers Stop and other formats on various issues.
“We have standardized and extended our processes to suppliers through this solution,” says Hegde. “All supply chain information is available at a central location, leading to a sync between vendors and employees,” he adds.
Spandhan B2B platform provides bi-directional data flow and enables suppliers to proactively participate in the end-to-end standardized supply chain processes. Suppliers can now update their profiles, provide/update product information, make range presentation, provide stock information, get visibility on demand planning process, provide advanced shipping note, provide invoices online, etc.
The platform connects to various primary data sources of the three retail formats (Shoppers Stop, Crossword and HyperCity), such as multiple editions of demand chain management applications, financial management application and Active Directory and extracts supplier basic information, various transaction information, such as Purchase Order, Receipts, Sales, Stock, Quantity Difference Note (QDN), Return To Vendor (RTV), Payment, Bill Matching and Ledger and provides reports and charts in a user friendly formats.
Spandhan B2B also provides a standardized communication and collaboration framework to post and respond to requests, suggestions and feedback.
The support centre module enables the central merchandise team to manage and govern the supply chain process, manage and track issues and manage users.
The platform is characterized by intuitive and consistent usability. Usability is regarded as the most important capability of all. Most suppliers have found a high degree of comfort level in using the supply chain platform within a few hours of their first visit. Shoppers Stop ensured that the usability was made simple, consistent, business friendly, intuitive and interesting.
The platform provides multiple options for self learning. With all the simplicity, training and mentoring on the platform was not undermined. Multiple modes of learning have been provided. Apart from online Help, the platform provides Tips, FAQ, Flash based role based demo and blogs to discuss about a particular usage scenario.
Hegde cites the instance of the difficulties created by each supplier having a different kind of invoice earlier. Taking the invoice into Oracle financial was a labor-intensive task that involved the nightmarish task of reconciling discrepancies and variances, which also led to incessant follow-ups by partners and delayed payments. Now, Spandhan B2B has a standardized e-invoice format that all partners are expected to use. When they use this to raise invoices, the system validates their data and points out any variances or discrepancies. Only when these have been resolved can the information be taken to the core system.
Any new templates created by the central merchandise department can be distributed automatically to partners via the system.
All the information available on the system is dynamic and accurate, leading to seamless collaboration between suppliers and employees. Any communication between suppliers and employees can now also be known to each person in the process.
The system also has a high level of information security—four layers of security have been built in to maintain a high degree of data security. Hegde explains that many of their suppliers actually compete with each other in the marketplace, so the details of one cannot be revealed to the other. The system enables the required stringent security and confidentiality of information. Each partner has its own site to access information and get complete end-to-end supply chain visibility.
Training was provided to partners when the system was rolled out, and the process is on as new partners begin using the system. In addition, the site itself has a support center module and a ‘tips’ feature, to facilitate ease of use. Partners, such as small accessories vendor, who don’t have computers, can use the site securely from even a cyber café.
Benefits
“SharePoint has enabled us to build simplicity of use along with rich capability,” says Hegde. He states that SharePoint is a product for collaboration, and they have used collaboration extensively in enabling employees to connect to suppliers contextually, and enabling suppliers to connect to employees proactively.
High ROI
Hegde says that while the solution, inclusive of hardware, licensing and development, cost them US$160,000, the ROI, about four months back, came to US$255,000 per annum. It would possibly be higher now, since more suppliers are using the system now. Hegde predicts that going forward, the ROI would be consistent or even higher.
Integrated solution for all formats
The current solution covers about 70 per cent of the supply chain of the different retail formats—compared to 10 per cent covered by the earlier solution—and still has further capabilities. It has enabled Shoppers Stop, HyperCity and Crossword, plus their sub-brands, to support an integrated backend chain of suppliers.
Improved Collaboration and Supplier Relations Management
Collaboration is the key to success for a sustained partnership. The platform is Web 2.0 compatible and has excellent collaboration capabilities and supports blogs, RSS, wiki, discussion boards, workflow, document sharing, reports, subscription/distribution, alerts and notification and contact lists.
Reduced turnaround time for stock replenishment
“This has been a product innovation for us,” states Hegde. The turnaround time for replenishment of stock at the stores by a supplier, which was at least five to six days, has come down, since suppliers can view their stock status in real time and get to know much in advance when replenishment is required.
Contextual communication
All communication between suppliers and employees can now be contextual—in the context of a purchase order or invoice, for instance. Suppliers only need to quote the purchase order number when they communicate. Similarly, even when an employee at the supplier’s end does not know who to contact at Shoppers Stop for an issue, using the system ensures that the issue is addressed at Shoppers Stop’s end by the concerned employees. Moreover, all the people involved in a particular process or order can now be kept in the loop seamlessly.
Extensible, Scalable, Flexible, Customizable
The solution is both extensible and scalable. Shoppers Stop has already explored it customizability to a large degree and Hegde states that it can be customized even further. Moreover, he states that the system is very flexible from the business point of view, in that it supports business restructuring processes in an organization. “We have restructured our organization three times in the last two years,” he says. The system supports this completely—whether it is restructuring of people, processes or formats.