IBM Retail | 14 Success Stories in Retail

Smart Work in Retail – Customer Stories


Smart Work for a Smarter Planet

The world has become highly instrumented, interconnected and intelligent: from our food and water, to our energy, homes and transportation, to our cities and governments and, of course, our businesses and places of work.

The workplace may be smarter, but it is also more challenging because of increasingly rapid and unpredictable change. Everything from swings in markets, to increasing global competition to new consumer expectations and more are changing at a furious pace.

To keep up, we work harder. But to win, we must work smarter.

Smart work embraces, even takes advantage of, change by creating a more agile, collaborative and connected business environment. It can make your business more profitable and productive. While it makes the world a better place to live and work.

Some organizations are showing the way. In this book, you’ll see how our customers from around the world, in the retail industry, are connecting people and processes to:

Optimize business performance

Use technology to meet business needs quickly

Maximize people's effectiveness working together

To learn more about Smart Work, visit ibm.com/smartwork. Additional case studies are available at ibm.com/smartwork/success. We would love to have your organization as a client reference. To become an IBM client reference, visit ibm.com/ibm/clientreference.

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Smart Work in Retail – Customer Stories Table of Contents

i

I-800-FLOWERS.COM, United States.....................................................................................7 1-800-FLOWERS.COM, INC needed to replace multiple, diverse, siloed e-commerce systems with a unified technology platform. Bazaar Voice, United States .....................................................................................................11 Bazaarvoice needed a vehicle to help its own software solution to increase online sales and create innovative tools to facilitate online commerce. Gewandhaus Gruber, Germany ..............................................................................................13 Gewandhaus Gruber wanted to better understand and reward its existing customers, while attracting new ones. It sought a cutting-edge loyalty offering that would help it increase revenue and differentiate itself from its competitors. Hartman Rauta Oy, Finland....................................................................................................15 The company wanted to take advantage of a number of new updates and improvements available in the latest version of Lotus Notes software, including new features that would improve mobile data security. In addition, Hartman wanted to implement a virtual group working environment to support improved communication and collaboration. Hess, United States....................................................................................................................17 Hess Corporation needed a new inventory solution that would automate processes and keep data up to date. Isuzu Australia, Limited, Australia.........................................................................................19 Isuzu Australia Limited needed a solution to improve the speed and accuracy of communications between head office and the dealerships as well as facilitate increased collaboration with business partners. Major Retailer, United States ..................................................................................................23 Major Retailer wanted to determine whether its hybrid inventory strategy with some stock keeping units (SKUs) was appropriate for its business. Max Bahr, Germany.................................................................................................................25 Max Bahr wanted to meet its customer demand for any of 40,000 products in over 80 outlets with low replenishment and storage costs. METRO Group, Germany.......................................................................................................27 METRO Group’s retail store meat tracking system was entirely manual, a time-consuming and error-prone process. METRO Group needed to gain a better grasp of the inventory management of its meat products, while working to improve customer food safety. Moosejaw, United States ..........................................................................................................29 To thrive in the highly competitive market for outdoor adventure gear, Moosejaw Mountaineering needed to create a customer experience that would engage a customer community whose appetite for extreme sports is matched by a hunger for communication and collaboration.

Smart Work in Retail – Customer Stories Table of Contents

ii

Sears Canada, Canada..............................................................................................................33 Sears Canada wanted to deliver on business objectives and reduce development cost through code reuse to eliminate coding and recoding of the same integration, and speed the exchange of information with business partners to improve business agility to be competitive in today’s economy. South American Retailer, Brazil .............................................................................................37 South American Retailer needed to enable an enterprise-wide sales information portal with dramatically improving productivity and information access while eliminating millions of printed pages annually. Spotlight Proprietary Group, Australia .................................................................................39 Spotlight Proprietary Group wanted to have a strong and flexible IT Infrastructure with sufficient strategic dimension or vision. Yansha, China ...........................................................................................................................55 Yansha needed to increase its competitiveness against both local retailers and new foreign competitors in an increasingly deregulated Chinese retail industry through the adoption of new business processes, automation and business intelligence.

Building a Smarter Planet

1-800-FLOWERS.COM: Creating ane-commerce platform for the future

Overview

■ Business Challenge

To better enable synergies

between its 14 gifting brands,

create greater business agility,

and reach its goal of becoming

one of the Top 10 among

Internet Retailer Top 500 com-

panies, 1-800-FLOWERS.COM,

INC. needed to replace multi-

ple, diverse, siloed e-commerce

systems with a unified technol-

ogy platform.

■ Solution

1-800-FLOWERS.COM teamed

with IBM to implement

IBM WebSphere® Commerce

for two of its gift food brands as

an initial proof of concept

for the platform. The site,

thepopcornfactory.com has

seen a consistent rise in conver-

sion since its November launch.

Using knowledge gained from

this first rollout, the company

will take a greater role in transi-

tioning most of its other brands

to the new platform over the

coming year.

■ Key Benefits

— Enables more rapid creation

and deployment of retail

Web sites

— Facilitates cross-selling

between brands

1-800-FLOWERS.COM, INC. is the

world’s largest florist and gift shop, with

revenues approaching US$1 billion. The

company is marked by its large-scale

vision and forward thinking, positioning

itself at the leading edge of trends with

innovative marketing such as “green”

initiatives that reward responsible con-

sumer behavior. For example, its

BloomNet® brand will, in exchange for

a customer forgoing a BloomNet Florist

paper directory, plant trees as part of a

reforestation campaign. It is also intro-

ducing environmental responsibility as a

theme across all of its businesses, with

awareness campaigns on social net-

working Web sites.

The company has a thorough under-

standing of the “gifting” market space in

which it operates, and sees great

potential for synergy by offering multiple

“ The platform willenable the individualbrands to do thingsthey would never have been able to cost-justify before. It’sgoing to give usunprecedented agility.”— Steve Bozzo, CIO, 1-800-FLOWERS.COM

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Making the most of brand synergy through shared technology

specialty brands. The 1-800-FLOWERS.COM strategy has been to grow three

ways: organic growth, internal business development and strategic acquisitions.

Today, it has 14 brands that sell everything from popcorn to gift baskets to gour-

met food and children’s gifts.

The strategy has given 1-800-FLOWERS.COM a broad and diverse portfolio, but it

also created a business challenge. To fully realize the benefits of its multibrand

strategy, they must be unified behind the scenes, but as is usually the case, each

new acquisition brought with it a different set of business processes and technol-

ogy, resulting in a large number of siloed operations that were difficult to integrate.

To promote brand synergy, the company has undertaken “Fresh Digital™,” an

enterprise-wide transformation initiative. “Unifying lines of business is a better

approach to retail,” says Steve Bozzo, CIO at 1-800-FLOWERS.COM. “By sharing

resources, systems and services, we accomplish a number of things. We become

a more dynamic and agile enterprise because we’re breaking down internal

barriers—which will also help us develop new business intelligence. We’ll be able to

leverage resources and services of all kinds across the brands, from information to

IT to shipping to warehousing, which will let us work smarter. And by consolidating,

sharing and implementing more efficient technologies as well as implementing

measures like sustainable packaging and reducing our reliance on paper catalogs,

we’ll be able to reduce our environmental footprint, which puts credibility behind

our green marketing efforts.”

Build versus buy

The first step on the consolidation path was to give the individual brands a com-

mon e-commerce platform. The 1-800-FLOWERS.COM brand itself uses a robust

e-commerce system that was developed entirely in-house and which continues to

serve the company very well, with a demonstrated ability to handle even the heavi-

est holiday volumes. It became clear, however, that using this platform to support

all of the other brands was not the best use of the company’s resources. Rolling

out the 1-800-FLOWERS.COM platform to its other brands would require replicat-

ing it over and over and it was simply not the most efficient way forward.

“We’re very happy with our core platform. Its performance proves we have the abil-

ity to create really strong e-commerce solutions, but fundamentally we’re not a

software company—we’re a gifting company,” says Steve Bozzo. “It made more

sense for us to find a best-of-breed e-commerce platform and work with it as

“ Tearing the wallsdown will enable us togo to market muchmore effectively. We’llhave a lot more sharedinformation, and thatwill allow us to cross-sell much better.”— Steve Bozzo

Business Benefits

● Enables more rapid creation and

deployment of retail Web sites,

allowing 1-800-FLOWERS.COM to try

out new offerings with very little

investment and risk

● Facilitates cross-selling between

brands by unifying the underlying

technology

● Provides the potential for information

sharing across business units, opening

up the possibility for more effective

marketing to customers

● Ensures a consistent look and feel

across the company

● Provides a rich, differentiated customer

experience

● Reduces maintenance and

development costs

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opposed to spending a lot of time and energy creating our own. Also, by going

with an industry leader, we’re leveraging its research and development dollars

instead of using ours to reinvent the wheel as well as reducing the size and envi-

ronmental impact of our infrastructure.”

The company chose IBM WebSphere Commerce, in part because of the flexible

and efficient way in which it functions behind the scenes. “With WebSphere

Commerce, basically you’ve got a single Web site that handles all of the transac-

tions,” says Bozzo. “This central engine supports as many customer-facing Web

stores as you like, and it’s easy to add new ones or roll out new features across

brands.”

The platform, running on IBM Power Systems™ hardware, also has to integrate

seamlessly with the company’s existing systems. The 1-800-FLOWERS.COM

platform will remain in place, and most of the other brands will be migrated to the

new WebSphere Commerce-based system over the coming year. In the interim,

everything needs to continue functioning transparently. To accomplish this, the

service-oriented architecture solution includes IBM WebSphere Message Broker

and IBM WebSphere MQ, which form an enterprise service bus that ties the legacy

systems together.

The initial rollout supports two of the company’s gift food brands, and took a total

of only seven months with the help of IBM Global Business Services. “We went

from Web 0.5 to Web 2.0 in only a few months; we could not have done that with-

out IBM,” Bozzo says. Knowledge transfer and lessons learned during the initial

rollout will help 1-800-FLOWERS.COM to take a greater role in launching the

remaining gift food brands. In this way, the company will be well prepared to launch

future brand storefronts entirely on its own.

IBM was chosen mostly because of the capabilities of WebSphere Commerce and

the expertise of IBM Global Business Services, but Bozzo emphasizes another

important consideration: IBM Global Financing. “Because of the uncertainty we’re

seeing in the macro economy these days, making it easier to make the investment

was a key decision driver for us. IBM was able to give us what we needed in that

area.”

Smarter Solutions for Retail

To realize its vision of synergy among its

14 brands and meet ambitious growth

goals, 1-800-FLOWERS.COM, INC.—the

world’s largest florist and gift shop—is

deploying a single e-commerce platform.

The solution, based on IBM WebSphere

Commerce, is designed to replace

multiple siloed systems. The new

platform adds flexibility and agility,

making it significantly easier to launch

new Web commerce brands—allowing

the company to try new business

strategies with little risk. In addition,

the shared platform facilitates cross-

selling and information sharing

across the enterprise, which helps

1-800-FLOWERS.COM gain maximum

benefit from its many business units.

Solution Components

Software

● IBM WebSphere Commerce

● IBM WebSphere Message Broker

● IBM WebSphere MQ

Hardware

● IBM Power Systems

Services

● IBM Global Business Services

● IBM Global Financing

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Supporting a visionary business strategy

The ultimate goal of the company’s overall Fresh Digital™ initiative is to eliminate all

of the barriers between business units, enabling the full sharing and leveraging of

information across the entire enterprise and throughout its back-end systems.

“Over the long term, our customers will be able shop any of our brands, and we’ll

be able to ship from a unified location. That’s a much more streamlined, efficient

and smarter model,” Bozzo says.

The implementation of WebSphere Commerce is a critical first step—the benefits of

shared services that it offers will trickle down throughout the organization over time

and enable new ways of going to market. “Tearing the walls down will enable us to

go to market more effectively. We’ll have a lot more shared information about buy-

ing patterns and customer profiles and that will allow us to cross-sell much better,”

says Bozzo. “Also, we’ll be able to try new ideas with little risk. With the new

platform, we can launch an entirely new brand fairly easily, because all of the

e-commerce technology is already there.”

The most significant impact of the platform, however, will be in the competitiveness

it brings to 1-800-FLOWERS.COM by allowing the company to leverage best prac-

tices across the entire business. “The platform will enable the individual brands to

do things they would never have been able to cost-justify before,” Bozzo says. “It’s

going to give us unprecedented agility. We’ll be able to re-merchandise our Web

stores on the fly in response to competitive offers. That will make us much more

relevant to the customer, which is critical. Customer expectations continue to

ratchet up, and this new platform is positioning us to meet them going forward.

We’ll have an immediacy and responsiveness that will give us a real competitive

advantage.”

For more information

To learn more about how IBM can help transform your business, please contact

your IBM sales representative or IBM Business Partner.

Visit us at: ibm.com/retail

ODC03103-USEN-00

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Overview

Bazaarvoice, Inc.Austin, Texaswww.bazaarvoice.com

Products• IBMWebSphereCommerce

“Joining PartnerWorld Industry

Networks and using the

exceptional resources that

IBM can bring to a partner

lets us take our business

to a whole new level. Our

relationship with IBM is making

Bazaarvoice grow faster and

in more robust ways than we

would have otherwise seen.”Brant Barton, vice president, business development, Bazaarvoice

Case Study QuickViewIndustry: Retail

Bazaarvoice social commerce solutions boost sales at online retail sites powered by IBM WebSphere Commerce

Bazaarvoice is a pioneer in developing technology and services that encourage and harness online word-of-mouth marketing and boost e-commerce. Working with IBM, Bazaarvoice chose IBM WebSphere® Commerce as a superior platform for its social commerce solutions.

Challenge

In the offline world, word of mouth is a powerful force, and perhaps the most trusted form of advertising. Bazaarvoice, an IBM Advanced Business Partner that participates in IBM PartnerWorld® Industry Networks and is optimized in the retail industry, saw the potential for word-of-mouth marketing to increase online sales and created innovative tools to facilitate this capability.

Solution

Bazaarvoice core products -- Ratings & Reviews™, Ask & Answer™, and Bazaarvoice Stories™ -- provide capabilities that are critical to differentiating retailers and driving sales. The tools, respectively, help enable customers to rate products and write reviews, ask questions and get answers directly from other consumers, and share user experiences. They can also seamlessly feed data to IBM DB2® databases.

Bazaarvoice solutions, which are hosted, managed and monitored, provide advanced analytics. They work with any e-commerce platform, including IBM WebSphere Commerce, a next-generation solution for e-commerce needs which is the preferred foundation for the applications for multi-channel retailers.

“WebSphere Commerce provides a whole set of possibilities that simply wouldn’t be possible with other e-commerce platforms that lack WebSphere’s multi-channel capabilities,” said Brant Barton, vice president, business development, Bazaarvoice.

Benefits

Bazaarvoice social commerce solutions running on IBM WebSphere Commerce:

• Increase online sales and reduce return rates

• Improve customer satisfaction and loyalty

• Improve search ranking and drive qualified leads

• Provide better understanding of customer wants and needs

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Innovation that matters

Gewandhaus Gruber is a clothing retailer with a 350-year history of dressmaking and retailing. It currently has eight branch stores, two outlets and a sports shop where it sells both traditional Bavarian clothing and formal dresses of other brands.

ChallengeGewandhaus Gruber is a successful mid-level to high-end clothing merchant in

Germany. Wanting to better understand and reward its existing customers while

attracting new ones, the company decided to implement a customer loyalty

program. But traditional card-based loyalty solutions were predictable and could

be expensive to maintain. Instead, the retailer sought a cutting-edge loyalty offering

that would help it increase revenue and differentiate itself from its competitors.

SolutionUsing a combination of IBM and IBM Business Partner technology, the retailer

launched the first fingerprint identification–based loyalty program and payment

method in Germany. The solution allows the client’s loyalty club members to quickly

and conveniently pay for items via a fingerprint scanner that also tracks purchases

and that rewards members through loyalty incentives. Further, it provides Gewandhaus

Gruber with in-depth sales reports that provide decision makers and marketers with

valuable insight into the way customers spend their money.

Benefits•Earned d2.6 million—15 percent—of annual revenue in just six months

through approximately 4,500 club members

•Saved d100,000 in operational costs over a comparable card-based

loyalty program

• Increasedrevenueby4%andimprovedcustomersatisfaction

Gewandhaus Gruber increases customer loyalty and sales revenue by using cutting-edge IBM and IBM Business Partner technology.

Overview

Gewandhaus GruberErding, Germanywww.gewandhaus-gruber.de

Industry•Retail

Employees•1,000

Products•IBMAnyplaceKiosk• IBMDB2® for Linux®

IBM Business Partner•it-werkeTechnologyGmbH

“The system is unusual and distinctive…it has a number of practical advantages… particularly in terms of lower operational costs. With no need to print cards, post them, manage them and replace them when lost, the savings are considerable.”—Svenja Wittrowski, project leader,

Gewandhaus Gruber

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Case Study QuickView

Hartman Rauta Oy operates a number of hardware and do-it-yourself (DIY) stores for private consumers and the construction industry. The company’s retail stores focus on providing products for leisure activities as well as interior decoration and construction.

ChallengeHartman Rauta Oy (Hartman) had been using IBM Lotus Notes V7 software

hosted on an IBM System i5 server as it legacy e-mail and messaging platform,

and was satisfied with the existing system. However, the company wanted to take

advantage of a number of new updates and improvements available in the latest

version of Lotus Notes software, including new features that would improve mobile

data security. In addition, Hartman wanted to implement a virtual group working

environment to support improved communication and collaboration.

SolutionHartman worked with IBM to upgrade its e-mail and messaging platform to

IBM Lotus Notes V8.5 software. The upgrade allowed the company to replace

its legacy Intellisync software with IBM Lotus Notes Traveler V8.5 software,

offering quick access to e-mail and attachments, calendar, address book,

journal and to-do list for Lotus Notes mobile users. Hartman also implemented

IBM Lotus Mobile Connect V8.5 software, helping to increase mobile security

for the company’s virtual private network connections. Hartman implemented

IBM Lotus Quickr V8.5 team collaboration software to create a shared work-

space that helps groups work together on projects and easily share everyday

content such as documents and rich media.

Benefits Increased security and flexibility of mobile connections•

Improved integration between the Lotus Notes platform and the company’s •

mobile Symbian operating system–based handhelds

The Domino Attachment and Object Service built into Lotus Notes V8.5 helps •

save storage capacity by minimizing duplicate file attachments

Hardware retailer increases mobile messaging security and flexibility while improving integration with IBM Lotus

Overview

Hartman Rauta Oy

Vaasa, Finland

www.hartman.fi

IndustryRetail•

Employees1,000-5,000 •

ProductsIBM• ® Lotus® Mobile Connect

IBM Lotus Quickr• ™

IBM Lotus Notes• ® V8.5

IBM Lotus Notes Traveler V8.5•

IBM System i5• ®

“IBM Lotus software provides the tools we need to leverage mobile productivity—without sacrificing security.”

—Jari Pienkuukka, Director, Logistics and ICT, Hartman Rauta Oy

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Copyright IBM Corporation 2009

IBM Software GroupRoute 100Somers, NY 10589

Produced in the United StatesAugust 2009All Rights Reserved

IBM, the IBM logo, ibm.com, Lotus, Lotus Notes, Quickr and System i5 are trademarks of International Business Machines Corporation, registered in many jurisdictions worldwide. A current list of IBM trademarks is available on the Web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml.

Other company, product or service names may be trademarks or service marks of others. The informa-tion contained in this documentation is provided for informational purposes only. While efforts were made to verify the completeness and accuracy of the information contained in this documentation, it is provided “as is” without warranty of any kind, express or implied. In addition, this information is based on IBM’s current product plans and strategy, which are subject to change by IBM without notice. IBM shall not be responsible for any damages arising out of the use of, or otherwise related to, this documentation or any other documentation. Nothing contained in this documentation is intended to, nor shall have the effect of, creating any warranties or representations from IBM (or its suppliers or licensors), or altering the terms and conditions of the applicable license agree-ment governing the use of IBM software.

LOC14140-USEN-00

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Case Study QuickView

Hess Corporation engages in the exploration, production and refinement of crude oil and natural gas. Operating more than 1,350 retail gas stations in 14 eastern U.S. states, the organization also offers energy-related utilities services to commercial and retail customers.

ChallengeLocked in stiff competition, Hess Corporation’s retail gas station business relied on

smooth supply chain operation to minimize costs and maintain high profit margins.

But the organization’s manual product pricing and inventory processes frustrated

these goals by consuming employee resources and leaving the organization open to

errors. Even worse, these manual processes led to delays that frequently resulted in

data that was out of date before it had been entered into the company’s database.

Hess Corporation needed a new inventory solution that would automate processes

and keep data up to date.

SolutionIBM delivered an IBM Retail Integration Framework solution (built using IBM Lotus®

Expeditor software) that leverages a service-oriented architecture (SOA) to provide

Hess Corporation with real-time insight into the inventory levels of its retail gas

stations. Using personal digital assistants (PDAs) and software from IBM Business

Partner Openstream Inc., the client’s staff can scan station inventory and upload

that data to a local database. This information is then distributed to the client’s

headquarters using Lotus Expeditor and IBM WebSphere® Process Server

software via the SOA. The solution also enables Hess Corporation to update

pricing information across its entire enterprise at one time, removing manual steps.

Benefits• Maximizes profitability by supporting real-time price change updates

• Reduces inventory-tracking errors and duplicate orders by eliminating

manual processes

• Streamlines order and inventory processes with an SOA, improving

employee productivity

Hess Corporation maximizes its profitability with real-time pricing updates thanks to an SOA built using IBM software.

Overview

Hess CorporationWoodbridge, New Jersey, USAwww.hess.com

Industry• Chemicals & Petroleum• Retail

Products• IBM Lotus Expeditor• IBM WebSphere Process

Server

IBM Business Partner• Openstream Inc.

“With the Openstream and IBM solution, it is so much easier to track inventory across our 870 stores. It streamlines our inventory processes while providing us with the peace of mind of knowing that the data is actually correct.” —Hess Corporation

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The information contained in this documentation is provided for informational purposes only. While efforts were made to verify the completeness and accuracy of the information contained in this docu-mentation, it is provided “as is” without warranty of any kind, express or implied. In addition, this infor-mation is based on IBM’s current product plans and strategy, which are subject to change by IBM without notice. IBM shall not be responsible for any dam-ages arising out of the use of, or otherwise related to, this documentation or any other documentation. Nothing contained in this documentation is intended to, nor shall have the effect of, creating any warran-ties or representations from IBM (or its suppliers or licensors), or altering the terms and conditions of the applicable license agreement governing the use of IBM software.

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IBM Australia

Isuzu Australia takes the road to collaboration success with IBM® WebSphere and Lotus technologies

About Isuzu Australia Limited

Isuzu Australia Limited is a wholly-

owned subsidiary of Isuzu Motors

Limited (Japan), and is responsible for

the marketing, distribution and support

of Isuzu Trucks in Australia. With just

65 employees in Australia, IAL depends

largely on its national dealer network

of over 1000 dealership staff to drive

its business and maintain its market

leading position.

Looking towards the latest technology

The Isuzu Truck national dealer

network is the retail end of the

distribution channel for Isuzu

Trucks sold in Australia, hence the

requirement for access to the latest

materials and information from IAL

head office. In 2005 the company

(IAL) was distributing all information to

dealers manually in printed format via

surface mail. Not only was this system

expensive and time-consuming, it was

also vulnerable to errors. Dealers were

responsible for the internal distribution

of the various materials, resulting in

frequent failure to reach the appropriate

dealer recipients. In addition to this any

errors or update to materials meant a

repeat of the above process, and again

there was no immediate confirmation of

receipt and use by dealers of the up to

date information.

It was evident to IAL that both internal

and external communications could

be improved through utilisation of new

technologies. Aninka Morhall, Staff

Operations Manager at Isuzu Australia’s

Head Office, in Port Melbourne, was

tasked with sourcing an online portal

and content management solution

to supercede the existing manual

processes.

Overview

Problem

Isuzu Australia Limited (IAL) has

a large national dealer network

which is the driving force behind

the business. The company needed

a solution to improve the speed

and accuracy of communications

between head office and the

dealerships as well as facilitate

increased collaboration with

business partners.

Solution

IAL chose to implement IBM

WebSphere® Portal linked to other

collaboration tools including Lotus®

Sametime®, Lotus Quickr™, Portal

Document Manager (PDM) and

Web Content Management.

Benefits

Communications both internally and

externally with dealers and partners

have been radically improved.

Information is now hosted centrally

on a web-based portal, allowing all

parties to access real time, up to

date information at any time.

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Collaboration pays off

The implementation of the WebSphere

Portal enhanced by Lotus collaboration

tools has totally transformed the

communication processes between

Isuzu and its dealer network. Today

all materials are hosted on the

portal and dealers simply have to

log on to instantly access the latest

information. The result has meant

vastly improved, more accurate and

timely communications with IAL’s

dealer network enhancing most areas

of their business operations, and even

increasing their ability to sell more

effectively. The dealers can also log onto

Sametime instant messaging through

a web interface, enabling them to

communicate with head office contacts

in real time and quickly trouble-shoot

any current queries.

Internal communication within IAL has

also improved. Staff can now publish

information themselves, expediting

access to important information. Instant

messaging has also meant employees

rely less on email and more business

decisions can be made in real time. The

discipline of using a central document

repository hosted online means fewer

documents are shared as attachments

and users can be more confident they

are accessing the most recent version.

Selection of a portal

Morhall evaluated solutions from a

number of leading vendors, but settled

on IBM WebSphere Portal along with

Workplace Web Content Management

(WCM). Commenting on IAL’s reasons

for selecting IBM technology Morhall

said, “We chose WebSphere Portal

and WCM because this solution was

more capable of meeting our needs

than the other offerings in the market,

in particular in terms of its scalability.

We were also interested in all of the

extra collaborative components.

As a long time Lotus Notes® user

we knew these systems would

integrate seamlessly with our existing

technology platforms.”

IAL also elected to expand its

collaboration capabilities by adding

Lotus Sametime instant messaging,

Lotus Quickr for team based project

management and Portal Document

Manager (PDM) to create a central

repository for documents. “These

additional systems were implemented

to enable teams to collaborate around

specific projects and documents and to

cut down on sharing of documents as

email attachments” Morhall commented.

The portal and collaboration tools were

rolled out to staff and 1000+ dealership

staff, with access controlled by a

complex security structure allowing the

right people to see the right content at

the right time. The systems were quickly

adopted by the majority of users and

today are used companywide.

“We chose WebSphere Portal and WCM because this solution was more capable of meeting our needs than the other offerings in the market, in particular in terms of its scalability. We were also interested in all of the extra collaborative components. As a long time Lotus Notes user we knew these systems would integrate seamlessly with our existing technology platforms.”- Aninka Morhall, Staff Operations Manager, Isuzu Australia

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Morhall explained, “Now our company

announcements are no longer sent

by email – people know they have to

log into the portal if they want to be

kept up to date. Anyone can publish

information, it’s simply reviewed for

appropriateness, and then it is posted

immediately. All our business policies

and procedures are hosted on the

portal as well.”

Since the portal went live in 2006

Isuzu has realised substantial

business benefits. The company has

enjoyed cost reductions since it no

longer has to print materials for the

dealer network and distribute them

through the mail. Cost aside, Isuzu

now distributes information to its

dealers instantaneously, confident

in the knowledge that dealers are

always just a click away from the

latest information. This has reduced

errors across the entire dealer

network.

Armed with the latest technology

tools, collaboration and knowledge

sharing has increased – for example

teams can discuss a particular

document over a web meeting, or

individuals can access the real-time

status of a project, task or milestone

simply by logging into the portal.

Continuing the journey

The implementation of WebSphere

Portal and Lotus collaboration tools

has given IAL a taste for more

technology and the productivity gains

it can deliver. Morhall is currently rolling

out the use of wiki technology which

is available in Quickr, “We are going

to start using wiki technology in Lotus

Quickr to further improve information

sharing – that’s our latest exciting

project here.” Morhall is also looking at

incorporating IBM’s Workplace learning

management system into the portal

to further extend knowledge sharing

and collaboration based e-learning

throughout the organisation.

Leading Communication for the Truck

Market leader

As Australian truck market leader for

19 consecutive years (20 by the end

of 2008), Isuzu Australia recognises

that maintaining this enviable record

is dependent on providing leading

products and services. IAL is also

committed to demonstrating leadership

in all areas of its operations, and by

selecting IBM WebSphere Portal and

Lotus Software technologies to provide

leading communications between

IAL and its dealer network its market

leadership is more easily maintained.

“Now our company announcements are no longer sent by email – people know they have to log into the portal if they want to be kept up to date. Anyone can publish information, it’s simply reviewed for appropriateness, and then it is posted immediately. All our business policies and procedures are hosted on the portal as well.”

- Aninka Morhall, Staff Operations Manager, Isuzu Australia

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© Copyright IBM Australia Limited 2008 ACN 79 000 024 733. © Copyright IBM Corporation 2008. All Rights Reserved

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08/08

IBM, the IBM logo, Websphere, Lotus, Sametime, Quickr and Lotus Notes are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries or both.

Intel, the Intel Inside Logo and Pentium are registered trademarks of Intel Corporation or its subsidiaries in the United States or other countries.


Important Privacy Information: If you would like to request access to or correction of your details or if you or your organisation would prefer not to receive further information on IBM products, please advise us on: 132 426 (Australia) or 0800 801 800 (New Zealand).

This customer story is based on information provided by AusRegistry and illustrates how one organisation uses IBM products. Many factors have contributed to the results and benefits described.IBM does not guarantee comparable results elsewhere.

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Please call 132 426 in Australia or

0800 801 800 in New Zealand.

of 60

scenarios were developed for each

strategy. The retailer was able to

reallocate nearly 25 percent of its

SKUs between the two strategies,

with a projected reduction in

transportation and inventory holding

costs of more than U.S.$1.5 million.

Benefits:

• Lower transportation costs

• More accurate inventory analysis

• Improved distribution

Objective:

A retailer with billions in annual sales

had seven distribution centers (DCs)

to serve its stores. The retailer was

growing rapidly through acquisitions

and organic growth. This produced a

hybrid inventory strategy with some

stock-keeping units (SKUs) stored at

all the DCs and others at only a few

centralized locations. The

assignment of SKUs was largely

based on the practices of the

acquired companies. The retailer

wanted to determine whether its

inventory strategy was appropriate

for its business.

Solution:

The decentralized strategy had

suppliers drop products at the DCs,

while the centralized strategy had

products go to central DCs and then

to other DCs. The latter system

resulted in transportation costs of

nearly U.S.$5 million a year between

the central and store-facing DCs.

Using IBM® ILOG Inventory Analyst,

the inventory planning solution from

LogicTools (now IBM ILOG),

Overview

Best of both inventory strategiesUsing the centralized strategy, the

retailer is able to reduce its inventory

levels through risk-pooling and more

accurate forecasts. Furthermore, the

larger volume at the central locations

means more frequent shipments

from suppliers, which results in lower

inventory levels. But this strategy incurs

additional transportation costs be tween

central and store-facing DCs, as well as

extra handling costs as products have

to flow between DCs and then on to the

stores.

IBMIBM Case Study

Major retailer Evaluating inventory strategies

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Each inventory strategy was evaluated

with IBM ILOG Inventory Analyst. The

factors modelled included product

costs, inventory holding costs, demand,

forecast error, service levels, supplier

lead times and reliability, receiving

frequency, and transportation times and

costs. A total cost for each SKU was

determined for each strategy, and the

resulting costs compared. This helped

determine which SKUs to assign to each

inventory strategy, and the projected

savings from doing so.

For operational reasons, some product

categories could not use a hybrid

strategy, and an aggregated decision

was made for these categories by

considering all the products in the

IBM®

Software

IBM® ILOG Inventory Analyst

Products and services used

WSC14123-USEN-01

group together. Also, sensitivity analysis

was conducted to determine how the

strategy would change if inventory

holding costs were changed.

BenefitsBy comparing IBM ILOG Inventory

Analyst’s recommendations with the

current distribution system, the retailer

was able to identify SKUs as candidates

for transition between the centralized

and decentralized inventory strategies.

Nearly 25 percent of the SKUs fell

into this category. By making these

changes, the retailer projected savings

of over U.S.$1.5 million per year, mainly

from reductions in transportation and

inventory holding costs.

Based on extensive analysis of the

results from the IBM ILOG Inventory

Analyst model, the customer was able

to save millions of dollars annually

in distribution costs, as well as

significantly reduce inventory. This

gave the customer more visibility into

the downstream supply chain, thereby

increasing manufacturing flexibility

and further reducing raw material

inventories. In addition, the length of

the cash-flow cycle was reduced by

50 percent through direct shipping to

customers.

Recyclable, please recycle.

© Copyright IBM Corporation 2009 IBM Corporation Software Group Route 100 Somers, New York 10589 U.S.A. Produced in the United States of America December 2009 All Rights Reserved IBM, the IBM logo, and ibm.com are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with a trademark symbol (® or ™), these symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be regis-tered or common law trademarks in other countries. A current list of IBM trademarks is available on the Web at “Copyright and trademark information” at ibm.com/legal/copytrade.shtml Other product, company or service names may be trademarks or service marks of others. This case study is an example of how one customer uses IBM products. There is no guarantee of comparable results. References in this publication to IBM products and services do not imply that IBM intends to make them available in all countries in which IBM operates.

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A change in business focusMax Bahr Holzhandlung GmbH, a pioneer since 1879 in Germany’s highly competitive do-it-yourself (DIY) market, was at a crossroads. After going through a busy period of opening up new stores during the 1990s, the DIY retailer wanted to refocus its energy on driving up sales per square meter of existing floor space. That meant ensuring high shelf availability for every item Max Bahr carries. DIY stores typically carry few substitutable products, and customers have a high propensity to buy when they are in the store.

With revenues of 816 million euros in 2005, Max Bahr operates more than 80 home and garden centers around the Federal Republic of Germany, as well as an e-commerce Web site. Its inventory of some 40,000 items, some of which carry the Max Bahr brand, are sourced globally and cover everything the “do-it-yourselfer” needs for the home and garden, including wallpaper, carpets, wood, electrical equipment, tools, DIY manuals, garden furniture and a huge assortment of plants and flowers. A central warehouse replenishes 30 percent of the products

in the stores; 70 percent arrive directly from suppliers. A second warehouse is scheduled to begin operations this year.

Max Bahr employs approximately 4,500 employees, all of whom are dedicated to one objective: providing superior on-floor consultation and service to every customer, whether layperson or professional. The company strives to offer premium goods and services at the lowest possible prices.

To help implement its revised business plan, Max Bahr needed an automated, centralized replenishment system that could provide the highest customer service levels, while optimizing inventory and storage costs. “We were making replenishment decisions locally at each store,” says Anja Schöning, project manager at Max Bahr. “Planners would look at the store’s point-of-sale (POS) data and manually place replenishment orders.” Each store has a POS system that runs on an IBM eServerTM iSeries™ server. However, not all stores had very good and experienced planners — often resulting in poor availability and high opportunity costs. Moreover, it was expensive employing so many planners.

“Do-it-yourself” retailer uses IBM solution to automate replenishment and help ensure high shelf availability

IBM Global Business Services

Supply Chain Management

Overview

ChallengeMeet customer demand for any of 40,000 products in over 80 outlets with low replenishment and storage costs

Why become an On Demand businessTo help drive up sales per square meter of existing floor space, Max Bahr needed an approach that would provide the highest product availability levels for customers, while optimizing inventory and storage costs

SolutionIBM Dynamic Inventory Optimization Solution, a comprehensive offering that helps companies determine optimal inventory levels based on cost constraints, forecasts, demand patterns and service level requirements

Key Benefits - Customer service levels of 99 percent

or higher- Over 90 percent of replenishment

proposals turn into orders without any review

- Improved demand forecasting, fewer planners and lower replenishment costs

Max Bahr Case Study

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BCC00102-USEN-01

Answering the challengeIn 2003, after considering a number of alternatives, Max Bahr turned to IBM, which proposed the IBM Dynamic Inventory Optimization Solution. After a one-month requirements study, the IBM team began incorporating the business rules needed by the solution to forecast demand, calculate safety stock, batch sizes and reorder points, and compute replenishment order proposals for the entire inventory.

“We wanted IBM to build in as much business logic as possible, so that replenishment orders could be sent to the warehouse and to suppliers without ever being reviewed by a planner,” explains Schöning. That required writing client-specific modules that considered variables such as maximum shelf or bin space for an item, upcoming promotions, supplier lead times, free shipping on orders above a certain amount, product assortments and odd lots.

“The capabilities and flexibility of the Dynamic Inventory Optimization Solution allowed us to respond quickly and effectively to Max Bahr,” says Richard Boedi, an IBM researcher on the team. “Within months of starting the project, we were managing inventory at four outlets and with one major supplier.”

Nightly replenishment runsToday, the Dynamic Inventory Optimization Solution performs eighty to ninety percent of Max Bahr’s inventory replenishment. There is no ERP system involved.

Shortly after midnight, the stores transfer POS data — approximately 15–20 million transactions — to a central database and add them to a rolling repository that contains a two-year history of every product in every store. Using this transaction dataset, the Dynamic Inventory Optimization Solution performs a two-echelon analysis, looking first at the outlets and then at the central warehouse to generate forecasts and order proposals. Each of the approximate 85 runs of the solution takes around one minute, constituting up to four million replenishment decisions. The entire process is completed by seven o’clock in the morning, before the planners arrive at work. Any replenishment issues found by the solution go on an exception report to be manually resolved.

The results from the Max Bahr-IBM collaboration are impressive. Customer service levels at the stores have reached an average of 99 percent or more. What’s more, over 90 percent of the order proposals are automatically turned into actual orders to suppliers without any review by, what is now, only a handful of planners in the company.

“The Dynamic Inventory Optimization Solution has become one of the most important business tools we have for positively impacting sales and keeping us competitive,” concludes Schöning.


IBM Global Services Route 100 Somers, NY 10589 U.S.A.

Printed in the United States of America 12-06 All Rights Reserved

IBM, the IBM logo, eServer and iSeries are trademarks or registered trademarks of Inter-national Business Machines Corporation in the United States, other countries or both.


References in this publication to IBM products or services do not imply that IBM intends to make them available in all countries in which IBM operates.

This document is based on information pro-vided by Max Bahr and illustrates how one organization uses IBM products. Many factors have contributed to the results and benefits described; IBM does not guarantee compa-rable results elsewhere.

“The [solution] has become one of the most important business tools we have for positively impacting sales and keeping us competitive.”

— Anja Schöning, project manager, Max Bahr

For more informationThe IBM Dynamic Inventory Optimization Solution is part of the IBM Center for Business Optimization’s solution portfolio, which includes solutions in the areas of risk management, marketing investment, pricing and supply chain management. The center brings together IBM’s industry and process expertise, hardware and business performance software, and the company’s deep computing and advanced analytics capabilities to tackle the most difficult challenges facing business and government.

To learn more about IBM Global Business Services, contact your IBM sales representative, or visit:

ibm.com/bcs

To learn more about the IBM Dynamic Inventory Optimization Solution and the IBM Center for Business Optimization, contact your IBM representative or visit:

ibm.com/services/cbo

of 60

Let’s build a smarter planet

METRO Group tracks meat products from production to point of sale.

Overview

METRO GroupDüsseldorf, Germanywww.metrogroup.de

Industry• Retail

Products• IBMGlobalBusinessServices• IBMInfoSphere™

TraceabilityServer

“METRO Group now has unprecedented transparency in its in-store meat processes of the real,- Future Store in Tönisvorst.”—Dr.GerdWolfram,HeadofCIO-Office,

METROAG

In Germany, there have been several incidences of moldy meat being sold by different meat wholesalers. Although this had not been a problem for METRO Group, customers were aware of fresh meat problems at other retailers.

ChallengeMETROGroup’sretailstoremeattrackingsystemwasentirelymanual.Expiration

datemonitoringwasdonevisually,atime-consuminganderror-proneprocess.

With800to1,000meattraysinsidetheself-servicecounterofasinglestoreat

anygiventime,METROGroupneededtogainabettergraspoftheinventory

managementofitsmeatproducts,whileworkingtoimprovecustomerfoodsafety.

SolutionWorkingwithIBMGlobalBusinessServicesinafirst-of-a-kindproject,METRO

GroupusedIBMInfoSphere™TraceabilityServersoftwareasthebackbone

ofitsnewmeat-trackingsolution.Meattraysaretaggedwithradiofrequency

identificationtags.Eachmeattrayisvisibleduringitscompletein-storelife-

cycle,frompackagingtopointofsale.

Readersthroughoutthelifecycleofthemeattraycontinuouslyupdatetheinventory

managementsystem.DataisstoredbytheIBMInfoSphereTraceabilityServer

software,enablingimprovedinventorymanagementandhelpingensureproduct

andconsumersafety.IBMGlobalBusinessServicesprovidedprocessconsulting,

dashboardsandthearchitectureforthesolution,aswellascustomization.

Benefits• Improvesinventorymanagementwithdemand-drivenforecasting,reducing

overstocksandwrite-offs

• Increasesconsumersafetybysendingsystemalertsforexpiredornearly

expiredproducts,whichcanthenberemovedfrominventory

• Iseasilyscalableandreusable,thankstostandardizedinterfaces,enabling

METROGrouptodeploytrack-and-tracesolutionsinothersaleslinesaswell

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©CopyrightIBMCorporation2009

IBMCorporation1NewOrchardRoadArmonk,NY10504U.S.A.

ProducedintheUnitedStatesofAmericaNovember2009AllRightsReserved

IBM,theIBMlogo,ibm.com,andSmarterPlanetaretrademarksofInternationalBusinessMachinesCorporation,registeredinmanyjurisdictionsworldwide.OtherproductandservicenamesmightbetrademarksofIBMorothercompanies.AcurrentlistofIBMtrademarksisavailableontheWebat“Copyrightandtrademarkinformation”atibm.com/legal/copytrade.shtml

Theinformationcontainedinthisdocumentationisprovidedforinformationalpurposesonly.Whileeffortsweremadetoverifythecompletenessandaccuracyoftheinformationcontainedinthisdocu-mentation,itisprovided“asis”withoutwarrantyofanykind,expressorimplied.Inaddition,thisinfor-mationisbasedonIBM’scurrentproductplansandstrategy,whicharesubjecttochangebyIBMwithoutnotice.IBMshallnotberesponsibleforanydam-agesarisingoutoftheuseof,orotherwiserelatedto,thisdocumentationoranyotherdocumentation.Nothingcontainedinthisdocumentationisintendedto,norshallhavetheeffectof,creatinganywarran-tiesorrepresentationsfromIBM(oritssuppliersorlicensors),oralteringthetermsandconditionsoftheapplicablelicenseagreementgoverningtheuseofIBMsoftware.

ThisdocumentillustrateshowoneorganizationusesIBMproductsandservices.Manyfactorshavecontributedtotheresultsandbenefitsdescribed;IBMdoesnotguaranteecomparableresultselsewhere.

ReferencesinthispublicationtoIBMproductsorservicesdonotimplythatIBMintendstomakethemavailableinallcountriesinwhichIBMoperates.

GBC03030-USEN-00

of 60


Moosejaw Mountaineering reaches new heights of customer engagement through social commerce.

Let’s build a smarter planet

Overview

n The Need

To thrive in the highly competitive

market for outdoor adventure

gear, Moosejaw Mountaineering

needed to create a customer

experience that would engage

a customer community whose

appetite for extreme sports is

matched by a hunger for commu-

nication and collaboration.

n The Solution

Moosejaw sought to make its site

the go-to destination for young, hip

high school and college students

and for hard-core outdoor enthusi-

asts by embedding rich community

features into its online commerce

experience, thus becoming one of

the first outdoor-adventure retail-

ers to make multichannel “social

commerce” the cornerstone of its

growth strategy.

Online commerce has changed a

lot in the decade since it entered

into the cultural mainstream. Driven

by relentlessly rising customer

expectations, sites have become

easier to use, merchandising has

improved and, to put it simply, com-

panies have gotten better at online

commerce because they’ve come

to understand its many nuances.

In spite of these changes, however,

the essential character of online

retail – namely, the extension of tradi-

tional retail practices to the Internet

channel – has remained largely

unchanged. So, too, have some basic

and long-held assumptions about the

way consumers buy and what they

are looking for from an online retailer.

n Key Benefits

• Increased revenue from an

expected increase in conversion

rate (based on an initial increase

to 50 percent)

• Expected increase in customer loy-

alty and word-of-mouth expansion

through a more engaging and col-

laborative online retail experience

• Ability to deliver seamless

messaging, programs and

customer experience across

all channels

• Expected increase in customer

satisfaction through richer, more

informative pre-purchase support

(e.g., customer ratings)

Based in Madison Heights, Michigan, Moosejaw Mountaineering, Inc. is one of the nation’s leading outdoor-adventure retailers. With seven retail locations employing 250 in Michigan and Chicago, the company’s online retail, Moosejaw.com, was rated a top 50 Web site according to Internet Retailer.

of 60

Enriching the retail experience with the power of social networking

2

The traditional view of online transactions is anchored on the idea that online

stores are first and foremost a venue for transactions, which, by and large, tend

to be tightly structured interactions involving the buyer and the retailer. Within

this interaction, the retailer’s key job is to provide customers with the information

they need to purchase – such as pricing, product descriptions and orderly

merchandising – and to deliver all within the context of a superior customer

experience. However, the way customers are seeking and processing this infor-

mation is beginning to change, and that’s expected to have a big impact on

tomorrow’s online experience.

The biggest reason is the sweeping impact of Web 2.0, a term that describes

a paradigm shift in the way people use the Internet to interact with each other –

and with information. The key earmark of Web 2.0 is the exploding popularity

of user generated content, examples of which range from blogs, wikis and

discussion groups to YouTube and MySpace. What each has in common is a

decidedly “bottom-up,” approach to generating and sharing information that’s

heavy on collaboration and light on hierarchical structures. So how does this

impact online retail? The answer, in large measure, lies in demographics and

changing expectations.

Community meets commerce

When the younger consumers driving the Web 2.0 wave want to buy online,

they’d prefer the same kind of collaborative, bottom-up information exchange

in their shopping experience. This, in effect, resets the goals and parameters

that retailers have to consider in configuring their online strategies. While issues

like merchandising and navigation remain important, retailers also need to

provide an environment that supports the interaction of customer communities,

which are exerting more and more influence on buying behavior. This is espe-

cially true for products that reflect a lifestyle or a set of emotional values. That’s

why Moosejaw Mountaineering (www.moosejaw.com), a fast-growing retailer

specializing in outdoor, surf, skate and snowboard equipment and apparel, is

such a good example of how it can work. Relying on a host of retail solutions

from IBM and IBM Business Partner CrossView, Moosejaw sought to make its

site the go-to destination for young, hip high school and college students and

for hard-core outdoor enthusiasts by embedding rich community features into

its online commerce experience, thus becoming one of the first retailers to make

“multi-channel, social commerce” the cornerstone of its growth strategy.

Now a fast-growing chain with seven stores and 250 employees, Moosejaw

owes much of its success to a fiercely loyal customer base. The roots of this

loyalty lay in the company’s ability to make shopping fun, as well as its abil-

ity to provide the right product mix, strong product and technical support and

Business Benefits

•Increasedrevenuefromanexpected

increaseinconversionrate(basedon

aninitialincreaseto50percent)

•Expectedincreaseincustomerloyalty

andword-of-mouthexpansionthrough

amoreengagingandcollaborative

onlineretailexperience

•Abilitytodeliverseamlessmessaging,

programsandcustomerexperience

acrossallchannels

•Expectedincreaseincustomer

satisfactionthroughricher,more

informativepre-purchasesupport

(e.g.,customerratings)

•Strongerbrandthroughamore

consistentmulti-channelexperience

“ Our strategy has been to reinvent the way people shop for outdoor, surf, skate and snowboard apparel and equip-ment. IBM – through its technology and retail thought leadership – has been instrumental in helping us realize this vision.”

– Jeffrey Wolfe, COO,

Moosejaw Mountaineering

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3

a constant drive to develop unique, innovative ways to communicate with

their customer. But with no shortage of competitors in the “outdoor adventure”

space – many large and well known – Moosejaw faces the ongoing challenge of

making itself the destination of choice. Rising to this challenge, the company

has introduced a steady stream of features that have resonated with custom-

ers, including over 50,000 customer reviews, texting of tracking numbers and

promotions to mobile phones, and its Moosejaw Madness community, where

customers post photos from their latest adventures, read the irreverent Daily

Remark and immerse themselves in Moosejaw’s unique culture. While features

like these have been highly successful, Chief Operating Officer Jeffrey Wolfe

believes that Moosejaw has only scratched the surface of what it can do for its

customers. “We are on the verge of truly blurring the lines between Web, retail,

mobile, catalog, call center and kiosk, taking the best of each channel and

making it possible across all channels.”

Moosejaw’s approach to multi-channel, social commerce was to implement a

new solution from the ground up with help from IBM and IBM Business Partner

CrossView. One of the key benefits of the solution is its ability to create a seam-

less, interactive, community shopping experience across every sales channel.

Customers can interact with Moosejaw staff and with other customers on the

Moosejaw Web site and then connect those threads on their mobile phones

and when they come into the Moosejaw retail stores. Perhaps more valuably, it

provides Moosejaw with a ready-made platform for integrating these social net-

working capabilities deeply into its commerce platform. Imagine, for example,

a customer looking for a tent suitable to use at 20,000 feet and 20 below zero.

Instead of simply searching through a catalog, customers can now search by

a product’s rating, while also taking into account customer profiles that include

product usage experience. Getting product feedback from someone who has

actually used that tent on Mount Everest or K2 is a far cry from standard catalog

information – and that’s exactly what Moosejaw is shooting for. Key to the realiza-

tion of this vision is the company’s work with IBM Toronto Software Lab, which is

working with Moosejaw to develop this breakthrough capability.

Moosejaw’s physical stores also figure prominently in its strategy. A standout

feature of the new solution is its ability to provide truly seamless support to –

and thus create a common, superior experience through – all of Moosejaw’s

channels. Key to this capability is CrossView’s Point of Sale solution which

extends the capabilities of IBM WebSphere® Commerce into retail stores with

a solution that utilizes WebSphere Commerce as its engine at the enterprise

and IBM WebSphere Remote Server in the stores. CrossView’s solution utilizes

a common information platform based on IBM DB2® and validated for the

IBM Retail Integration Framework, making it easy for Moosejaw to extend its

Solution Components

Software

•IBMWebSphereCommerce

•IBMWebSphereRemoteServer

•IBMDB2

Hardware

•IBMSurePOSTM500Express

Services

•IBMTorontoSoftwareLab

•IBMGlobalTechnologyServices

•IBMRetailStoreSolutions

IBM Business Partner

•CrossView

Timeframe

•Coreplatformimplementation:9months

•Socialcommerceplatform:5months

What Makes it Smarter

MoosejawMountaineeringismaking

itselfoneoftheleadingplacestobefor

outdooradventurersbyleadingtheway

intheintegrationofsocialnetworking

capabilitieslikeblogging,groupdiscus-

sionandcustomerproductratingsacross

all ofitsretailchannels.

of 60

ODC03073-USEN-02

online channel programs and tactics into its store environment. For instance,

using IBM SurePOS 500 dual-screen point-of-sale terminals in-store customers

are now able to buy, ship and pay with the exact same services they are familiar

with online, and they will be offered the same targeted promotions and cross-

sells while they read reviews, blogs and recommendations. With all this new

technology, that same fun and irreverence that has been a part of the Moosejaw

culture from the beginning will now be part of the in-store check-out process.

Multichannel benefits

To enable a consistent shopping experience for customers across channels,

the Moosejaw solution integrates and registers orders and inventory changes

for every channel, offering increased visibility and optimum resource alloca-

tion across channels. The multichannel capability also provides Moosejaw’s

in-store sales associates and call center agents with the tools they need

to provide more interactive and insightful support to customers. It’s seen in

the small things, like being able to tell a customer how close they are to a

reward point threshold or asking about their satisfaction with a recent pur-

chase. But it’s also seen in the bigger things, like the system’s ability to see

inventory in near real time so an associate can find just the right Patagonia

coat for a customer – whether it’s in the store, in the warehouse or at a supplier’s

warehouse – and send the order via XML straight to the other shop, warehouse

or supplier for processing and fulfillment. It’s seen in the way it enables call

center agents to get a full profile of a customer and provide the most knowl-

edgeable and comprehensive support.

Altogether, it’s about providing the kind of customer experience that will

continue to make Moosejaw the premier destination for the outdoor, surf,

skate and snowboard community and in the process enable Moosejaw to

sustain its high rate of growth. Wolfe sees the company’s advanced social

commerce capabilities playing an important role by strengthening loyalty,

increasing the conversion, or “browse-to-buy,” rate of the Moosejaw site and

by building word-of-mouth support, which thus far has been one of the biggest

factors in its growth. “Our strategy has been to reinvent the way people shop

for outdoor, surf, skate and snowboard apparel and equipment,” says Wolfe.

“IBM – through its technology and retail thought leadership – has been instru-

mental in helping us realize this vision.”


Please contact your IBM sales representative or IBM Business Partner.

Visit us at:

ibm.com/retail


IBM Corporation 1 New Orchard Road Armonk, NY 10504 U.S.A

Produced in the United States of America September 2009 All Rights Reserved

IBM, the IBM logo, ibm.com, Smarter Planet, DB2, SurePOS and WebSphere are trademarks of International Business Machines Corporation, registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the Web at www.ibm.com/legal/copytrade.shtml



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IBM Case Study

Sears Canada increases code reuse by5%-15% with SOA solution

Overview

■ Challenge

Deliver on business objectives

and reduce development cost

through code reuse to eliminate

coding and recoding of the

same integration, and speed the

exchange of information with

business partners to improve

business agility to be competi-

tive in today’s economy

■ Solution

Supplier information exchange

service enabling exchange of

product information between

Sears Canada’s legacy systems

and 3,000 suppliers

■ Benefits

— 5%-15% reuse of code, low-

ering costs and improving

developer productivity

— Faster deployment of prod-

ucts and services

— Improved customer,

dealer, supplier and partner

experience

A successful retailer needs to change

quickly to keep pace with shifting cus-

tomer tastes. For Sears Canada, this

has meant improving the agility of its

supply chain.

Sears Canada is a retail powerhouse

with a strong heritage in large

brick-and-mortar stores and a compre-

hensive product catalog with associ-

ated merchandise pick-up locations.

The company operates 196 company-

owned stores, 178 dealer stores,

64 home improvement showrooms

and 1,850 catalog merchandise pick-up

locations.

Today, the company partners with

about 3,000 suppliers to makes sure all

of its sales channels—stores, catalog

and online—are fully stocked with the

right mix of products that consumers

want at the right price.

“ Already, Sears Canadacan clearly see theROI advantages of ourIBM SOA solution.”— Miki E. Uhlyarik, Middleware

and Integration Architect, SearsCanada

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http://www.ibm.com

http://www.ibm.com/websphere

Streamlining business and IT processes

From the business side, Sears Canada needs to streamline its internal processes

to achieve faster time to market even as it reduces the cost of bringing new mer-

chandise to its customers. From the IT side, it needs to streamline development

and integration to enable it to exchange data with its suppliers more efficiently

and expeditiously.

The IT infrastructure team, led by Middleware and Integration Architect Miki E.

Uhlyarik, has the responsibility of integrating new functionality with the company’s

legacy systems, which still run a very large part of the business and act as the

main repository of corporate data. Sears Canada faced a major challenge in imple-

menting changes quickly enough in its legacy development processes to keep up

with the fast pace of business change.

“We faced point-to-point, fairly rigid connections,” says Uhlyarik. “We couldn’t very

easily replace components. What’s more, any change to one component had to be

made in all the other components.”

After researching service oriented architecture (SOA), the team recognized it as a

valuable concept that they could apply. “SOA offered us a framework both on the

conceptual and on the technical level that could help us overcome issues related to

the integration of internal and external business systems,” says Uhlyarik.

Uhlyarik’s team anticipated that SOA would enable code reuse to eliminate coding

and recoding of the same integration; reduce development costs over the long

term; and speed the exchange of information with business partners to improve

business agility.

Investing in SOA skills and infrastructure

Starting essentially from scratch, the infrastructure team realized it had to

prepare before it could begin employing an SOA approach to coding services or

building applications.

The team established an SOA Center of Excellence (CoE) and began publicizing it.

The CoE initially functioned as an SOA information, education and training clearing-

house. The company leveraged its more than 30-year partnership with IBM to raise

its CoE’s understanding of SOA and begin orienting people in the new approach.

Sears Canada also initiated IBM training programs to close the skills gap that fre-

quently hinders SOA projects, especially in the early stages. The IBM training

addressed SOA concepts, Web services, XML and security. The team even began

educating management long before a single service had been developed. “We

found that we needed support from IT management because SOA required a major

investment before the actual applications could be put in place,” says Uhlyarik. of 60

The company installed IBM System p® servers running AIX® to host

IBM WebSphere® Application Server as the core component of the application

foundation based on Smart SOA. IBM WebSphere Application Server provides an

innovative, performance-based application foundation for building, deploying, and

managing robust, agile, and reusable services and SOA applications of all types.

The production environment is configured for high availability. In addition, Sears

Canada set up separate server environments for staging and for development. The

company also acquired IBM WebSphere Enterprise Service Bus, which it imple-

mented right away, and WebSphere Service Registry and Repository.

Exchanging data with suppliers in just a few clicks

The company’s initial implementation focused on a simple system integration bus

intended to streamline integration. For that, it created a Web services gateway,

mediation flows and JAX-RPC to implement common infrastructure components

that Web services-based applications would need. Then the team went looking for

an application requiring deeper-level integration and a higher level of reuse. This

project would be the pilot implementation of WebSphere Enterprise Service Bus.

The company needed to exchange product data between its 3,000 suppliers

and its internal database and IBM CICS® systems. The exchange of this

product information—sizes, colors and various other product attributes—is essen-

tial to getting products in front of Sears’ customers in a timely way. Until the infor-

mation is in the system, Sears has no way to market and sell the product through

any of its channels.

Uhlyarik’s team chose to pilot SOA by creating a supplier information exchange

service. Initially the team would test the service with one vendor. After that, the plan

was to roll it out to all vendors. “It will save a great deal of time spent retyping and

scanning the data each time it is updated. And with 3,000 suppliers, just think of

the potential time savings,” notes Uhlyarik.

Following an initial proof-of-concept, the ESB team can now make the supplier

information exchange service available for other suppliers with just a few clicks,

while the custom developers continue to create more custom point-to-point con-

nections. WebSphere ESB converts messages as needed to maintain the flow of

information through the system.

The savings will grow dramatically with each supplier joining the system. “We have

to look ahead two or three years to see the payback,” says Uhlyarik. “But already,

Sears Canada can clearly see the ROI advantages of our IBM SOA solution.”

Solution Components

Servers

● IBM System p®

Software

● IBM AIX®

● IBM WebSphere® Application Server

● IBM WebSphere Enterprise

Service Bus

● IBM WebSphere Service Registry

and Repository

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5%-15% increase in code reuse

Every IT initiative at Sears Canada must be based on a clear business case with a

positive payback. In the case of vendor data exchange, the infrastructure team

estimated 5%-15% of code was suitable for reuse and calculated that the effort

would deliver an attractive payback even at a seemingly low 5% level of reuse.

In addition to hard-dollar savings realized through code reuse, the benefits Sears

Canada expects to receive from its SOA investment include:

● Greater flexibility, responsiveness and efficiency● Faster deployment of products and services● Improved customer, dealer, supplier and partner experience● Improved developer productivity● More reliable code and fewer support problems● More efficient maintenance

The most prominent sign of the success of the Sears Canada SOA initiative, how-

ever, can be seen in the response of senior IT and business management to the

effort. “Our 2009 plan with SOA was approved at the executive level. The plan has

made it through a very rigorous analysis where a lot of projects just fell by the way-

side,” Uhlyarik concludes. That represents success by any measure.

WSC14089-USEN-00


IBM CorporationSoftware GroupRoute 100Somers, NY 10589U.S.A.

Produced in the United States of AmericaApril 2009All Rights Reserved

IBM, the IBM logo, ibm.com, AIX, CICS, System p and WebSphere are trademarks orregistered trademarks of International BusinessMachines Corporation in the United States,other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with atrademark symbol (® or TM), these symbolsindicate U.S. registered or common lawtrademarks owned by IBM at the time thisinformation was published. Such trademarksmay also be registered or common lawtrademarks in other countries. A current list ofIBM trademarks is available on the Web at“Copyright and trademark information” atibm.com/legal/copytrade.shtml.

Other product, company or service names maybe trademarks or service marks of others.

This case study is an example of how onecustomer uses IBM products. There is noguarantee of comparable results.

References in this publication to IBM productsand services do not imply that IBM intends tomake them available in all countries in whichIBM operates.


Contact your IBM sales representative or IBM Business Partner. Visit us at:

● ibm.com/soa

● ibm.com/websphere

For more information on Sears Canada, visit: www.sears.ca

of 60

http://www.ibm.com


http://www.ibm.com/soa


http://www.sears.ca

Overview

South American Retailer

IndustryRetail•

Employees16,000•

ProductsIBM• ®WebSphere®PortalEnable

IBMLotus• ®WorkplaceWebContentManagement

Linux• ®

Case Study Quickview

South American retailer improves productivity by delivering information to the point of sale using IBM WebSphere Portal

Retailer deploys IBM WebSphere Portal Enable and IBM Lotus Workplace

Web Content Management to enable an enterprise-wide sales

information portal, dramatically improving productivity and information

access while eliminating millions of printed pages annually.

ChallengeTheITinfrastructureatamajorSouthAmericanretailercouldnotsupport

reliabledistributionofinformationtoemployeeswithinthetimeframesrequiredto

supportsales.Thecompanywaslosingbusinessbecausesalespersonscould

notprovidedetailedproductinformationtocustomers.Additionally,theprocess

forcommunicatingnewproductlinesandweekendofferinformationwashighly

inefficient,andthecompanylackedacentralrepositoryfortheinformation.

Byimprovingitscommunicationssystemstoprovideseamlessinformationdelivery

fromheadquarterstothesalesfloor,theretailercoulddeliverimmediate,accurate

informationtoeachsalespersoninordertoansweranyandallproductquestionsa

customermighthave.

SolutionThecompanychoseaportalsolutioncomprisedofIBMWebSpherePortalEnable

andIBMLotusWorkplaceWebContentManagementrunningontheLinux

operatingsystem.Thesetoolshaveenabledthecompanytodeployanintranet

productandsalesinformationportalacrosstheenterprise.WithLotusWorkplace

Web ContentManagement,informationiseasilymanagedandupdatedfromback-

endsystemsatthecompany’sheadquartersandaccessedviaLinuxdesktopsand

thinclientsineachstore.

TheWebsiteprovidesupdatedcontentregardingeverypertinentaspectofsales.

With10to20terminalsineachretaillocation,everysalespersonnowhasconvenient

accesstoproductdetailsandinformationonsalesandpromotions.

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http://www.ibm.com/us/


©CopyrightIBMCorporation2009

IBMCorporationSoftwareGroupRoute100Somers,NY10589U.S.A.

ProducedintheUnitedStatesofAmericaJune2009AllRightsReserved

IBM,theIBMlogo,ibm.com,LotusandWebSpherearetrademarksofInternationalBusinessMachinesCorporation,registeredinmanyjurisdictionsworldwide.AcurrentlistofIBMtrademarksisavailableontheWebat“Copyrightandtrademarkinformation”atibm.com/legal/copytrade.shtml.

LinuxisaregisteredtrademarkofLinusTorvaldsintheUnitedStates,othercountries,orboth.

Othercompany,productorservicenamesmaybetrademarksorservicemarksofothers.

Theinformationcontainedinthisdocumentationisprovidedforinformationalpurposesonly.Whileeffortsweremadetoverifythecompletenessandaccuracyoftheinformationcontainedinthisdocumentation,itisprovided“asis”withoutwarrantyofanykind,expressorimplied.Inaddition,thisinformationisbasedonIBM’scurrentproductplansandstrategy,whicharesubjecttochangebyIBMwithoutnotice.IBMshallnotberesponsibleforanydamagesarisingoutoftheuseof,orotherwiserelatedto,thisdocumentationoranyotherdocumentation.Nothingcontainedinthisdocumentationisintendedto,norshallhavetheeffectof,creatinganywarrantiesorrepresentationsfromIBM(oritssuppliersorlicensors),oralteringthetermsandconditionsoftheapplicablelicenseagreementgoverningtheuseofIBMsoftware.

LOC14125-USEN-00

BenefitsThenewsystemreducesunnecessaryworkloadandimprovesproductivity•

acrossthecompanybecauseallsalespeoplenowhavecompleteandimmediate

accesstotheinformationneededtomakeasale

Thecompanyhasrealizedamassivereductioninprintingcosts,eliminating•

approximately180,000printoutsperweekendandover10millionprintouts

annually

Thecompanycanimmediatelyrespondtocompetitorpromotionsbystorearea•

withacompetitiveinitiativeandeasilydistributetherightinformationtoaffected

employees

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http://www.ibm.com



http://www.ibm.com/us/

Australian retailer focuses on business processes as the entry point to service-oriented computing.Spotlight turns around IT with business process-based SOA

Service Oriented ArchitectureDeepView case studyOctober 2008

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Australian retailer focuses on business processes as the entry point to service-oriented computing.Page 2

ContentsIntroduction

Founded in 1973 by two brothers, Spotlight Proprietary Limited is a privately owned crafts and soft furnishings retailer based in Australia, with 106 stores located across Australia, New Zealand, Singapore and Hong Kong. In addition, it has 12 Anaconda superstores in Australia, selling outdoor adventure goods, clothes and equipment.

Spotlight is a very large business, with more than 6,000 employees. Stores and catalogs generate approximately one million sales transactions a day, with annual sales approaching A$1B in 2008. The product mix is highly seasonal and rotates quickly throughout the year. At any one time, some 250,000 out of 500,000 SKUs are active. A mission-critical loyalty program is another measure of Spotlight’s success, with five million registered customers.

Anne McDiarmid is the Chief Information Officer for Spotlight Proprietary Limited. Her responsibility is to provide the technology to support both the Spotlight and Anaconda brands, plus provision back-office IT. When she arrived at Spotlight, IT was at a breaking point.

In this DeepView, Ms. McDiarmid discusses how she and KAZ Group, an IBM Business Partner, introduced process- and service-based computing to support the Spotlight business. KAZ Group, located in Australia, focuses predomi-nantly on applications development and systems integration.

3 The challenge: an IT

infrastructure at risk of

imminent failure

4 The strategy for change:

start with understanding the

business processes

6 Developing a roadmap for

implementation

7 Integrating legacy and new

systems with a services-based

approach

7 Selecting the right tools for

end-to-end process control

10 Where is Spotlight today?

11 Taking the transformation to

the next level

13 Lesson learned: bring in the

right help at the right time

14 The final analysis: it begins

and ends with process

management

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The challenge: an IT infrastructure at risk of imminent failure

When I joined Spotlight in late 2006, the company had enjoyed 35 years of highly successful retailing and continual growth. As a result, Spotlight was heavily invested in property—the bricks-and-mortar side of the business.

However, the company had only made information technology an investment priority for the previous seven or so years—and that was without sufficient stra-tegic dimension or vision. For example, the point-of-sale (POS) system had only been in our stores for some seven years—and even it was 10 releases behind the current version. We also had several homegrown legacy systems, plus one com-mercial financial package that had been hacked beyond recognition. It might originally have been “out-of-the-box,” but this was now impossible to tell. And we had middleware connecting to middleware (Figure 1).

Solution components

Software

IBM WebSphere• ® Process Server

IBM WebSphere Commerce Server•

IBM WebSphere Portal•

Figure 1. Before the start of its IT transformation initiatives, Spotlight’s infrastructure had not kept pace with the needs of the rapidly growing retail operations.

Suppliers

Goods ReceiptMerchandising, Marketing, Finance

www

Insufficient investment in IT infra-

structure had left Spotlight without

a way to provide the business

with accurate sales, product or

price information.

We had no parallel processing. Everything was performed overnight, sequentially. Even basic sales information was lacking, or so out of date as to be largely worthless. Instead of daily sales summaries, we were waiting until Thursday each following week to find out the previous week’s sales. And, depending on where you went, you could get a different version of what sales were.

of 60


Highlights

The retailer’s continued growth

resulted in new stores, which put

more stress on already overloaded

legacy systems.

To make matters worse, we could not guarantee product and price. We could not tell you what inventory was in the business, nor did we have any means of knowing what we had sold. Instead, we had a simple “system” that replenished what we sold—whether it was old stock or new stock. Furthermore, we did not run on traditional min-maxes. We had no visibility across the chain of how our product sales were being achieved in terms of growth.

What we had, therefore, was a failure in terms of delivery to our stores, and therefore to our customers. Yet we continued to be highly successful. We kept adding stores. Unfortunately, that meant we kept adding load to our already-stressed legacy systems. We had failures in products and pricing every day, just basically because we had no message queuing or even automatic restart capa-bility. In short, the business may have been growing, but the IT infrastructure was simply not keeping up.

The strategy for change: start with understanding the business processes

From soon after my appointment, it was clear that my priority was to address these shortcomings. The imperative had become finding an escape from what all too easily might become a business threatening trap. Once I understood the scale of the issues we were facing and the resources I had to work with, I real-ized we needed additional help.

Spotlight had a team of about 55 IT professionals who had been working with-out the benefit of defined processes or basic disciplines. They were willing and conscientious in terms of supporting our customers in the business. But most of their time was spent fighting fires.

KAZ Group, under Senior Solution Architect Vicki Redwood’s leadership, brought in a team of analysts to help us develop a strategy for building an IT infrastructure that could support our business and enable continued growth. The KAZ team took us back to square one—understanding our business processes.

With the in-house IT team spending

most of its resources fighting fires,

Spotlight looked to IBM Business

Partner KAZ Group for assistance

in addressing the IT shortcomings.

of 60


HighlightsWe call this effort the “process flow saga,” because it took three long months to arrive at accurate diagrams of what our systems did and what our process flows were (Figure 2). At the time, this process flow analysis seemed endless. From talking with other organizations, we now know that our experience was neither unique nor all that lengthy. But at the time, it felt like we were not making much overt progress.

Figure 2. Spotlight’s IT transformation began with a detailed mapping of the processes behind the retailer’s core business.

PRODUCTMASTER

PLU Ref. Data(warehouse lines)

WarehouseShipment Costs

Eagle

IETL190PRONTO

RavenWalka (NZ)

Sub Dept SalesPurchases & Interstores

Shipment Rece

Virtual Shipment

KeyedReceipts

Store Credit Claims(Whouse & Supplier)

CREDITCLAIMS

STOCKRECEIPTS

PLU COUNTS

PDSTAG

BC

Store claimapprovals

Buyers Co

un

tA

dju

stmen

ts

Store

On Hand,rder Status

Eagle

CockatooClaims

CREDITCLAIMS

CLAIMREPORTING viaSQL reporting

IETL 350STOCKTAKE

MASTER

Client PC

IETL251

IETL280IETL 250CREDITCLAIMS

Hornbill

???

???

???

Head Office

terstoreansfers

Shippingdept.

Before Spotlight could transform

its IT operations, it needed to

understand the business processes

IT supports.

An end-to-end process mapping

helped the IT team see how applica-

tions and data related to the needs

of the business.

Nevertheless, this represented a watershed for many on my team. Until we went through this exercise, they did not understand how, by tweaking this or adding that, they had all too effectively inhibited the use of what IT and applications we did have.

of 60


HighlightsAnother eye-opener for us all was the process mapping. Spotlight is a retailer. We buy and we sell. Everything is about products and price. It should be simple, but in many cases it is not. So what we focused on was the end-to-end process for a sales transaction: How did we buy a product and receive it into stock? How did we move a product from stock to the store? How did we record the sale and capture the transaction data in our systems? Where did the sales data end up in the legacy systems?

At the end of the “saga,” the IT team understood what the business was about. And once we understood how many different versions of the truth we had in circulation, we could begin to rationalize.

Developing a roadmap for implementation

Once we thoroughly understood our “as is” situation—from both a business process and a technology perspective—it was time to change. We needed a roadmap to new, replacement, systems while keeping the old systems going. At the same time, we were plagued with systems instability. Our legacy systems were failing. In order to keep the business running, we just hoped we had the time to make replacements before something irrevocably broke.

We had to identify priorities—what we could live with for the long term, and what needed addressing sooner. We also needed the control to selectively turn off some parts while leaving others on. That meant thinking about how we might run some elements in parallel, at least until the new parts were proven.

For example, we decided early on that we had to replace our point-of-sale system immediately in one country. Yet this could not happen overnight; it had to occur gradually over some six months. We also decided to add enter-prise resource planning (ERP) capability, so we chose both a new point-of-sale system and SAP Retail for ERP.

The next step was to identify

which legacy systems to retain

and which to retire—and to

develop a phased implementation

plan that would support ongoing

business operations.

of 60


HighlightsIntegrating legacy and new systems with a services-based approach

We decided, with KAZ’s encouragement, to break the old systems into what we now refer to as services, or small components. The advantage was that the business could understand what each part was doing and then could choose when to turn on (or off) selected business functionality.

This also enabled us to combine parts (services) that previously could not have been combined, as well as introduce new services and functions that could work with old ones. For example, we could create a mixture of old point-of-sale and new point-of-sale systems feeding old and new applications—all of which was automatically achieved by putting the service layer in between.

Even with this phase completed, and with a rationalization of the middleware that connected everything, we still needed end-to-end control. Our architec-tural solution, suggested by KAZ, was to add a process service layer on top so that we would apply automated coordination and control from start to finish. A further benefit of this was that we were then able to introduce a degree of parallel processing without having to change the old systems. The important aspect to remember, however, is that this process service layer could only work because we were breaking functions up into services and placing the service architecture at the center.

Selecting the right tools for end-to-end process control

The next question we addressed was tool selection. As a dynamic retail business with continuous events, we could not afford any loss of business capability. We could not contemplate turning off the point-of-sale system for a week to install a new one, nor could we shut down the business for three weeks to introduce ERP. We needed to migrate slowly across different stores in different locations, from legacy to new, and perform this seamlessly so there would be no significant impact on the business. These were the most critical factors for us.

Introducing a services layer

enabled Spotlight to integrate

business functions in new ways

and readily add new capabilities.

The one missing component was a

way to control business processes

end-to-end.

Spotlight began to look at applica-

tions in terms of the business

functions they performed, which

were defined as services.

of 60


HighlightsWith this in mind, Vicki’s team proposed IBM WebSphere® Process Server. The attraction was that it provides the basis for end-to-end control over at least five disparate systems. With one process control point, we could see and manage everything, from goods going to the store through to sales being recognized in the head office (Figure 3).

Figure 3. WebSphere Process Server provides a central point of control over business events while integrating the flow of business processes across multiple applications.

The company selected IBM

WebSphere Process Server

to provide a single process

control point over multiple

disparate systems.

The process control layer

coordinates business events

across five applications, handling

errors and generating alerts. WebSphere Process Server is now being used as our virtual process control. It coordinates business events across our five main applications as well as performing error handling and generating alerts. Now we can see what is hap-pening, which is good. Yet we also discovered we could see errors that we did not even know were occurring. Nevertheless, we now have consistent process flows and process monitoring across many asynchronous steps, which are being performed in a mix of old and new applications.

of 60


HighlightsThis is a huge improvement. Before, we looked like a monolithic IT shop with the business having minimal control and no responsibility. Now the business has information and must take responsibility. It is a fundamental change that has been achieved by using services and process management. The business and IT work more closely together than ever before.

Part of what has helped here is a set of common definitions that work for both business and IT (Figure 4). While it may seem a statement of the obvious, having a common understanding of what constitutes a sale or a trend or a product is critical. Now, when business and IT people talk, we know we are talking about the same thing. That has already proved to be an incredible winning situation for the business and for my developers, and we consider it to be a best practice for any services-based transformation.

A common set of definitions—

developed during the business

process analysis phase—helps

ensure that business and IT speak

the same language.

Figure 4. Business and IT agreed on a set of definitions that provides a common vocabulary for describing business functions.

of 60


HighlightsWhere is Spotlight today?

At the time of this writing, we have made incredible inroads into reshaping how Spotlight delivers and exploits IT. We are 20 months into our transfor-mation, and we are about one-third of the way through our plan. We have implemented WebSphere Process Server —it is live and running. We are in the final stages of testing SAP for Retail, and that will shortly be going live (Figure 5).

www

Figure 5. This diagram illustrates the progress of Spotlight’s IT transformation at the time of this writing.

A phased rollout of new POS

systems to stores was implemented

in parallel with bringing a new ERP

solution online.

of 60


HighlightsAlready we are more than halfway through introducing the new point-of-sale systems. We have about 120 stores to do over a four-month period, at a rate of about 8–10 per week. Now that we have the installation process refined, these are going in smoothly. In the interim before SAP goes live, they are fed by the services at the front end of our legacy systems.

Using the services-based approach, we are already combining product hierarchies across the new SAP system and the legacy systems. Similarly, we have started to create orders on the new ERP system regardless of whether they point to the new point-of-sale or old point-of-sale system. To us these are all enormous wins.

The feedback from stores has been amazing. I received yet another e-mail recently saying how much a staff member likes the new system—not least because it enables her to support her customers much better. Furthermore, the rollout has not impeded our catalog business and its related sales.

Taking the transformation to the next level

Next on our agenda is a retooling of our Web site. We have selected IBM WebSphere Commerce Server to be our new Web store. After that there are additional systems we will update, change or reuse (Figure 6). But thanks to the services approach and the way that WebSphere Process Server can be used, we have a flexibility of choice. This is highly attractive, especially now that we have mapped our processes and understand our data.

The services-based approach

enabled Spotlight to combine data

across the new and old point-of-

sale systems, legacy applications

and the new SAP system.

of 60


Highlights

We also plan to implement IBM WebSphere Portal as our new internal com-munications mechanism. With 6,000 employees, some of them short-term or even temporary contractors, effective communications and easy access to training materials are additional business imperatives. The portal will allow us to do training locally, at the store level, while ensuring consistency by keeping documentation updated and available centrally.

WebSphere Portal also offers us the option for expanding our marketing initiatives on the Web. With five million registered members in our loyalty program, we see tremendous potential in using WebSphere Portal to create a powerful social networking community with our customers.

Figure 6. Future plans call for implementing a new infrastructure for Web retailing and a portal-based intranet.

The next steps in Spotlight’s IT

transformation will be to retool

the Web site and implement an

employee portal.

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HighlightsLesson learned: bring in the right help at the right time

The single most important lesson I have learned from what we went through is that you should never underestimate the size of the task. Spotlight needed help to achieve what we have done. We needed the KAZ team to come in and show us what was in front of us and to have that extra level of knowledge and experience that our IT team, however well motivated, simply lacked.

If we had tried to do everything ourselves we would have been slower and more error prone, as well as less imaginative. One does not always have objective thinking when one is on the inside. For us this lesson learned is all about finding the best people to help understand the business together and then to achieve a gradual skills transfer.

The result has been to change how IT supports the business. We now have a coherent IT operation and an expanded, more skilled IT team that aims to understand and fulfill the business requirements. We can now use services because everything we do is oriented around the business processes.

From a CIO viewpoint, perhaps the biggest value has been that my IT depart-ment now understands our business processes. We are not “techies” anymore. We are Business Process Retail Technicians. Furthermore, the obverse is true: the business also understands the drivers and levers that affect IT. The busi-ness is both more realistic and imaginative, now that it understands the layers and the services as well as the complexity of what we have developed.

With the new skills they acquired,

Spotlight’s IT staff is now focused

on understanding and meeting the

needs of the business.

The knowledge and resources

provided by KAZ—plus that

team’s objective point of view—

were critical to the success of

the project.

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HighlightsThe final analysis: it begins and ends with process management

Looking back, I do not think we had even heard of the term “SOA” until comparatively recently. Rather, we adopted the approach that KAZ brought to us as a way of reaching our objectives. They convinced us that the process management approach would enable us to move from A to Z without signifi-cant negative effects on the business. There was never any discussion of SOA principles that I can recall.

Instead, the focus was on what WebSphere Process Server would allow us to do—on the function and effect, not the architectural principles. I remember thinking that it all sounded really good, almost too good. Ours was a business-driven decision. It was not a conceptually driven conclusion.

That is not, however, to downplay SOA. We did not know we were delivering according to SOA principles. We did not know that others had arrived at the sorts of conclusions we had. Now I can see that we “did” SOA without knowing about SOA—and this confirms to me just how effective SOA is and continues to be for the business.

While the project did not begin

with a formal decision to take

advantage of SOA, it was

immediately evident that the

initiative would benefit greatly by

adhering to SOA design principles.

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About IBM

IBM is a global computer products and services company, with close to US$97 billion in sales, approximately 386,000 employees, and operations spanning more than 150 countries and including thousands of clients, Business Partners and suppliers. As one of the world’s largest IT companies, IBM strives to invent, develop and manufacture the industry’s most advanced information technologies, including computer systems, software, network-ing systems, storage devices and microelectronics. Its worldwide network of services professionals provides the extensive expertise clients need to create business value using IBM’s leading technological solutions.

About KAZ

KAZ Group, an IBM Premier Business Partner, is the largest Australian-owned IT services company, providing innovative and flexible IT solutions that help clients simplify, optimize and transform the way clients do business. As a separately managed subsidiary of Telstra, KAZ combines a 30-year heritage in IT with the networks and connectivity options of Australia’s leading telecom-munications and information services company.


To learn more about the many ways IBM can help you build and manage a Smart SOA™ solution for transforming business processes, please contact your IBM representative or IBM Business Partner. Or visit us at:

ibm.com/soa

To learn more about KAZ Group, an IBM Premier Business Partner, visit:

kaz-group.com

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IBM Corporation Software Group Route 100 Somers, NY 10589 U.S.A.

Produced in the United States of America October-08 All Rights Reserved

IBM, the IBM logo, ibm.com, Smart SOA and WebSphere are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with a trademark symbol (® or ™), these symbols indicate U.S. registered or com-mon law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or common law trade-marks in other countries. A current list of IBM trademarks is available on the Web at “Copyright and trademark information” at www.ibm.com/legal/copytrade.shtml.

Other company, product, or service names may be trademarks or service marks of others.



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Yansha department store embraces supplier collaboration to streamline processes

Innovation that matters

■ Key Benefits

• Reduced order lead time from

2.5 days to 4.5 hours

• Improved order acknowledgement

rate from 80 to 99 percent

• Reduced order error rate from nine

to one percent

• Achieved ROI in nine months

Overview

■ Business Challenge

In order to maintain its market

leadership position, Chinese

retailer Yansha needed to

increase its competitiveness

against both local retailers and

new foreign competitors in an

increasingly deregulated Chinese

retail industry. Yansha saw that

the best way forward was to trans-

form the way it does business

with its supply chain partners

through the adoption of new busi-

ness processes, automation and

business intelligence.

■ Solution

Yansha deployed a first-of-its-kind

supply chain management (SCM)

platform that leverages a service-

oriented architecture (SOA) to inte-

grate enterprise resource planning

(ERP) and SCM applications. The

platform enables Yansha and its

suppliers to leverage new real-time

performance information to provide

transparency into supply chain

business processes and generate

actionable business intelligence,

setting new standards of efficiency.

A rapidly changing retail landscape

The retail industry in the vast

Chinese marketplace is very differ-

ent from that in the West. Retailers

have historically been highly region-

alized, and the overall market has

been largely closed to competition

from foreign companies. With the

rapid growth of the Chinese econ-

omy and relaxation of regulations,

that is changing rapidly. Mergers

and acquisitions are on the rise lead-

ing to industry consolidation and

expansion beyond regional boundar-

ies, and Chinese retailers must now

share the market with global compa-

nies as well.

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2

Transforming the supply chain through real-time performance information

This adds up to unprecedented competitive pressure for Yansha, one of China’s

largest regional retailers. Yansha is an upscale brand with revenues in the

billions of Yuan each year and 215,000 square feet of retail space at its Youyi

Shopping City in Beijing. Catering to an upscale clientele, Yansha sells high-

end, exclusive goods from brands such as Versace, Prada and Calvin Klein.

Yansha has long displayed industry leadership. Opened in 1992, Yansha

was the first retailer operating as a joint venture in China to introduce modern

enterprise processes and computer systems aimed at improving managerial

methodologies. In 2000, it implemented IBM Business Partner eFuture’s ONE

POS-ERP suite, providing it new levels of internal efficiency. In 2003, the ERP

suite was upgraded with SCM capabilities.

But Yansha was not realizing the full potential of its systems. With the rapid

pace of change in the retail landscape, Yansha knew that it had to do more

if it was to maintain its leadership position. Faced with the prospect of having

to compete with highly efficient foreign competitors, Yansha realized that it

had to optimize its supply chain and improve efficiency among its 1,800-plus

local and international suppliers, and that leveraging technology was the way

to do it. This quantum shift represented a radical departure for Yansha, which

like its local competitors, was still doing business manually for the most part,

relying on paper-based processes and interaction via telephone and fax.

Yansha faced two fundamental challenges in its effort to optimize its supply

chain: first, to streamline and automate its business processes, and second,

to find a way to get all of its suppliers to buy into a new, more efficient way of

doing business.

Transforming business processes for enhanced decision-making

Despite its implementation of an enterprise suite, a number of obstacles–

continued reliance on manual processes, the siloed nature of many of its sys-

tems and a lack of integration with supply chain partners – were hampering

Yansha’s ability to track and integrate information in real time and generate

actionable business intelligence from it. More than 30 key supply chain pro-

cesses were handled manually. The result was low productivity, high error rates

and inaccurate business data, all leading to reduced competitiveness.

To transform its processes for more informed decision-making, Yansha worked

with the IBM China Research Lab (CRL) and eFuture to develop Blue Engine,

a process-driven SCM platform built specifically for the retailer. Blue Engine

incorporates both automated business processes (such as purchase orders,

shipping notification, invoicing, payment and return of goods) and new function-

ality based on IBM WebSphere® Process Server and IBM DB2® middleware.

Business Benefits

• Increased supplier information

service revenue by 50 percent

• Reduced order lead time from

2.5 days to 4.5 hours, driving down

inventory costs

• Improved order acknowledgement

rate from 80 to 99 percent

• Reduced order error rate from nine

to one percent

• Achieved ROI in nine months

• Enhanced operating and business

process efficiencies, visibility, asset

structure and both customer and

supplier satisfaction

• Enabled the creation of a value-based

supplier pricing model that uses new

supplier performance metrics

• Reduced operating risks due to

optimization of supplier relationship

profitability and lower error rates

“ Exchanging our data and interacting closely will enable us to respond to the market appropriately.”

– Mr. Ai Jie Ma, Director of Yansha

Technical and Information Department

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3

By integrating information from existing systems with new automated

processes through a service-oriented architecture, Blue Engine accomplishes

several key objectives:

• Automates the supply chain management-related key business processes among

people, across multiple existing applications and between Yansha and its suppliers

• Improves visibility through real-time monitoring of business processes, generating

key performance indicators (KPIs) – such as order acceptance rate and on-time

delivery rate – that enhance decision-making capabilities

• Provides suppliers with better online information services to make customer buying

behavior, sales trend and process information transparent, enabling suppliers to

adjust and optimize their operations to satisfy market demand. This increases supplier

willingness to pay for these fee-based services (thereby increasing revenue), while

encouraging them to move away from manual interactions – thus improving overall

supply chain efficiency

Because of the need for the efficient integration of information, processes

and systems across the enterprise and out into the supply chain, the adoption

of SOA is a key part of Blue Engine. It provides the flexibility to quickly build

new solutions (and change existing ones) based on immediate business need.

SOA also enables greater interaction with suppliers through Web-based delivery

of services, which fosters greater responsiveness. According to Mr. Ai Jie Ma,

Director of Yansha Technical and Information Department, “This solution will

help us build an information platform together with our suppliers in their internal

information system. Exchanging our data and interacting closely will enable us

to respond to the market appropriately.”

With Blue Engine, many of Yansha’s paper-based manual processes have

become a thing of the past. Workflow-related activities such as issuing purchase

orders and checking inventory are pushed directly to appropriate users via

mobile short messages, browser-based workspace and e-mail – triggering alerts

when activity processing is delayed, and significantly improving business

process execution. Business users can also employ collaboration utilities such

as mobile short message services to find the right person to solve potential

process issues, which helps streamline resources and avoid rework.

The power of real-time information

The Blue Engine project pioneered the first application of a process automation-

based workflow engine using IBM China Research Lab’s Web 2.0-based visual-

ization and interactive business process monitoring technology for China’s retail

industry. This visualization technology enables Yansha management to get an

accurate, real-time view of its supply chain, delivered through a “dashboard” that

displays continuously updated key performance indicators. This in turn provides

a solid basis for business decision-making and process optimization.

Key Components

Software

• IBM WebSphere Process Server

• IBM DB2 database software

Services

• IBM China Research Lab

• IBM Global Business Services

IBM Business Partner

• eFuture

Why it matters

In the vast Chinese retail market,

deregulation has been driving increased

competition from regional players as

well as newly arrived international

companies. In order to maintain its

leadership position in the marketplace,

major Beijing retailer Yansha deployed

an SOA-based supply-chain manage-

ment solution – an industry-first in China –

that enabled the company to expand

its capabilities and transform the way it

does business with over 1,800 suppliers.

Thanks to streamlined, automated pro-

cesses and new business intelligence,

Yansha has been able to increase its

competitive edge over other retailers by

optimizing the efficiency and profitability

of its entire supply chain.

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ODC03019-USEN-00

More importantly, real-time information enables Yansha to work more effectively

and efficiently with its suppliers. The retailer now has the information it needs

to accurately categorize its suppliers based on a number of factors including

their profitability, monthly selling trends and level of activity. This has enabled

Yansha to come up with a completely new, value-based supplier pricing model

that gives preferential treatment to those vendors which are most valuable and

profitable for the company. In this way, suppliers are given an incentive to work

efficiently: superior performance is rewarded with a better deal.

The availability of new information provided by the solution has also enabled

Yansha to provide enhanced fee-based online information services to its

suppliers, which not only encourages them to adopt the new methods, but also

generates additional revenue for the retailer.

Competitive advantage, greater efficiency...and satisfied suppliers

All 1,800 of Yansha’s suppliers actively use the supply chain management

solution and supplier satisfaction has improved significantly. The improvements

in efficiency are dramatic: Order acknowledgement (a required verification

step in the supplier order/fulfillment process) is up from 80 to 99 percent, order

lead time has dropped from 2.5 days to only 4.5 hours and error rates are down

from nine percent to only one percent. Risk and cost have both been reduced,

and competitiveness is greatly improved. Even the revenue generated by online

supplier information services has increased by 50 percent.

“Our shopping mall now has a technical advantage,” notes Mr. Ma. “We have

a leading role in securing prospective sites, enabling us to rebuild business

processes and stay competitive. It is a classic case of information technology’s

business value for corporations.”


To find out how better use of your information assets can help transform your

business, please contact your IBM representative or IBM Business Partner.

Visit us at:

ibm.com/innovation


IBM Corporation Global Solutions, Industry Marketing 294 Route 100 Somers, NY 10589 U.S.A.

Produced in the United States of America 11-07 All Rights Reserved

IBM, the IBM logo, ibm.com, DB2 and WebSphere are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both.

Other company, product, or service names may be trademarks or service marks of others.

Many factors contributed to the results and benefits achieved by the IBM customer described in this document. IBM does not guarantee comparable results.


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http://www.ibm.com/innovation

SWM14010-USEN-00


IBM CorporationRoute 100Somers, NY 10589U.S.A.

Produced in the United States of AmericaJanuary 2010All Rights Reserved

IBM, the IBM logo, ibm.com, Smarter Planet, the planet icon, DB2, Lotus, Rational, Tivoli and WebSphere are trademarks of International Business Machines Corporation in the United States, other countries or both.

Other company, product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the Web at ibm.com/legal/copytrade.shtml

References in this publication to IBM products and services do not imply that IBM intends to make them available in all countries in which IBM operates.

These customer stories are each based on information provided by the client and illustrate how one organization uses IBM products. Many factors may have contributed to the results and benefits described; IBM does not guarantee comparable results elsewhere.

IBM Retail | 14 Success Stories in Retail

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