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Inside:

Supply Chain Collaborationin Retail

Collaboration and RetailAn introduction

Streamlining the supply chainHow analysis eases the points of pain

Talking the same languageLearning to communicate beyond the enterprise

TRANSPARENCY IN THE SUPPLY CHAIN

Exploiting the power of partnerships

XML, SOAP AND MICROSOFT .NET

Seamless information flow

with REM Workbench

REAL-TIME TRACKING

Enhancing customer service levels

with Marks & Spencer

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Ever since Efficient Consumer Response (ECR), with its emphasis

on partnering and category management, became the

dominant supply chain model in the mid 1990s, the importance

of collaboration between trading partners has steadily increased.

Initially, such efforts focused on greater visibility in shipment

information to improve inventory management and cut lead-times;

before long companies like Safeway and Tesco were providing key

suppliers with transactional data at Distribution Centre level.

Today Collaborative Planning, Forecasting and Replenishment

(CPFR) is widely adopted on both sides of the Atlantic while were

already seeing the first Collaborative Product Development

(CPD) initiatives involving retailers such as J Sainsbury plc.

Introduction

Collaboration and Retail

As the pace of change in consumer demand

and the speed of retailers response continues

to accelerate, real-time systems with seamless

extended enterprise information flows are

becoming vital. Products need to be developed

faster and more efficiently; suppliers need to

respond ever more quickly to each fluctuating

nuance in consumer preferences and mass

customisation is no longer a futurist concept.Many analysts already argue that such product

personalisation will extend across all market

segments in the foreseeable future with

shoppers able to select the ingredients of their

ready meals, the shade of their carpets, or the

waist sizes of their skirts or trousers and all

for delivery within a few hours or days.

These factors make supply chain collaboration

even more essential with that collaboration

extending far beyond retailers and suppliers

to packaging designers, third party logistics

specialists or raw materials producers in a

complex supply web. IT companies like Eqos,along with management and technology services

partners such as Accenture and technology

providers like Microsoft, are already putting the

infrastructure in place to support this vision of

the future a vision that is far closer to reality

than perhaps we realise.

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Streamlining the supply chainAsk any retailer to name the key areas of concern within their organisation and the odds are

that the list of pain points will be headed by supply chain and stock-outs.

Estimates vary and in some cases guesstimate is perhaps the more correct term but for most retailers

an average stock-out level of 8-12 per cent is not atypical. The word average is important, too, as not surprisingly

popular lines sell out more quickly so the stock-out level for these items can easily reach 20 per cent or more,

representing a significant erosion of both customer service levels and sales. While retailers have been aware that

stock-outs are a nagging sore on the side of efficiency, the scale of the problem has been highlighted in the past

couple of years by in-store picking routines for home shopping orders. As the substitutions mounted, companies

like Tesco became quickly and uncomfortably aware of the shortfalls.

Accept no substitutes

At the same time, pressures continue to reduce the levels

of inventory languishing in the supply pipeline. Sainsburys,

which is currently undergoing a massive transformation of

its entire supply chain with an investment of more than

45 million in its Project Phoenix programme, is working

towards the stockless supply chain. By using real-time

information, cross-docking and sophisticated fulfillment

factories, each capable of processing around 2.6 million

cases a week, Sainsburys will cut overall stocks to less

than one week so improving both margins and freshness.

Sainsburys has outsourced much of its IT to Accenture which has advised the company

not only on choice of technology, but on the necessary process transformation that will guide

developments in a changing marketplace. Our work with Sainsburys aims to help them

gain maximum business value from both current and future technologies, says Bob Willett,

Accentures Global Managing Partner for the Retail Industry. Weve been actively researching

consumer trends and it is vital for retailers to understand this changing landscape.

One of the leading players in this area is Marks &

Spencer which is able to link directly to its hanging

garment sortation system to adjust product allocation

to stores within five minutes of an exceptional event

distorting store demand. Monitoring these goods once

they have left the distribution centre to improve

responsiveness still further has the potential to create

great efficiencies in the f uture.

Bob Willett, Accentures Global Managing Partner for

the Retail Industry, believes such monitoring will

become even more important over the next year or so.

He argues that with wireless product identification

systems (RF-ID) falling in price it will be possible to use

these sorts of tags to monitor not only product

movements but to supply additional information to

customers on sourcing and freshness to enhance

service levels. Prices are falling and within 18 months

RF-ID tags could become practicable for high volume

commodity lines, he suggests. This will change the

dynamics of retailing beyond all measure. Just as

automatic replenishment is becoming a viable

Business to Business (B2B) supply chain option,

Willett argues that RF-ID could enable the same sort

of system on a Business to Consumer (B2C) level.

Home-based scanning systems beloved of futurists

such as the intelligent fridge c ould finally become

commercially viable, capable of monitoring our grocery

store cupboards and automatically compiling

replenishment orders for home delivery.

This may still be three to five years away, he adds, but

tomorrows successful retailers will be those who own

the necessary infrastructure and make appropriate

brand alliances to enhance the consumer offer.

Today it might sound a trifle fanciful to suggest that a

shoppers pantry could note the consumption of apple

pies, automatically alert the local store of a developing

requirement, and have the same demand data beamed

to a remote bakery to influence production. But the

technology to do so is already largely in place and it will

enable tomorrows stockless supply chain.

Real-time tracking

Real time, real business

Within the Heartbeat application, stock levels are

agreed with individual retailers and then the system

implements automatic replenishment up to these

levels. As well as improving stock levels by up to 25

per cent, the system has significantly cut the numbers

of disputed invoices.

The system is flexible, adds Adrian Morrish,

Microsofts Retail Industry Manager, so that Proctor

& Gamble can work with either store level

transactional data or information about shipments

from regional distribution centres; it makes it very

adaptable to the different levels of technical capability

among P&Gs retail c ustomers.

Trust is essential in these sorts of real-time models:

suppliers are given information about consumer

demand and must act on that information within

a pre-agreed framework. That can include product

and promotional lifecycle management with trading

partners agreeing terms of reference and business

rules and then automated systems managing the

response to demand or lack of it as need be.

Solutions like Eqos Retail Event Management

Workbench have been developed specifically for this

sort of highly automated operation based on business

process analysis from Accenture and the Microsoft

.NET platform. While real-time information flow is an

essential component of the stockless supply chain,

so too is real-time product tracking.

Automated operations

Given the enormous volumes, systems like

these must be highly automated. Real-time

information is the key, says Mike Quinn, CEO of

Eqos. If you effectively no longer have an internal

supply chain with products going straight from

supplier, possibly via a cross-docking operation, to

the store, then you need rapid and reliable links to

those suppliers. CPFR moves far beyond simply

sharing data, it becomes part of the overall supplier

performance management strategy. In the US,

Proctor and Gambles Heartbeat project focuses on

real-time event management using XML messaging

and Microsofts BizTalk servers to link

to a number of major retailers to collect near real

time transactional data. Out of stocks in theindustry have been a problem for years, says Steve

David, P&Gs chief information and B2B officer. The

situation is only getting worse as all try to run our

supply chains faster with less inventory.

Analysis

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Integrating large numbers of trading partners in complex supply webs is far from

easy but open connectivity standards can help.

Supply chains are just that chains: they are made up of links, through a complex supply web, connecting

buyers, sellers, designers, shippers or packagers. These companies may be large or small; they may use mainframes,

thin clients, the latest most sophisticated servers or they may rub along with elderly desk-top machines. They will

certainly be using a mish-mash of software applications and operating systems and they all need to collaborate.

XML, SOAP and Microsoft .NET

We specialise in the B2B space,

says Chris Foulkes, Chief Technology

Officer at Eqos, so .NET is ideal as it

provides the necessary resilience,

transparent connectivity and

interoperability. What especially excitesus is not the server infrastructure but the

level of connectedness that can be

achieved and the ease with which our

products can be maintained on this

platform. Eqos Collaborator technology

is already well established in the area of

supply chain event management, with a

successful track record in providing

collaborative solutions for managing

promotions and new product introductions.

Newest addition to the product suite

is Retail Event Management (REM)

Workbench which has been developed in

association with Accenture. While allowing

a number of trading partners to collaborate

on a one-to-one basis, the Workbench

extends well beyond the conventional

concept of a shared corporate portal.It combines seamless information flows

with workflow and process management

so that prompts and exception reports can

be triggered, in real time, if there is any

deviation from the development plan

or timetable. The speed of change in

business is such that essential processes

are no longer static, says Foulkes.

A problem with earlier systems has been

that the technology simply cannot keep up

with this level of transformation and so

becomes restrictive rather than enabling.

Working with Workbench

Creating a common framework that can

overcome these inevitable differences is

essential for supply chain collaboration

and Microsoft believes that XML Web services

and the SOAP [Simple Object Access Protocol]

standard can provide the solution. XML and

SOAP are completely independent of operating

systems, says Phil Cross, Developer MarketingManager for XML Web Services, at Microsoft.

This means that applications can talk to each

other regardless of whether they are IBM,

Microsoft, Unix or whatever. It means that

retailers and their trading partners can easily

establish a relationship for rapid data

exchange. Supporting these technologies is

Microsofts .NET platform. The label embraces

a new generation of Microsoft products and

technologies spanning clients, tools, servers

and a selection of Web services from

Microsoft. The platform exploits the power

of XML technology to enable a combination of

Internet and traditional IT solutions to create

a fully integrated real-time environment.

Technology

Talking the same language

To find out more aboutMicrosoft .NETvisit: http://www.microsoft.com/uk/business/agility/dotnet.asp or email Marina Stedman on marinast@microsoft.com

Eqos and its solutions visit: www.eqos.com or call Eqos on 01372 224400

Accentures Retail Operating Group and Supply Chain Management visit: http://www.accenture.com/retail

or http://www.accenture.com/supplychain

Accentures Microsoft Solutions visit: http://www.accenture.com/microsoft

Or, to contact Accenture directly about its Microsoft solutions visit: http://www.accenture.com/microsoft and select the Contact us bullet

The immediate solution

With XML and the .NET framework, IT can finally keep up with the demands

of the business so that both strategic process management and short-term

workflow needs can be met. Embedded business rules can react in real

time to events as they happen: there is no longer any need for data to be

batched and analysed, responses can be immediate and accurate. While

Accenture adds the business expertise to establish these business

processes and embedded rules, thanks to the rapid developments possible

with .NET and XML Web services the REM Workbench can be fully

implemented within 8 to 12 weeks.

Transparency in the supply chain

The openness of the technology means that the system

can be used for all product types and trading partners, adds

Eqos CEO, Mike Quinn. It can be suitable for a wide range of

collaborative activities including new product development or

monitoring performance against agreed KPI (Key

Performance Indicators). REM Workbench is one of the

new generation of software systems that are starting to

exploit the full potential of the .NET environment. Not only

do systems such as this finally make real-time supply chains

a possibility, but they can extend the supply chain from prime

producer to end consumer in a totally transparent model

which allows for all involved to interact easily and effectively.

Microsoft,theMicrosoftlogoand BizTalkareregisteredtrademarksand/ortrademarksoftheMicrosoftCorporationintheUS and/orothercountries.2002MicrosoftCorporation.

Allotherproductsandcompany namesmentionedhereinmaybetrademarksof theirrespectiveowners.Allrightsreserved.

Solution deployment

XML Web Services

Internal Systems

InternalSystems

Integrator

.NET

Passport

.NET

Passport

.NETAlerts

Integrator

InternalSystems

Integrator

Collaborator Server

Application Builder

Trading Partners

Lead Organisation

Trading Partners

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