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Asda
The Third Largest Grocery Retailer in the UK Implements a Data Warehouse To Drive Operational Systems
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Over the past decade retailers have turned traditional approaches to logistics and product distribution on their head, as there has been a move to embrace total supply chain management. While many companies have implemented new operational systems, leading retailer Asda has taken the technology step further, implementing a data warehouse that provides the information to drive the operational systems. |
In the next phase, the company is looking to move to closed loop systems, whereby the whole process is automated, with staff only needing to interact on exceptions to core processes.
Asda is the third largest grocery retailer in the UK and has ambitious plans to continue to grow it market share. John Malpass, Business Systems Manager, says, "Asda realises it has to invest in IT to support its growth plans." And key to that is the supply chain. "The company objective is to achieve world beating availability," he explains. "Availability has a direct bearing on a customer's perception of Asda: having the right range is important but if the product is not on the shelf you create an unhappy customer."
In addition to high availability there is huge pressure on retailers to reduce stock in both stores and depots, to reduce lead times from supplier to shelf edge, and to increase order accuracy and fulfillment to ensure that stores and depots get the right products on time. Add to this the requirements for 24-hour trading - coming on top of Sunday trading - and ever increasing ranges and, says Malpass, "It is a complex environment to manage."
He insists that the only way to manage these volumes without clogging up the distribution network and stores is to centrally manage the environment. The need is to assess which products need to be ordered on which days, based on lead times and merchandise dates. "Then you need to be able to dynamically tune the supply chain to take in promotions and seasonality," he adds.
Three years ago the company had no information systems to support its focus on customer availability. All the supply chain ordering systems were detached both from customer demand and each other. Without a sales basis for ordering, there was no forecasts shared between systems and the company relied heavily on manual intervention and gut reaction. There was a clear need to drive sales right through the supply system, to ensure that all ordering systems were based on sales forecasts. To achieve this Asda needed to integrate the supply chain, create a single base for ordering and forecasting from stores and depots to suppliers. "We wanted to totally automate that process and provide full central visibility at head office for control of the supply chain dynamics," he confirms.
Fundamental to the development was the integration of a data warehouse into the business process to deliver, says Malpass, "One version of the truth. We also wanted intelligent systems that enabled alerts and exceptions to be integrated into the operational system to start driving those decisions and to allow the system to drive the day to day decisions, with only exceptions being handled by people."
Asda has worked with three suppliers on the creation of its integrated supply chain and data warehouse: NCR - adopting its Enterprise Information Factory model, IBM and MicroStrategy. The company also adopted a three stage approach: a new store based ordering system to align forecast with customer demand; integrate ordering and forecasting through the supply chain; and provide the information to support and drive the supply chain. "The third phase happened in parallel with the first two stages." As the roll out of in-store sales based ordering systems continued, Malpass looked to develop appropriate information systems that were not - unlike existing systems in finance and category management - based on pre-canned reports. "Our IT strategy is to get the business to use information in a different way," he says.
The new in-store systems provide a raft of sales, forecast and stock information as well as shelf capacity and order lead times. The prototype data warehouse was developed based on this information which the team called the 'SCIP' - supply chain information database - which provided information about what was happening in store for the first time, including when products were not available on the shelf.
Although the initial reports were designed to replace the dependency on the mainframe and aimed to demonstrate to the business the value of the information now available to them, the company had a clear vision for the future direction of the warehouse which influenced its decision to adopt MicroStrategy Agent. "We want to do complex analysis on line as well as in batch, so response times have to be good enough to support online processes as well," he says. Adding, "We needed methods of creating intelligent agents and we wanted to use point and click technology to deliver this very quickly. We wanted people to be able to understand the impact of an alert, with the system providing the action options for them to take - such as reapportion stock to specific stores or substitute this product." The ability to integrate MicroStrategy Agent into the application - using either Java or Visual Basic - was also a key criterion. "We wanted the raw analytical capability to happen behind the scenes so that the user has one common interface whether they are accessing MicroStrategy Agent or mainframe screens," he says. The initial development demonstrated the potential of the technology. For the first time, the company had access to daily information and they embarked upon the use of exception reports to tactically manage availability. "For the first time ever we saw things as they were happening, enabling us to take action when it is needed," says Malpass.
The next step was to extend this to depot replenishment, which had to be driven from store based sales forecasts and to move towards the goal of centrally managing the supply chain in an automated fashion to free up more staff to handle the planning function. He explains, "We wanted to increase the planning capability and introduce real exception management which would allow us to start concentrating on planning, getting close to stores, and close to suppliers - getting this customer focused supply chain."
This is where the company looked to introduce major business change based on closed loop decision support whereby the operational systems are driven by the data warehouse and then feed key data back into that warehouse. "Operational systems allow you to run your business faster while information systems should allow you to run the business smarter," he says. "We wanted to be faster at running the business smarter." The goal is to automate the whole cycle, with the system carrying out analysis, providing the exceptions and alerts and providing the key associated information that enables staff to take rapid action. "We want to start driving the operations from information and start closing that loop."
Asda has now added all depot information to the store based information to extend the SCIP into a full data warehouse. This provides information on sales forecasts, sales, shelf capacity and so on. The company is redeveloping the business processes for replenishing stock in the depots using the information in the data warehouse, which also feeds information back to the store database. He says, "Now we have all the information from stores, depots and suppliers in the data warehouse we have full supply chain visibility, which means we can start modeling supply chain dynamics."
For example, should the decision be taken centrally to change the order day for a specific product it can be implemented immediately, without having to enforce it a store level, just inform the store managers. This will allow the company to balance intake and dispatch through the supply chain. In addition, the query capability of the software enables Asda to carry out What If analysis on the impact of shifting demand for five stores from one depot to another, while knowing all the key parameters that drive the supply chain are still current.
"With the Enterprise Information Factory in place the impact of such a decision will be clear. The system will monitor and ensure the parameters are in sync, maintaining it using alerts and exceptions." He concludes, "The whole supply chain order process becomes hands free."
Asda is currently loading 1 Gigabyte of data daily into the data warehouse and this will increase once store forecasting information is added. As a result, the company is assessing the possibility of trickle feeding information rather than loading it nightly, which will be, he says, a major challenge.
A major challenge that, once complete, will play a mission critical role within the company. He maintains that Asda is expecting to significantly reduce manual interventions in order generation and, as a result, improve the relationship with suppliers that should result in a reduction in lost sales.
Sales information is obviously key for the Store Managers and, in the near future, Asda plans to use MicroStrategy Web to make this information available to Store Managers. "This information enables us to calculate the cost of lost sales and attribute reason," he says. "Using MicroStrategy Web, the information can be presented to the store managers in a simple fashion via the Web, enabling him to know both how previous decisions impacted his store and what potential issues of stock outs he may face that day."
He concludes, "Asda has made the data warehouse central to the way that we manage stock, availability and service in the supply chain. It will ultimately enable us to centrally manage the end to end supply chain dynamics from supplier to shelf edge." |
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There is huge pressure on retailers to reduce stock in both stores and depots. To reduce lead times from supplier to shelf edge, and to increase order accuracy and fulfillment to ensure that stores and depots get the right products on time. |
|
|
|
|
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The new in-store systems provide a raft of sales, forecast and stock information as well as shelf capacity and order lead times. The prototype data warehouse was developed based on this information which the team called the 'SCIP' - supply chain information database - which provided information about what was happening in store for the first time, including when products were not available on the shelf. |
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Asda has now added all depot information to the store based information to extend the SCIP into a full data warehouse. This provides information on sales forecasts, sales, shelf capacity and so on. The company is redeveloping the business processes for replenishing stock in the depots using the information in the data warehouse, which also feeds information back to the store database. John Malpass, Asda Business Systems Manager says, "Now we have all the information from stores, depots and suppliers in the data warehouse we have full supply chain visibility, which means we can start modeling supply chain dynamics." |
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"Asda has made the data warehouse central to the way that we manage stock, availability and service in the supply chain. It will ultimately enable us to centrally manage the end to end supply chain dynamics from supplier to shelf edge."
John Malpass
Asda Business Systems Manager
Asda |
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