Many bricks and mortar retailers are struggling to develop an effective Internet strategy, as they try to reconcile the disparity between operating both online and offline sales models. Meanwhile, their already competitive marketplaces are facing additional stresses thanks to web-only startups, unencumbered with the baggage of a bricks and mortar high street history.
It is early days for many of these web-only retailers, and pretty well none has yet to show a profit, a fact well noted both by a cynical press and by a hard headed investment community. But the signs are already there that customers may well come to favour online outlets over conventional operations because of their ease of use, compatibility with busy lifestyles, and, of course, low pricing.
Ready2 is a fashion and lifestyle-oriented business venture set up in 1999 by Trinny Woodall and Suzannah Constantine, both women by no means unfamiliar with the worlds of haute couture and high society. With Ready2, both are committed to forging a whole new style of retail, in their case run by women for women, beyond even the scope of many of their online peers.
Their aim is to provide various interactive services for busy, professional women to enable them to make lifestyle and clothing choices using a variety of media, such as the web, digital interactive TV and mobile and broadband services.
Ready2shop.com, the first part of this service, was launched in December 1999, and is currently backed by a high profile advertising campaign.
According to Woodhall: “It provides women with attitude and little time to shop with advice and information on what, how and where to buy the latest and greatest high street and designer products. It is an interactive site offering a unique personalisation service that is not available elsewhere on or off line.” Prior to the launch, Ready2’s proprietors set about the task of tendering for an e-business solution that matched their vision. The winner was consultancy and software developer e-Net Software. A partner of software vendor Oracle, e-Net implemented a solution using Internet-ready database software and application development tools from Oracle, supported by enterprise servers from Sun Microsystems, and its own ISP hosting services and web implementation services.
The database has been configured so that advice given to women on fashion and styles is based on their previous purchases and profile. A customer’s individual selection criteria can be dealt with and retained to give vital information for future market analysis, leading to high quality strategy decision making. The service is projected to attract several thousand regular users within the first year, and will expand well beyond this in 2001. With each user projected to represent a high volume of sales, this modest sounding forecast should prove a strong generator of revenue.
David Griffith, e-Net’s Oracle business director, says: “Our hosting services mean that Ready2 gets 24/7 support, which they need as a dynamic web retailing business. They wanted a proper web-based infrastructure, but not all of the hassle that goes with it, which is why they chose us for our hosting and service experience. Our business is not just about selling software licences, but about helping our customers develop by being an ongoing partner.”
Now, with the Ready2 brand established on the web, the company is poised to follow up with 15 different advice channels available on digital TV, WAP and the web. These dedicated channels will cover a range of issues including health and beauty, travel, careers, money, decoration, weddings and divorce.
e-Net is to help steer Ready2 through the forthcoming phases of its IT development. With offices in Bath, London, Cambridge and Coventry, and partnerships with Oracle, Sun and Cisco, e-Net is already the force behind many leading e-business operations. With so many businesses keen to emulate the flexible models being created by operations like Ready2, a profitable few years lie ahead for e-retail consultancies like e-Net.
Tesco was the first of the UK’s supermarket groups to offer Internet shopping, trialling the concept in the Leeds area three years ago. Since its launch, Tesco Direct has grown steadily and the company has refined its offering constantly.
Currently shoppers in over half of the UK’s postcode areas can use the service, which is being rolled out to a further five stores each week.
Says Richard Davis, Tesco’s Internet systems manager: “Of course, there will be some parts of the country where we will be unable to offer the service, either due to distance from the store, or other practical reasons.”
A concern that has played a large part in Tesco’s thinking is that of customer access to the web site. Davis says: “There’s no point in having the most sophisticated web site going if the customers can’t even log on because the server’s down or the network is overloaded.”
To combat this potential problem, Tesco’s web servers operate in a load-balanced cluster and access the Internet through a broadband link. Sophisticated counters and monitoring systems manage the server farm, but even that does not offer Tesco enough confidence. Davis explains: “What we get from our internal server monitoring is quantitative information about how busy the cluster is at any time, but it does not give us a picture of how our customers see the system. It means that we could well respond to a report that there is one particular node going flat out, when all that’s really happening is that the service is working hard, and in fact customers are getting through with no problems. On the other hand, it’s equally possible that our systems could report that everything at our end is running smoothly, when in reality customers are waiting for ages to log on.”
To help deal with this threat, Tesco turned to the iGroup, the e-business consultancy division of Computacenter, and has deployed its SiteAlert application. Tim Taylor, account manager from the iGroup responsible for the implementation, says: “SiteAlert pulls together technologies from Computer Associates and Micromuse to deliver a service that can be used not just to check site availability and response times, but also the probity of data being delivered. In Tesco’s case we set it to poll the servers every five minutes. If there is an outage or slow performance, or data is being corrupted, then the system alerts Tesco directly, through a pager, telephone call or mobile number message.”
He says the service is backed up by a help desk, so that if an alert is sent and Tesco can’t see a problem at its end, it can call and work through the chain to find out where the problem is occurring. Davis says: “The fact that it is both a monitoring tool and a support service means that I can be confident that I am alerted to any events before our customers, regardless of time of day. In many instances, SiteAlert provides confirmation of situations that our internal monitoring has spotted, but it has also shown us that there were other times when customers were getting through perfectly well, even though our internal monitors were flagging warnings of potential overloads. It gives us a very useful reality check by following the path that our customers take to get to our servers and reporting on how that is working.”
iGroup consultant George Anderson says that e-business consultancy is an extremely hot space to work in. “There are a lot of companies out there who want help as they try to become e-businesses. They need someone to monitor their systems, to tell them when something is going wrong and to fix it. Because an e-business is a 24 hour business, lots of our clients can’t manage to have someone watch over their system on that basis, so we’ll do that for them.”
He adds: “Through Computacenter, we can supply all the hardware and software they need as well. We can take a lot of the pressure off them as they adapt to a new business model.”
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In today’s competitive market, manufacturing and supply chain systems must be flexible and responsive to customer demand, yet tightly control stock inventory. For British American Tobacco, increasing globalisation and market volatility meant that it must rationalise its manufacturing and supply chain processes. And, as customer demand forced down prices on textile products, industrial textile manufacturer Don & Low found itself under pressure to improve manufacturing efficiency and shorten lead times
British American Tobacco
British American Tobacco (BAT) has markets in almost every country around the globe, and manufacturing plants in over 50. Its brands include market leaders like Benson & Hedges, John Player, State Express 555 and Kent.
With its main manufacturing centre in Southampton, BAT manages a complex international supply chain, and the markets it addresses vary a great deal in terms of volatility of demand and the range of product required.
Its traditional manufacturing and supply chain systems have tended to operate with a high, and therefore highly expensive, inventory to ensure 100 percent product availability.
As the company continues to globalise, and expand into ever more markets, it has felt a need to rationalise these manufacturing and supply chain processes, and decided last year to move beyond its basic spreadsheet-based planning system.
BAT wanted a new system that would enable it to determine optimal courses of action against set business objectives, for example whether to hold excess inventory or run overtime to meet unexpected demand. Doing both was proving too costly in a competitive market.
The system would also need to service a more flexible and responsive supply chain that could accommodate market volatility and complexity.
There was also the matter of ensuring that the new solution supported the business process changes happening within the company, with a new organisation model geared towards “global good” rather than localised decision making. Finally, it was essential that the project was self financing, each phase demonstrating a rapid return on investment before the next was begun.
Andersen Consulting was chosen to carry out the business process reengineering and to do the overall implementation and integration work, which it managed in conjunction with supply chain consultancy and software developer i2.
The latter was chosen principally because of its Supply Chain Planner (SCP) software suite, which now runs in parallel with SAP’s R/3 system at the Southampton plant, assisting with creating efficiencies within the manufacturing and supply chain process.
i2’s director of marketing Steve Weller explains “The company had been using disparate systems all over the world, so we knew they would be able to achieve a lot with one ERP platform. The company had been growing by acquisition, and so had become inefficient from a supply chain perspective.
Although the business value from changing systems was limited, the real value lay in a co-ordinated, optimised international supply chain, integrated across Europe.”
SCP is allowing BAT to model changing market characteristics and deal with customer complexity and unforeseen constraints. The planning of manufacture is optimised to meet customers’ needs in a cost effective manner, while still taking into account opportunities offered by individual markets.
SCP also enables “what if” scenario analysis, so that questions like “Is it better to hold stock or run overtime?” can be answered.
The new system both unites BAT’s European operations with the Southampton centre, and enables better links with customers in the Asia Pacific region.
With much less needing to be held in the form of inventory, manufacturing operations are now much less wasteful and expensive. Weller says: “Although much inventory has been managed out of the chain, there is still some way to go before full benefits are felt, but BAT is well on the way. As well as manufacturing and supply chain benefits, customer service levels have improved. Confidence in dates being met in itself leads to less inventory.”
Barry Rinaldi, BAT’s resources planning manager, says: “i2 offered the solution we needed to build a sophisticated planning system that would reflect real supply chain conditions in detail while providing a view of the bigger picture. The new system not only supports the delivery of flexible and responsive customer service, but it also lays the foundations for e-business at BAT.”
Don & Low
Don & Low is a manufacturer of industrial textiles, based in Forfar in Scotland, employing some 600 people at four manufacturing sites and with an annual turnover of around £45m.
With customer demand forcing down prices on textile products like geotextiles, agrotextiles, furniture, bedding and packaging materials, the company has found itself under pressure in recent years to improve manufacturing efficiency and shorten lead times.
In 1999, the company decided to modernise its business processes and production monitoring systems. It set aside a budget of £1.9m for the entire reeengineering project, with £900,000 earmarked for the manufacturing systems element.
Don & Low called on PA Consulting to help to develop an IT strategy that would make this possible. PA carried out a review of the company’s existing systems, and helped to develop a shortlist of suppliers to carry out the work.
Strategic Systems International was chosen. The SSI contract included software and services from its Tropos ERP suite, plus integrated products including Coda Financials, Cognos business intelligence tools and Formscape and Greycon scheduling and sequencing optimisers. The full project has been linked to a barcode-based Dextralog process monitoring management and control system being installed by textile specialist Barco.
Phase one of the project went live in August 1999 in a “big bang” switchover, when the company’s entire production of woven and non-woven industrial textiles began to be planned and managed by Tropos.
Don & Low’s project manager for the work is Karen Souter. She says: “We’d struggled for a few years with the old system in place. Most of it was not Y2K compliant and we thought it was best to bite the bullet, throw the whole lot out and get in a new package.”
Souter says the project took 13 months to implement. “It might sound like a long time, but we were replacing everything all in one go. Now, a few months down the line, it’s all starting to pull together and work in the way we want it to. There were just a few minor glitches, but you would expect that in any new system.”
The system looks to be well on its way to enhancing Don & Low’s competitive edge by streamlining planning processes and shortening production cycles, improving process and throughput, and enabling the planning of production to manage work in progress and finished goods stock levels. In common with most manufacturing operations, the issue of stock inventory has become key to competitiveness, and the new system is on course to solve the headache of highly expensive over stocking.
Souter says: “We are now thinking about how to move forward with the next stage of our manufacturing process modernisation. We want to continue to push down stocks. I am glad that we set firm targets for the project up front, rather than bumble along later with no firm metrics of its success.”
Stewart Baxter, Don & Low’s corporate services director, also stresses the benefit of future planning. “Our business environment is constantly changing, so the solution we selected needed to have good levels of adaptability.
Tropos is extremely adept in this respect. Because of this constant need to adapt, we had to impose very tight timescales on the project.”
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