Integrate operations & maximizesupply chain effectiveness

How IBM technology and consultingservices helped the DA Retailgroep

to innovateFrank Kuijper

Head of ITDA Retailgroep BV

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Agenda

About the DA Retailgroep BV and the speaker

The challenge for DAThe project(s) – focus on ITProject “Heartbeat” – specific innovationsThe technology usedThe servicesThe results

Summary

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About the DA Retailgroep BV and the speaker

The DA Retailgroep B.V. is the service and retail organization behind the DA brand. DA Retailgroep B.V. is responsible for purchasing, marketing and (logistics) support for 550 DA and DA Beauté drugstores in the Netherlands.Turnover in 2005 appr. 300M €.

Frank Kuijper joined the DA Retailgroep BV in 2003 after an IT technology and business consulting career within Digital/Compaq and IBM Consulting Services.

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The challenge for DA

The changing market dynamics, increased competition and weak economic climate demanded a change in strategy at the organisational, business process and IT level.

The IT systems were mainly wholesale oriented and managed by the former sister organisation.

The IT goal was to support the company business strategyand innovation/changes based on standard industrysolutions.

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The project(s)

The innovation of the IT environment supporting the changing business strategy consisted of multiple projects:– IT Strategy at the store level

– IT Strategy at the central level

– Selection, design and implementation of a new Supply ChainManagement system – project “Heartbeat”

– Selection, design and implementation of several supportingapplications such as Business Intelligence, Call Center functionality, intranet/Internet portal environment

– Integration of all systems

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Project “Heartbeat” - overview

Select, design and implement an end-to-end (suppliers – DA Retailgroep – stores) SCM system– 1. Infrastructure: IBM WebSphere MQ product set (SOA)– 2. Core SCM system: Aldata’s GOLD® Central and Stock– 3. Supplier portal: Certipost CertiOne– 4. Promotions handling system: custom applicationIBM project methodology adapted

TestingBlueprint

Preparation Follow up

support

ScopingTraining & education

Businessscripts

Interfaces

Conversion

GoLiveprep

Arrange support organization

Cookbooks

Preparation phase Implementation phase

CRPtest

Customisation

TestingBlueprint

Preparation Follow up

support

ScopingTraining & education

Businessscripts

Interfaces

Conversion

GoLiveprep

Arrange support organization

Cookbooks

Preparation phase Implementation phase

CRPtest

Customisation

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Project “Heartbeat” – relations between subprojects

Store-portal Merchandise

GOLD Invoicing / matching W arehouse

IBM WebSphere Broker

OracleFinancials

. General ledger. Accounts payable/

recaivable. Project costing. Fixed assets

DataWarehouse /

Businessintelligence

AXI. Ikoda settlements

. Invoicingservices

Backofficestores

. Article data

. Prices/promotions

. Pull/push orders

. Dispatch note

. Pos data

Suppliers. Purchase orders. Delivery note. Invoices

Others. Customer orders (not DA). Delivery note (not DA). Invoices customers (notDA)

Externaldatasource. Cocosof t - luxerymaster data. EAN-DAS

Ware-houseControlSystem

Visualpromotion. folder

Prospace. spaceplans

CustomerRelationManagem.

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Project “Heartbeat” – specific innovations

Optimize/redesign business processes.

Move from a wholesale to an integrated SCM system, including Warehouse Management.

Provide a reliable, (near) real-time infrastructure tothe stores and decouple main systems – SOA based.

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The technology used – part 1 - infrastructure

The basic infrastructure was redesigned to allowfor a reliable IT environment that providesflexibility (e-business on demand).Main technology components:– IBM UNIX systems– IBM WebSphere MQ series product suite, using XML

based messages for the Enterprise Service Bus– IBM WebSphere Portal– KPN ePacity business network

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Infrastructure part 1A – store communications

Translation & supporting

tables

Translation & supporting

tables

Shop systemsShop systems

ESB

Connectivity layer

ESB

Connectivity layer

Pilot Store

System

Pilot Store

SystemExternal IT

supplier

External IT supplier

External Article

database

External Article

database

Goal: Setup Enterprise Service Bus and connections to Shop systems

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Infrastructure part 1B – the SOA “bus”

ESB

Connectivity layer

ESB

Connectivity layerTranslation & supporting

tables

Translation & supporting

tables

External IT supplier

External IT supplier

Shop systemsShop systems

Portal supplier

(CertiPost)

Portal supplier

(CertiPost)

Information Suppliers and

Vendors, shops with

SMTP

Information Suppliers and

Vendors, shops with

SMTP

Pilot Store

System

Pilot Store

System

DA SCM Application

(GOLD)

DA SCM Application

(GOLD)

Warehouse system

Warehouse system

DA Financial System (OFI)

DA Financial System (OFI)

DA Folder Application

(DAF)

DA Folder Application

(DAF)ScanSiteScanSite EXACTEXACT Pro

Space

Pro Space

External Data-base

External Data-base

Goal: Complete ESB required for implementation SCM system

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The technology used – part 2 – SCM system

DA selected GOLD® from Aldata for its SCM software:– GOLD Central for all central retail functionality

(assortment/price management, buying, ordering etc.)

– Gold Stock for logistics functionality

– Gold Radio for RF support (with Psion) in the DC’s

– Gold Forecast (in the future probably Topas) forforecasting/replenishment, both from DA to supplier as from stores to DA

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The services used - consulting

IBM Business Consulting Services played a major role in assistingDA to innovate:– At the strategy level:

• IT Cost benchmarking• Vendor selection

– At the business process level:• Blueprint of SCM and financial business processes• Innovation of and leverage new business and IT environment

– At the technology level:• Design and implementation of the SOA• Co- (with Aldata) design and implementation of the SCM system

Other IBM business units (Software Group, Hardware Group) supported IBM BCS in meeting the goals.

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The services used – an example

IBM recently conducted a study on how to leverageand optimize the currentsupply chain (system), bothfrom an organisational as well from an IT viewpoint

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The results

Within a period of three years, DA has almost completelyrevised it’s IT Strategy and systems.

The new environment far better supports the requirementsof the retail organisation.

Work is still to be done; the market dynamics and IT technology continue to evolve.IT technology needs to be adapted to support the change in the business strategy and processes – “eBusiness onDemand”.

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Summary

IBM has proven to be a valuable solution partner in the innovation of the DA Retailgroep’s organisation and support IT technology.

Technology is never a means in itself, it is only anenabler.

Implementing new technology is (often) easierthan changing an organisation and it’s business processes; people are often reluctant to change.