The Tech Issue
 When Jeff Ratcliff began work as a Retail Link analyst 12 years ago, access to Wal-Mart’s proprietary database was crude by today’s standards. To query the system for information, he had to use a computer provided by Wal-Mart, which functioned as a dedicated terminal and as such, had to be free of other applications. If the information being retrieved was too extensive, it had to be stored on diskettes and transferred to another computer.
Cumbersome as it was, the system was still better than what existed at other retailers, who typically charged suppliers for point-of-sale data, assuming they even made it available. Today’s Retail Link system has come a long way, with richer features that make actionable data easier to obtain. It also is accessible via the Internet, which simplifies usage.
“To see the type of analytics that were being provided regarding Wal-Mart back in 1996 compared to today is like night and day,” said Ratcliff, who now serves as director of sales team strategy for Del Monte Foods, a company with more than $1 billion in annual sales and a 45-member team in Northwest Arkansas. “Now, technology is the name of the game. If you think about the way business was done 10 or 15 years ago, a lot of it was driven by relationships, whereas today, it is more fact driven. Whoever has the best facts wins, and that is driven by technology.”
Technology has always been a driving force at Wal-Mart, and that promises to be true in the future as well, with the clearest indication being a series of recent actions on the part of the company. Three months ago, Wal-Mart confirmed that it selected a product from Oracle called Oracle Business Intelligence Suite Enterprise Edition Plus to provide it with comprehensive data intelligence and analysis across its entire operation. “The Oracle solution is very robust and it integrates well with our other applications, particularly as our business continues to grow in scale and complexity,” said Wal-Mart cio Rollin Ford.
Wal-Mart plans to use the system to administer its logistics, transportation, category management, finance, human resources, real estate, merchandising and store and club operations. Those uses are in addition to other recently implemented Oracle Retail applications, such as Oracle Retail Merchandise Financial Planning, Oracle Retail Item Planning and other elements of the Oracle Retail Suite that were not identified.
Oracle declined to offer additional details, but the company has indicated the products include intriguing features such as interactive dashboards, full ad hoc queries and analysis, proactive intelligence delivery and alerts, enterprise and financial reports, online analytical processing, analysis and presentation, high-volume production reporting, real-time predictive intelligence, disconnected analytics and integration with Microsoft Office.
The recent decision regarding the use of Oracle follows another major information systems announcement that was made roughly a year ago regarding the use of SAP’s ERP Financials product. According to SAP, Wal-Mart chose the company’s powerful software for its ability to support the company’s global expansion and to efficiently respond to changes in the business and regulatory landscape. Implementation is taking place in phases, with the first phase expected to be completed in 2010. SAP replaces some of Wal-Mart’s legacy systems, while integrating with other internal Wal-Mart systems.
Investments in Oracle, SAP and, to a lesser degree, systems related to human resources, are so significant that Wal-Mart financial executives have taken to calling out the impact when the company reports financial results, something the company historically has not done. “Investments in information systems for merchandising, finance and human resources will continue to be a headwind for the rest of this fiscal year and several years to come,” Wal-Mart cfo Tom Schoewe offered as an explanation for Wal-Mart’s increased corporate expenses when the company released second-quarter results in August.
Wal-Mart faces expense headwinds from a lot of sources, but none offer the potential to help the company thrive in the future the way staying at the forefront of technology does. “A key mandate for retailers is to provide an exceptional in-store experience for customers while at the same time reducing costs,” according to Bernstein Research analyst Uta Werner. What that means is that retailers—Wal-Mart included—rely on specialized information technology hardware at the checkout, on the sales floor and in the back room. “Increasingly, this hardware is integrated with the large enterprise systems that help gather and process large quantities of activity, product and location data in an increasingly granular and timely manner.”
The growing complexity of the technology Wal-Mart uses to run its business, coupled with the availability of an expanding volume of information available via Retail Link and the expectation that the information is being used, equals an unprecedented thirst for knowledge within the supplier community. As a result, the challenge for suppliers will be much the same as it was when Del Monte’s Ratcliff began using the system more than a decade ago. The big difference now is that in addition to the raw data made available from Retail Link, suppliers have other sources of data that need to be merged together to produce results and various systems are used to accomplish that goal.
For example, Del Monte uses tools from True Demand and Vision Chain to analyze point-of-sale data, another tool from Cognos for shipment management and a Siebel Systems tool for trade promotion management. “One of the challenges that we have today as a company and a sales team is linking all those tools together,” Ratcliff said. “With technology, there is always a level of human interaction. You have to have good people and great minds to analyze the data and put all the pieces of the puzzle together.”
That need explains why the Northwest Arkansas chapter of the Retail Link Users Group has seen its membership explode to 945 people from 600 just three years ago. The organization, which exists primarily to help users of the Retail Link system share best practices, has grown into an elaborate network with 11 subgroups that meet quarterly or bi-monthly in addition to the main group’s monthly meetings, all of which is overseen by a 12-member volunteer planning committee and four officers. Two new subgroups were recently added, focused on topics such as marketing and direct imports, and the creation of a sustainability subgroup is being considered.
Formerly known as the Rogers RLUG, the group rebranded itself this August as the nwa RLUG and launched its first-ever Web site at www.nwarlug.org. The group even adopted the slogan, “learn, share, succeed,” which succinctly defines the mission of transforming data into action that yields business results.
“It’s always been, and I believe always will be, the main challenge for supplier teams,” said Kristin Murphy, an nwa RLUG board member and national account manager with IdeaStream Consumer Products. “You can hire the best talent and have the best tools, but if you just don’t know how to put the pieces together, you just won’t be able to get the business results. You can walk out of one of the subgroup meetings and go back to your company and say, ‘I learned this and we are going to be able to do x, y and z.’ How you use the data available from Retail Link is one of the big differences between a good supplier and a great supplier.”
These days, simply being a good supplier poses a risk to the business, and with the need to effectively leverage technology being the key differentiator for great suppliers, the nwa RLUG is likely to become more valuable within the supplier community. Todd Johnson, president of the organization and senior business development manager for Wal-Mart North America with the Persona division of American Safety Razor, notes that suppliers from large to small and people of all experience levels are engaged with the group in their quest to better understand what to do with Retail Link data after they have obtained it.
A number of sophisticated third-party tools, such as products from Shiloh and Vision Chain, exist to help suppliers with that challenge, but much of the focus of the nwa RLUG and the dozens of chapters that exist in cities around the country is focused on getting the most out of the tools Wal-Mart makes available.
“We are not telling people don’t go buy software packages, but we are trying to show them how to get to the same conclusions those products provide on their own,” Johnson said. “It may take them a little bit longer, but we want to give them the best practices so they can do it themselves.”
For its part, Wal-Mart is also trying to make Retail Link simpler to use by enhancing its functionality with tools such as business-at-a-glance and a dashboards feature, which provides custom reports. “The dashboards get Retail Link past the point of being a decision support system where you have to submit queries and makes it extremely useful, because when you log in, you see exactly what it is you need to dig into,” said Dan Batson, a Retail Link user with Fuji. “Based on your role within the organization on either the supplier side or Wal-Mart side, the dashboard or business-at-a-glance tools are tailored to your needs and from there you can tweak it yourself.”
The dashboard capability is something Wal-Mart has talked about for several years and is now being tested with about 20 suppliers, which suggests a broader rollout could be several more years away given how long it took to get to this point and given all the other technology initiatives under way at the company.
In the meantime, demand for knowledge about Wal-Mart’s technology has suppliers clamoring for training, either via the Retail Link users groups, or through other organizations such as 8th & Walton. The firm was created last year and since then, founder Matt Fifer said growth has been explosive. “Our assumption when we started this business was that we would be focused on small to mid-size companies, but we have been surprised by the diversity of our customer base,” Fifer said.
The company has developed courses specifically geared toward users of Retail Link and those are among the classes in greatest demand. Since 8th & Walton was formed, the business has doubled its office space to add three new classrooms, hosted 26 events in cities nationwide and created an on-demand educational offering. “We are having more and more people show up at our classes who have been referred to us by Wal-Mart,” Fifer said.
That is a trend likely to continue as Wal-Mart becomes more reliant on technology and suppliers’ abilities to use it effectively to drive growth.
Retailing Today ©2008 Lebhar-Friedman, Inc.
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