A new retail format requires new ways of operating. Trent facilitated its entry into the hypermarket format with an ERP solution from SAP Trent, is part of the Tata Group, one of Indiaís largest and most respected business conglomerates. Known for its ambitious undertakings, the company is headquartered in Mumbai, India. Prior to 2004, Trent had 12 Westside department stores focused on fashion retailing, operating across India. In October 2004, the company moved into a new territory when it launched its first hypermarket discount format store, Star India Bazaar. As hypermarkets are based on a new business model, hypermarket retailing would require the support of a new kind of IT infrastructure, for which Trent tapped SAP solutions. 'The hypermarket is a major greenfield initiative for Tata,' says KVS Seshasai, Head of IT and Corporate Quality at Trent. 'The corporation has big plans for the hypermarket that includes opening another 10 to 20 stores over the next several years. We expect this division to grow very quickly it will be the growth engine for Trent.' Trent was also aware that hypermarket retailing is the largest retail opportunity in India today, so it could not take a slow, low-risk approach to choosing and implementing the kind of infrastructure it needed. 'We knew that we would be in this business for some time to come,' says Mr Seshasai, 'So we decided to invest in a best-in-class infrastructure-one that would help us grow and keep pace with our changing needs.' Super Supermarket The Star India Bazaar is a hypermarket. In its 50,000 square feet of floor space, the hypermarket offers low prices for a wide selection of goods. With more than 60,000 stock-keeping units (SKUs), the store offers white goods, apparel, fresh goods, consumer durables, household products, luggage, mobile phones and much more. In addition to offering a 5 per cent to 7 per cent discount over the maximum retail price (MRP), the store makes available its own private line of products with prices that are significantly lower than the discounted brand-name products.
 The MRP is unique to India. To protect consumers, the government mandates that there be an MRP on every product. The product manufacturer sets the retail price and wholesales the product to retailers like Trent with a predetermined profit margin. This unique pricing scheme was one of the many local requirements that had to be handled by the hypermarketís IT infrastructure. Trent's IT organisation looked for the right software, with enterprise-wide functionality for the retail industry, analytics and reporting that would make up the hypermarketís core infrastructure' not only for the Star India Bazaar but also for all the Trent hypermarkets to come.'Since this was a greenfield project, we had the enviable advantage of starting from scratch,' says Mr Seshasai. 'There were no outdated legacy systems or applications that had to be upgraded or integrated into the new infrastructure. As a result, we envisioned creating a state-of-the-art, integrated IT infrastructure that incorporated the latest in best practices. Overall, our requirements for the new infrastructure were quite demanding.' The company that won the contract would have had to be able to localise its solution to meet India's complex financial and regulatory conditions, have an installed base in India and be able to provide excellent support including a close working relationship with implementation and consulting partners in India. According to Mr Seshasai, 'Its software would have to be world-class and provide a clear road map for the future. We evaluated several vendors and only SAP met all our criteria.' There were two other major factors that caused Trent to choose SAP software. One was its SAP Best Practices for Retail offering that incorporated the mySAP ERP solution. The best practices contain detailed descriptions of all essential business processes, a clear implementation methodology, extensive reusable documentation and essential 'out-of-the-box' preconfigured, retail-specific IT practices.
The other factor was the availability of Tata Consultancy Services (TCS), a valued SAP partner and a part of the Tata Group. TCS, founded in 1968, is a world-leading IT consulting, services and business process outsourcing organisation that pioneered the adoption of flexible global business practices. TCS has a long history of implementing SAP solutions and is wellversed with the intricacies of Indiaís marketplace making it a perfect implementation partner for Trent. Big-Bang SAP Software Implementation 'In 2003, we decided to implement the entire solutionóthe big-bang approach,' Mr Seshasai says. The implementation included the SAP for Retail solution portfolio with mySAP ERP, SAP Best Practices for Retail and the SAP NetWeaver platform along with its components, SAP NetWeaver Business Intelligence (SAP NetWeaver BI) and SAP NetWeaver Portal, which also offers knowledge management functionalities. A small, separate, point-of-sale (POS) system between the store and Trent's headquarters office was also implemented.
'TCS brought a very high level of energy to the implementation,' Mr Seshasai says. Its team included 10 to 15 members who were very committed to the project. Trent supplied a core team of eight senior people who were familiar with every aspect of the retail business including finance, logistics and merchandising. In addition, Trent asked the SAP Consulting organisation to assist with business blueprints, some SAP software specific processes and a number of India-specific problems. 'We had anticipated a six-month implementation and through the combined efforts of Trent, TCS and SAP that is exactly what happened,' says Mr Seshasai. There were no major problems at the golive stage except for a few issues around integrating the POS system with SAP software and those were resolved on the first day of operation. 'Both prior to and after the store opening, there were never any business-critical problems,' he adds. Key Business Processes SAP software supports a number of key processes for Trent's current and future hypermarket business. These include strategic planning for merchandise, margins and store operation as well as tactical planning such as replenishment requirements. Procurement policies' both centralised and localisedóas well as sales pricing and promotions are handled with the software. In addition, Trent uses the SAP software for logistics, tracking store sales (through its integration with the POS system) and executive reporting. 'The result of the process improvements has been lower transaction processing costs and a much higher operational efficiency,' says Mr Seshasai.
With one store in operation, Trent is already realising the benefits from the infrastructure. 'There are some specific advantages that we are already enjoying. For example, we are making good use of SAP NetWeaver BI analytic and data warehouse functionalities, which provide an invaluable window into the business,' says Mr Seshasai. One such use is the tracking of how well the companyís private labels are selling compared to branded items from Unilever, P&G, Colgate and others. The information is loaded into SAP NetWeaver BI every night. The next day, an analyst accesses a report through SAP NetWeaver Portal that compares the respective market shares of the brands within each category. The SAP NetWeaver portal is also used to push highpriority reports to management. An executive dashboard provides aggregated information content reflecting daily operationsóa single dashboard window allows users to access different parts of the software as well as the internet. With SAP NetWeaver BI, users can easily manipulate data and reports, including nonstandard data elements. 'We also use SAP NetWeaver BI to provide buyers with access to sales data on a daily basis,' Mr Seshasai says. Buyers can drill down from the highest hierarchy to the SKU level and see immediately, which products are doing well and which are not. Another advantage is the time saved when conducting a physical stock take. 'Initially, when we used the POS system, the process took nearly two months to complete,' says Mr Seshasai. 'Now, using SAP software, we can count the entire stock in just one day. This is incredible considering the size of the store and the hundreds of thousands of SKUs that we stock.' Trent also uses SAP for retail solutions in order to automate the entire replenishment process at the hypermarket. This contrasts with the manual processes used at Trent's other stores provides the company with significant productivity gains. Trent uses the software to help it conduct a large number of sales promotions such as bonus buys like 'Buy two shirts and get one free'. Every other week, one employee uses the software to create promotions for thousands of articles in half a day. The promotions are all configured in SAP software and downloaded to the POS system. Then the software is used to track and analyse the results of each promotion. 'This capability is very critical for Trent as our marketplace is highly competitive and being able to perform complex analyses of our marketing results is essential,' elaborates Mr Seshasai. Trent used SAP NetWeaver functionalities to build an interface between two of its critical databases-the POS database and the information stored in SAP NetWeaver BI. With the help of TCS and SAP, the Trent IT organisation has built custom cubes to handle queries and reports involving the two databases. Information that was not easily available before, such as bill penetration, scanning efficiency, billing efficiency across time and basket-size analysis, is now quickly accessed. Productivity Gains The SAP software has also made pricing much easier for the hypermarket. For example, when after six months a recent discount pricing strategy based on volume purchases was not bringing the desired results, Trent was able to quickly switch gears. 'Once the decision was made, we were able to change the pricing on more than 20,000 SKUs in less than one day. Using the old system, the same activity would have taken a month,' confirms Mr Seshasai.
According to Mr Seshasai, the SAP software provides complete, end-to-end process integration with minimum user intervention. It flexibly accommodates evolving business processes and executive reporting requirements and is easy to administer. 'Our SAP solutions provide a robust platform for building enterprise-wide components,' he says. Trent plans to open another hypermarket store by the end of 2005. 'Now that we have the basic IT infrastructure in place, we can accelerate the establishment of new hypermarkets across India,' says Mr Seshasai. 'It is very much to our advantage that the SAP software grows and evolves to support the fast pace of Trent's business growth. With SAP software providing the functionality and TCS providing the support, we will be able to establish and enhance our competitive position in this new marketplace.' Courtesy - SAP |
