Retail: The ultimate distributed architecture

Low-tech IT, far-flung locations, and a patchwork of inventory requirements demand ingenious solutions, especially on a shoestring budget

Editor's Note: This article has been edited since it was originally published. Spencer Gifts has decided to discontinue its remote access project for the Spirit Halloween chain.

Technology in retail ranges from the wonders of the bleeding edge to a morass of home-brewed confusion. The first might be typified by Wal-Mart, which has shown the large-scale retail industry the future through a complex yet efficient use of RFID technology, inventory, supply chain management, and interstore communications.

Unfortunately, most retail outfits fall into the second category for one simple reason. “We’re notorious for attempting to do more with less,” says David Powell, manager of network and computing services at Spencer Gifts, a novelty gift store chain with 620 locations nationwide. “We try to implement technology in a very cost-conscious manner that maximizes ROI, and we try to do it alone whenever possible.”

Until two years ago, fully half of Spencer’s stores were connected to the world via a single telephone line that was used for everything from voice to credit card authentication -- even downloading the in-store music content. The rest had two phone lines, with one reserved solely for credit cards.

“We had to do something,” Powell says, “because in either scenario, credit card processing was slow and we were limited to that single function.”

Broadband on the cheap
Spencer quickly realized that broadband to every site was a requirement and would allow the company to offer additional IT services to users on-site. So Spencer ordered 300 new DSL lines and converted the secondary phone lines in the other 300 stores to DSL as well.

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“That alone was a tough job because we had to deal not just with the big DSL providers but the regional mom-and-pop providers, too,” Powell says. “These guys tend to have monopolies in their regions, and you have to leave yourself time and flexibility to work around that. And after that was done, we needed to install the hardware, which we decided to perform ourselves to avoid costly outside installation services.”

Powell spent time looking around for a workable hardware solution and chose SonicWall’s TZ 170 SP series of broadband routers because it fit his criteria, which included centralized management and an internal modem for redundant connectivity.

“We took a while planning this part of the project, but it paid off,” Powell explains. The company had both the SonicWalls and the DSL modems shipped to its headquarters where both pieces of hardware were configured as a kit along with step-by-step instructions for plugging everything in. The company didn’t have to spend money on sending IT folks to every location; instead, it merely needed to have someone near a phone to answer tech support questions.

Asked what lessons he learned from this vertical problem, Powell quickly replies, “Time. If you’re working on a tight budget with an aggressive timeframe, break these projects into workable chunks and leave yourself enough time to successfully complete each one.”

Cutting supply chains to fit
That’s one lesson, agrees Mike Skinner, CIO of Eurpac. “But I’d add a close knowledge of your particular business as well,” he says. Eurpac does business with the military resale industry, the part of the military that stocks and operates the PX and commissary stores on every U.S. military base worldwide. Eurpac’s business is 80 percent domestic and 20 percent overseas, and the company deals with supply chain management issues and retail marketing when the products hit the shelves.

No matter how much technology you throw at a supply chain problem, though, Murphy’s Law can’t be disregarded. “For example, we’ve got product going overseas on ships,” Skinner says. “Those can get diverted for storms, or customs, or any number of reasons and disrupt your careful supply chain operation. That could mean you’re getting your July 4th holiday products on July 5th, for example.”

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No matter how much technology you throw at a supply chain problem, though, Murphy’s Law can’t be disregarded. “For example, we’ve got product going overseas on ships,” Skinner says. “Those can get diverted for storms, or customs, or any number of reasons and disrupt your careful supply chain operation. That could mean you’re getting your July 4th holiday products on July 5th, for example.”

Knowing the particulars of your retail business and its products, he maintains, will allow you to more efficiently plan a supply chain operation to incorporate the best of just-in-time delivery and ensure your shelves are stocked when they should be. Just remember not to cut it too close, or you’ll risk running out of stock -- which isn’t worth the incremental reward of just-in-time turnaround, he says.

Powell agrees. Spencer Gifts also owns Spirit Halloween, a 400-store Halloween specialty operation. “We spin up these 400 locations every year from September to October and then close them down,” Powell says. That’s a tremendous undertaking, and Powell is carefully applying technology to make this process more efficient.

“This year, we’re doing a pilot project on 15 locations where we’ll deploy DSL or EvDO [Evolution Data Optimized] wireless broadband for all eight weeks of operation,” Powell says. He’s planned this down to the last detail, including participating in a beta test of a new model of the SonicWall TZ 170 SP, which includes a PC Card slot so he can deploy pre-configured EvDO cards prior to sending the box on-site. With EvDO, the Spirit stores get 3G broadband through the air from various carriers around the country, eliminating the hassle of provisioning DSL lines.

With broadband connectivity to the home office, Powell hopes to allow Spirit locations to eventually monitor the entire operation’s supply chain, possibly diverting excess inventory to places where it’s needed. At present, the company is in the early stages of selecting supply chain software.

“But with 400 stores going online for eight weeks, the process must be carefully mapped out; technology can’t be an added burden. You just have to take it slow,” Powell says.

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