Introduction to RFID Inventory Management in Retail

Radio Frequency Identification - RFID is an established data-carrying and automatic identification technology used throughout industry, and in the retail sector, has long been touted as the Holy Grail of Inventory Management. I can remember a conversation I had with one of the IT Directors of Tesco who said to me '..whichever Retailer cracks RFID first, wins. Period'. Dramatic words indeed.

Within Retail, think of RFID as an Intelligent barcode. Intelligent because it not only identifies the product, but it uniquely identifies the product. ie I'm not just a 300g tin of beans, I'm 300g tin of beans number 54167. It can do this because data relating to the specific item is stored on the RFID tag which is attached to the item. Like a bar code, a tag is a data carrier. A bar code carries data in a visible symbol and is read by a bar code scanner using optical or infrared wavelengths. An RFID tag carries data programmed into a small computer chip and operates at a wide range of radio frequencies.

The tag is activated by radio waves emitted from an RFID reader. The reader communicates wirelessly with the tag across what is known as the air-interface. Once activated, the tag sends data stored in its memory relating to the item back to the reader.

The RFID readers vary in the range at which they can read the RFID tags. This starts from the tap and go type readers which operate at the 0 - 1cm range, think TFL Oyster card, where you tap the card on to a reader (Interestingly such system are called contactless, despite the need to touch them to the reader). This area of RFID isn't really suitable for Inventory Management and is being explored more as a quick payment method.

Long range RFID scanners can pick up tags at range's up to 200m, and its these long and medium range scanners that open up the opportunity within warehouses and store backrooms for automatic inventory counting, goods in scanning etc. Imagine being able to take in a delivery from a supplier and automatically know each individual product that is on the pallet.

Aside from the infrastructure and setup challenges associated with an RFID solution, is the challenge of what to do with all that data. The increase in data volumes associated with a change in supply chain management from pallets to individual items is huge. I've worked at 4 out of the top 5 UK retailers and they all have enterprise datawarehouses measured in the 10's of Terabytes, driven by holding data mostly at SKU level. (Some of the data held will be at transaction level, which is almost individual item level, but the volumes of this typically range in the 0 - 5% of total space utilisation). To change the granularity to be at individual RFID rather than SKU is to scale that volume by a rough factor of 10,000. (based on 1000 stores and 10 incidences of each item per store).

The data challenge for RFID Inventory Management therefore becomes how to cope with a new level granularity, which systems need to use it, how they talk to other systems, how to cope with the increased network and storage requirements.

Grapes are a vines babies

A thought occurred to me yesterday while I was working with my operations team on a reasonably complex data issue. We were waiting for the results of a program to come back and I was nibbling at the grapes in the company fruit bowl. For those of you that don't have office based lives, the latest must have accessory is company provided fruit. Fresh fruit is delivered to the office every other day, and staff get to munch for free. It's a HR thing aimed at us all leading healthier lives. I'm all for it.

So I'm sitting there eating grapes, big fat juicy seedless grapes, the best sort. I felt a bit guilty that they'd come in from Kenya via Air freight, not so environmentally friendly, and I felt my carbon footprint flex ever so slightly.

I'm eating grapes and suddenly the thought occurs to me, that these grapes are the vines babies. Grapes are the equivalent of eggs surely. The plant-world equivalent of an unborn foetus.

I'm not a vegetarian. I eat meat and dairy, so really this shouldn't matter should it. Milk is not the innocent white-coloured water we pour over cereals, but the fluid used by a mother cow to feed baby calves. Eggs are unborn chicks.

If vegetarians don't eat meat and vegans don't eat meat or dairy. What do you call someone who doesn't eat meat, dairy or fruit and vegetables??

Answers on a postcard...

The True Cost of Cheap Food

A dispatches investigation into how the supermarkets are cashing in on the credit crunch by encouraging the trading down to own label value lines.


I find myself drawn naturally to programs that slag supermarkets off (we all know it's fashionable to be anti-supermarket). I've worked in retail for more than 15 years, including more than 11 years working for an international retailer, so as a retail expert, you could say it's part of my job to keep an eye on programmes like this. I find myself usually both agreeing and disagreeing to the various points in the show, and the degree to which this happens depends greatly on the quality of the show.


This particular program is better than many other 'supermarkets are really bad' type shows. It was full of stats, many of which I captured and I've documented at the end of the post, and it's main point was that cheap food can be improved very easily and very cheaply, usually for less than 1 pence per sausage/apple pie/cheese slice.


It suggested that supermarkets should improve the quality and take the hit on their own margin. I'm not sure I agree with that and given that we're only talking about increasing the price of a pack of 8 value sausages by 8 pence, why should they. However, since that 8 pence produces a significantly better product, I rather think the show should have stressed the point that supermarkets should wherever possible, provide the best quality product. They're allowed to make a profit out of it.


I'm toying with the idea of doing a Hugh Fearnley-Whittingstall and raising a motion at the Tesco AGM to force them to improve the quality of their sausages. If enough people comment on this post in favour of this action I'll do it. Pass this on to your friends...


Now for the stats

Beef Burgers
How much protein is their in premium vs economy burgers?? grams protein per 100g

Asda - premium 23, economy 20
Tesco - premium 23, economy 19
Iceland - premium 25, economy 18

Tomatoes
How much of the anti-oxidant lycopene in premium vs economy tomatoes??

Tesco - premium 5.5, economy 3.4
Asda - premium 6.5, economy 3.6
Sainsburys - premium 5.2, economy 3.6
Morrisons - premium 5.1, economy 4.1
Aldi - premium 5.1, economy 3.4
Lidl - economy 3.8
Iceland - premium 5.5, economy 3.3

Chicken breasts
The percentage of meat in chicken breasts.

Asda - 82%
Iceland - 85%
Morrisons - 88%
Tesco - 84%

The remaining percentage is made up of varying combinations of the following water, salt, stabilisers, dextrose, polyphosphate and liquid glucose.

Sausages
The percentage of protein in a sausage. (protein is an indication of meat content)

Tesco - premium 15.8, economy 11.2
Asda - n/a
Morrisons - premium14.3, economy 9.0
Sainsburys - premium 15.3, economy 8.3
Iceland - premium 12.0, economy 11.6
Aldi - n/a
Lidl - premium 15.3, economy 12.9

Data Visualization Golden Rules

Last week I posted about a friend of mine, John Brookmyre, who blogged about getting started with cloud computing. It's a great post and John's blog is something that's definately worth keeping an eye on, because he understands and can communicate business intelligence very well in addition to being able to deliver technically in some 20+ platforms.



John's latest post, is about business intelligence data visualization, something that I've been very interested in for the 2 years, and have written about my experiences in the following;

• User Centred Design and Business Intelligence
• Business Intelligence Dashboards

Interestingly, Johns post has been commented on by Tableau Software, who are niche players in the BI market, but among the industry leaders in BI data visualisation. You can trial the software, which I did about 9 months ago when I was looking for alternatives to Microsoft Performance Point Server.



On that occasion the client purchased PPS instead, which we deployed via a customised sharepoint front end. We got round the limitations of both PPS and sharepoint with some clever visualisation tricks and the result was stunning. I'd been reading Stephen Few's blog for a while, (he's a modern day Edward Tufte) and also had some recent experience of heuristic evaluation, which meant I was well up to speed on usability and visualization. If your interested in getting into the subject then these are good places to start.



Back to Tableau though. It's a very interesting product and I wasn't able to get through it all in the 28 days. I managed some very pleasing visualisations involving multiple graphs in a grid formation. The advantages of this being you waste very little space on title's and legends as you benefit from a write once, use many policy. I managed to get 25 graphs on screen (5x5) in a layout that wasn't off-putting, and I could see it working for business users. I've pasted in below an example of the tableau website, that demonstrates the type of visualisation I'm describing. (I like to think that mine was better though!)

Corporate Social Responsibility and the economic downturn

Given the unstable nature of the world economy at the moment, how will the latest corporate trend, Corporate Social Responsibility, fair as companies tighten their belts and look to cut costs?

All major retailers have Corporate Social Responsibility (CSR) statements proudly displayed on their web sites, and being green and being seen to be green, is high up the agenda in all PR and Marketing departments. Retailers are fighting to have sector leading green credentials with the humble carrier bag thrust into the limelight, centre stage. Corporate Social Responsibility is not just about being green though, it's about promoting sustainability and one of the leading bodies to define standards for business sustainability, the Global Reporting Initiative, defines five areas where business needs to focus;

o Economic
o Environmental
o Human Rights
o Labour
o Product Responsibility

With the price of energy increasing all the time, it's easy to see that focusing effort on reducing your Carbon Footprint, is good business sense, as well as providing good PR material. The green movement has successfully persuaded companies that being green makes commercial sense. However being green is only a part of a companies CSR strategy, so as times get harder will we see a relaxing of the commitments made across the other key areas.

With sales weakening across the high street many retailers will be asking their supply chain to bear the costs of poor trade. Changing payments terms for suppliers and asking suppliers for extra discount are some of the ways retailers can put the squeeze on their suppliers. For suppliers though, struggling with their own increased energy costs, this additional pressure will be most unwelcome and for many, could push them close to the edge.

This doesn't strike me as a sustainable business strategy. Sure, your suppliers will need to bear some of the costs, but the sustainable way out of the downturn would be to work together. How sustainable can it be to destroy your supplier base?

Queue theory can help manage retail queues

Queues are bad. Really bad. They literally cost you money. One of the principles of queue theory is that once a queue forms it has to be managed, which requires resources, then you need over capacity at some point, in order to reduce the length of the queue. Often the resource to manage the queue comes from the very thing serving the queue. This means the queue gets processed even more slowly than before the queue started and the queue gets longer. It doesn't start to get shorter until you have over capacity.

Retail queues cost money in all kinds of ways and often those costs are hidden, or at least not immediately apparent. Long queues lead to customer dissatisfaction and ultimately to lost customers. Losing customers obviously isn't a good thing and will cost you money in the long run, and it's in this respect that most people associate the cost of queueing. (Queueing, incidentally, is the only word in the English language to contain 5 consecutive vowels)

Some less obvious ways that queues cost money involve

o In a supermarket, the space kept clear between the checkouts and the start of the aisles is valuable space that is being used to manage queues instead of being used as shelf space.
o Two delivery lorries arriving at a store/depot at the same time cost money in waiting time.
o Or a more trivial example, taking a ticket at the meat counter involves the cost of the little yellow tickets and the dispenser

Understandably therefore, minimising queues is top priority, and as something that has big impact on customer dissatisfaction, it's something of a PR tool in the supermarket wars. The trade off is balancing the cost of resources used to prevent queues, vs the cost of the queue itself. Having all checkouts open all the time would go a long way to easing congestion in the store, but that has to weighed up against the retail wage budget, (the single biggest expense for a large retailer), used to pay all of those checkout operators required to ensure no queues.

Retailers understand this trade off and have developed complex systems to help them manage queues, something that the average shopper trying gauge whether aisle 19 (short queue, but inefficient operator) is better than aisle 20 (longer queue but smaller basket size) probably doesn't appreciate. (Fuzzy logic might help here!) Space in store is critical and the retail wage budget is massive, so what looks like large investment can be easily offset by the cost of real savings in either of those areas.

You might like to ponder this next time your stuck in a checkout queue, It's something I can't help myself doing... (My personal favourite is the Wilkinson's dot matrix receipt printer, which takes something like 15 seconds to print your receipt. Whilst laser printer are more expensive, the retail wage budget saving, at roughly a quarter to half a million pounds per second, I'm sure would massively outweigh the investment)

You can apply a queue theory equation in loads of different ways (another favourite of mine is NHS waiting lists). In a later post I'll talk about how I've used queue theory to revamp a large data warehouse batch schedule..

Collaboration between client and supplier lead to project success

I've been frustrated recently by being surrounded by some 'Old Skool' supplier management techniques. I've always worked in Retail so I'm used to being in environments with very strong purchasing backgrounds, and suppliers being driven hard on deals. However, recent events have left me exasperated to the point of writing this.

The recent examples involves insuring yourself against failure to deliver by a supplier, which I think everyone would agree is a good thing. You can do this in a number of ways and permutations. Two approaches at opposite ends of the spectrum are, having bullet proof contracts that claw back money or services in the event of failure, at one end, or being pro-active and putting processes and resources in place to prevent the failure ever happening, at the other.

The former appears to cost you less, you get money back for any issues and you don't pay for anyone in a QA type role etc. and therefore seems quite attractive. I've also seen this create the 'big man effect' in those people who suddenly find themselves in a position to throw some weight around, which adds to the attractiveness for some. I feel this approach is short sighted and tends to focus on cash rather than value. It ignores the opportunity cost, or cost of failure.

Organisations who take this approach would do well to remember why they embarked on those projects in the first place. Generally (I know there are some exceptions) business undertakes new projects to add value, get a return on investment, call it what you will, spend some money, get more money back (lots more hopefully!). Or in the case of service, spend on support, to prevent issues happening that will cost you lots more.

So, if we're doing projects because we want to make more money, then any failure or delay, not only costs the additional sum to rectify the problem, but also costs the lost opportunity from delivering the project. In today's rapidly changing technology world, these opportunity costs can be enormous. Here at Retail Monster we've had the opportunity to work on cutting edge projects that have delivered massive returns on investment. You can read some of our case studies here.

My experience is to avoid this type of approach like the plague and take a more collaborative approach, more partner than supplier. Shared vision, shared objectives, collaborative teams, Agile approach, which is also how Retail Monster Consulting like to work. It's one of the reasons I formed the company. If you feel the same way, then maybe you'd like to Join us too.

Organisations that take the former approach, hiding behind contracts in the event of failure, can create a blame culture, where everyone is covering their back. Avoiding blame and responsibility becomes the primary driver. Organisations who embrace the partnership philosophy set themselves up for success, the culture of the organisation becomes based on success, delivery becomes key, and everyone internally, and 3rd parties, are focused on this. Because they're focused on the value of delivery. failure is just not an option....

Carbon labelling comes to a supermarket near you...

Tesco opens up another front on the green supermarket war today, by announcing that products will now be labelled with their individual carbon footprint. Tesco are hot on the heels of Marks and Spencer who stole a march on their rivals to lead the sector on green credentials, by being the first to charge for carrier bags. A move that sounds as good for business as it does for the environment.

Tesco is to become the world’s first supermarket group to launch a major trial of carbon labelling on its own-brand products. The Carbon Reduction Label developed by the Carbon Trust will soon appear on 20 Tesco products in four different categories: laundry detergent, orange juice, potatoes and light bulbs.... Read the full press release here.

Product level carbon labelling was bound to happen sooner or later, and I don't take any credit for predicting it here some weeks ago. Whether this takes off or not, and leads to a genuine reduction in the production of CO2, only time will tell. It's easy to think that people will see this and think twice about which product to buy, searching and substituting for greener alternatives. That might certainly be true of hardened environmentalists but for the ordinary shopper this additional dimension of choice may not come in to play very much at all.

Today's ordinary shopper has a vast array of choice in picking between variants of a similar product. On top of the traditional hard-core options of brand and price, we can opt in for healthy eating (Be good to yourself), quality (Finest, Taste the Difference), ethics (Fairtrade), organic (inc non GM) to name but a few. How 'carbon' as an option competes amongst these existing choices will be interesting to see. i.e. High Carbon but Fairtrade vs Low Carbon non Fairtrade etc.

Whilst I might be questioning the effectiveness of carbon labelling in driving consumer choice, what I think is more certain is that labelling of products will drive down the carbon footprints via the suppliers. Some suppliers will want to be seen at the cutting edge of green manufacturing and will lead the reduction in Carbon values. For those that don't want to lead from the front, they won't want to get at the back of the back either. Once product level carbon measurement becomes more common, it won't be long before the media start running column inches and documentaries exposing high polluting suppliers.

Whilst consumers might find it hard to differentiate products, on the basis of their green credentials, at the shelf edge. They might find it easier to do from the comfort of their living room...

M&S start charging for food carrier bags

5p for Carrier bags, good for the environment and good for business...

Today, Marks & Spencer begin charging 5p for food carrier bags. That's good for the environment because alongside the reduction in plastic that will be sent to landfill, the profit from the sale of the bags will go to Groundwork, an environmental charity which creates and improves green spaces across the UK. In preparation for this, M&S have been giving away free Bags for Life over the last month, with 15 Million given away so far. Customers will now be able to choose either a 5p food carrier or a Bag for Life costing 10p, to take their shopping home in. This is all part of Marks and Spencer's Plan A initiative which commits to, amongst others, reducing carrier bag usage by a third and to sending no waste to landfill by 2012.

With those free Bags for life costing £1.5M, how can that be good for business? Of course the key word in the above paragraph is profit. 'All of the profit from the sale of the bags'. Officially, that means 1.85p from the sale of single use food carrier bags will be donated to Groundwork. That's a nice 3.15p recouped per bag for M&S, which previously was bearing the costs of the plastic bags. So aside from the benefits of all the positive publicity, column inches, air time etc. On top of the competitive advantage gained by making the first move and being seen to set the standard for sustainability within the retail sector. You get to wipe out a very sizeable revenue charge in one fell swoop and get sector leading green credentials at the same time.

Now that's good business!

Green credentials : altruism or commercial interest?

I recently facilitated a Retail Business Intelligence Seminar, which was attended by many of the UK's leading retailers. The format of the day was a number of presentations and some round table discussions on topics that had been selected by the attendees in advance by way of a questionnaire. The Butler group presented on the leading topics of the day within business intelligence and we heard from Conchango's David Ellis, on web performance management.

Corporate Social Responsibility reporting, colloquially referred to as 'Green' reporting, was one of the latter topics of the day for the round table discussion. Green credentials are obviously top of the agenda at C-level of the top retailers and are filtering their way down the organisational hierarchy. IT departments haven't yet got to grips with this in any serious way although departments like Marketing are in full swing, which is why we're all familiar with stories about Marks and Spencer, who are soon to start charging for carrier bags as part of their Plan A initiative, but in the meantime have been giving away free 'Bags for Life'. Sainsbury's have dipped their toe in the 'free Bag for Life' water too. Tesco of course are in on the act with the Future Store initiative, check it out next time you're in Wick (!), and have installed, reputedly, the worlds largest solar panel roof at their Fresh and Easy distribution centre in the US.

The discussion at the table rounded very squarely at one point on 'Are they doing it for money or because they care for the planet?'. Unanimously, instantly, 'for the money!' was the response. Was I the only person slightly disappointed by this response? Or have I bought into the marketing message and believe they do care after all? Who knows? but later when I reflected back on this, I thought, 'If they are in it for the money, in what directions could they take it?'

If you shop with a Tesco, and use your clubcard, then Tesco will know every item you buy. Tesco could therefore work out an individuals customers green credentials from the products they buy, assuming they work out individual product greenness, which surely is a first step. They'll already use some Fuzzy definition of greenness probably linked to a measure of ethicalness for segmentation purposes, but this will allow a whole new measure of granularity.

Doing this would of course give rise to opportunities to up-sell people to more 'green' products, that as well as espousing their green credentials, probably cost more and have a greater margin. This has profit implications but also huge customer satisfaction potential. Imagine how powerful Tesco online shopping could be if you could be presented with greener alternatives to those Kenyan strawberries, right there on the page? This has the added advantage of being applicable to all customers for as we have all heard, there are those vocal customer groups who shun the mighty clubcard for big brother reasons. For the many who carry one though, (13.5 Million), I wouldn't be surprised if they actually wanted Tesco to go this far. Why try and work out your own carbon footprint when someone else can do it for you?

As I stated above, 'Green' is big at C-level and has slowly started filtering down, at some point in the near future green credentials will filter it's way into mainstream BI. Expect more blogs on this in the future....

Selling houses with fuzzy logic

Isn't searching for a house online addictive?

You spend hours and hours at the computer, changing sites, varying search parameters, taking virtual tours etc. If your seriously moving then you do this every day so you can catch the latest properties. Is it addictive? Or does it just take hours because traditional house hunting search engines like Right Move, just don't work like we need them too? In my experience, In order to find that dream house, you need to enter parameters so wide that hundreds of properties are returned, almost all unsuitable and your left to trawl through each one looking for the one or two possibilities. In this day and age shouldn't the computer be doing that? Yes!

It's my belief that house hunting search engines are fundamentally flawed because they use boolean logic. Things are either true or false, 1 or 0. A house either has 4 bedrooms or it doesn't. It's priced under £400K or it isn't. But searching for a house isn't a true or false search. You may want 4 bedrooms, but a 3 bed house with room for an extension might be ok if the other factors were also strong. Boolean logic can't cope with this. Things get much worse when you add more and more search parameters in i.e. detached, 4 beds, 400K, Drive, Garage, study. Let's look at two approaches.

If you AND these factors together then only houses that have all 6 will be returned, unlikely.

If you OR these together and rank on number of matches (like a search engine) then you typically get hundreds of houses returned.

I think you'd get much better results if your search applied fuzzy logic. Fuzzy logic deals with degrees of truth, rather than absolutes. Rather than a yes or no, it's under 400K or not, yes or no. Its a 'yes, nearly, not quite, not really, no' type of thing. Rather than looking at criteria as pass or fail, 1 or 0, Fuzzy Logic scores them and come up with a holistic view. You score the search against the parameters and include near misses.

Estate agents would argue they been doing this for years, and given the increasing trend to do away with estate agents, they'd be wise to press this angle. If your estate agent is good you might get a call like this?

"Hello Mr Hanlon, its Laura from the Estate Agents. We've got a new property on the market that I think you may be interested in. It hasn't got the 4 beds that you wanted but it's in a really great location, large back garden, drive for 5 cars and the possibility to extend. I thought you might be interested. Give me a ring back when you can".

The estate agent here used fuzzy logic to judge that whilst this property didn't tick the boxes exactly, it scored highly across a number of categories to warrant looking at. How many people have ever given something 9.5 out of ten? or used a rule of thumb? All of these are examples of fuzzy logic in action. Our brains see things as shades of grey, rather than black or white. So how does this all relate to Business Intelligence? Well it's one reason why dashboard reporting can miss the mark.

OK but what do we learn from this.?

Estate agents could re-learn from retailers that's it's important to listen to your customer and give them what they want. They have the edge over search engines and they should work hard to exploit it.

Fuzzy logic is the way all things in the future will work. More of this later...

PS A friend of mine, Jamie Thompson, can also see the benefits of Fuzzy Logic, why not read some of his posts in his blog, SSIS Junkie.

User Centred Design and Business Intelligence

Traditional Business Intelligence was all about numbers, charts and reports and it's been replaced by super whizzy dashboards that promise the earth but may or may not deliver value.

Business Intelligence applications, along with email, are probably the only system that senior executives of companies actually use. As such they have visibility that's unrivalled from other IT areas and therefore why not make them a showcase of IT. A User Centred Design ( UCD ) approach can deliver a look and feel that exceeds peoples expectations, whilst avoiding the temptation to play with technology and overload on 'gimmicky' sliders and gauges.

Taking the time to sit down to map and understand the user journey can change the whole design of an application and deliver something that's really usable and adds value.

But isn't that just capturing the business requirements?

No, it goes beyond that. Understanding what the next move needs to be at each point creates new opportunities to link in deeper analysis, link to operational systems to action items as they are identified, memo issues so that they can be referred to later or trigger workflow tasks on the fly. Then have all of that designed by someone with years of experience in graphic design so that it looks fantastic. If you thought about it , why would you let a programmer design a front end that goes in front of the CEO?

Fantastic, I'll take two. Well, it's not that easy. Working with BI tools isn't the blank canvas that you have with traditional uses of User Centred Design such as web design. The tools have bounds and limits that you can't go beyond, and varying degrees of customisation. At the top end you could re-skin app's published in Sharepoint and have breathtaking state of the art look and feel. At the other end of the spectrum, you can make seemingly simple layout and design changes that transform mediocre reports into clean, professional, visually appealing documents that speak quality.

We use highly skilled IT professionals to build Business Intelligence applications, shouldn't we use highly skilled Creative professionals to design them?

Business Intelligence Dashboards : Are they all they're cracked up to be? Yes and No...!

Traditionally Business Intelligence is about numbers, charts and reports right? Big mainframe reporting systems using Focus or SAS, or even COBOL (those were the days, PIC S9(9) COMP-3, happy memories!!). Or early implementations of Microstrategy or Business Objects that looked good in their day, but seem out of place now.

The trend with technology companies for a few years now has been to make this front end graphical and 'fancy', and to sell the concept of a dashboard. Tools like Business Objects Excelsius and Microsoft Performance Point Server two examples of the leaders. One can't but help get the feeling though that technology has got ahead of the business requirements. Sure, we've all come to expect fancy graphics, but if these don't add any business value then what you end up with is 'gimmicky', 'fun' tools, that don't really add anything above charts and reams of numbers, or worse, deliver less. Charts after all did do the job for decades.

People like the dashboard concept because it promises summarised, easily understandable, relevant, actionable information. It's too easy though to under deliver on this promise. The idea that we can define rules that highlight exceptions, so that time spent analysing numbers is minimised and people are presented with the answer, is an attractive one but not one based on reality. 'Retail is Detail' so the saying goes and reading a retailers trading reports is not a simple business, if it was, buyers would have been replaced with Quants developing algorithms to manage the entire buy/supply process, and I'm not aware of any retailer doing this, or even remotely near it.

But let's not lose heart. That doesn't mean we can't get dashboards working. We need to concentrate on the business requirements and the business value and avoid the temptation to 'play' with technology. We can and should make the applications look good, processes like User Centred Design can add very significant value. Business Intelligence applications, along with email, are probably the only system that senior executives of companies actually use. As such they have visibility that's unrivalled from other IT areas and therefore why not make them a showcase of IT. Charts have their place and we need to play on their strengths and build in functionality that enhances them rather than supercedes them.

Too often the temptation with dashboards is to hide charts behind petrol gauges and sliders, why not have the chart of numbers as the centre piece and use it as the entry point into graphs, charts and deeper analysis.

Corporate Performance Management

A healthy and stable business finds the balance between, often competing, stakeholders. A point I try and make in a humorous way in my previous post about my local Off-License. Corporate Performance Management is the new name for what was referred to as the 'balanced scorecard' approach to executive management. This approach aims to balance the competing stakeholders such as employees and shareholders, customers and suppliers.

Limited companies need to provide a good return for their shareholders to do that they need the best staff, who like to be paid well. The more you pay your staff, the less profit you have to distribute amongst your shareholders, or the more you need to charge your customers for goods in order to make the profit, or the harder deal you need to negotiate with suppliers in order to minimise costs, etc etc.... So we have many stakeholders who all have individual needs, which often compete against each other, but to create a sustainable business they all need to be managed well.

Corporate Performance Management, or CPM for short, is about setting upper and lower boundaries for each of these stakeholders and their interests and then monitoring the performance of each to keep within these boundaries. It's CPM that we can blame for staff survey's, who want to know if 'My contribution is recognized by my manager', 'I have an opportunity for career progression' and 'the pay I get for my job is fair'. It's also behind Retailer/Supplier code of ethics and for the rise in Corporate Social Responsibility.

Whilst mostly CPM is used at the executive level, the principal applies equally well within departments. Shops need to balance the wishes of the customer in not having to queue, with the impact on the retail wage budget in having excessive staff manning the checkouts. An area where retailers invest heavily to create the right balance, as discussed in an earlier post on queueing theory. Inventory levels are another key area where the balance between stock and availability needs to managed closely, to minimise the costs of out of stocks and the lost interest of having money tied up in stock instead of in the bank.Sustainable business isn't "all about the numbers", it's a balancing act.

Off-License 2.0

I've introduced my local off-license and it's over friendly owner, Pete, in my previous post about the impact that merchandising has on replenishment. Being a small shopkeeper, Pete only has limited capital to invest in the business, so it needs to be highly targeted to where it adds most value. Pete still uses a pricing gun and an old fashioned till. It's obvious that this costs him a lot in time and effort, but it's his own time and he likes doing it so he carries on, the benefit isn't worth the investment.

This might seem a little old fashioned but in another way Pete is on the cutting edge of off-license retailing. Pete has just introduced the concept of off-license 2.0, social network retailing in beers, wines, spirits and confectionary. I mentioned before that the real purpose of the shop is to engage customers in conversation and Pete has now taken this to the next step by installing sofa's in his shop, near the checkout, to extend the social interaction both to customers and non-customers. Regular customers can now come in for a sit down and a chat whether they are buying anything or not.

It's hard to work out the impact on trade that this will have. I'm sure that the regulars now become even more regular and will often be tempted into impulse purchases when they'd no intention of buying. For others,me included, I'm less impressed with the innovation. Before the checkout process used to take 5 minutes and was a necessary evil. Now of course this can be extended as other people can chip into the conversation. Maybe the two balance out.

The benefit to Pete though, of this investment, is huge. Now he can hold conversations whether there are customers in the shop or not, as there tends to be a steady stream of loafers willing to come in and sit down. It's not all about trade and numbers, there are other factors, often competing that contribute to a healthy and stable business. Larger retailers are trying to balance shareholders vs employees, or customers vs suppliers. Off license 2.0 might not have had a huge impact on trade but it's certainly improved some of Pete's other KPI's and therefore worth every penny.