Retail brand Pepco is a familiar face on Poland’s high streets. Selling discounted consumer goods such as clothing and homeware, it has stores in 223 locations across the country. And while the company’s success lies in its ability to keep costs down, quite apart from the average discounter, Pepco invests heavily in the customer experience, having recently overhauled its stores to create an exciting place to shop.
“The new design of our stores features enhanced displays, bright colours and friendly aesthetics, ensuring that our customers can find their way around quicker and easier,” explains Matthew Lythgoe, Pepco’s CEO. “We want to make shopping at Pepco an enjoyable experience and we’ve taken great strides to ensure this.”
This commitment to enhancing the customer experience is matched by Pepco’s commitment to the future. By 2014, the retailer wants to have opened a further 200 stores, aiming to become the largest, cheapest and most recognisable clothing and homeware discount retailer in the country. However, to do this, the company realised that it had a challenge on its hands. “Our aggressive growth strategy couldn’t be achieved with our existing IT infrastructure,” explains Lythgoe. “We were using an off-the-shelf system that was bought when we had just 15 stores.” This meant that head office had little insight into what was happening at each outlet.
“We had too much spreadsheet-based data, making it difficult to gain an overview of the company as a whole,” says Lythgoe. “However, because of the high volumes of data, this was not only extremely time consuming, but also prone to error. Accurately predicting demand became tough, which meant that some stores had stock issues, yet we couldn’t effectively react to this.”
The purchasing department also faced difficulties. Buying much of its stock abroad, purchasers were faced with fluctuating exchange rates, which were difficult to keep a handle on. “As a discounter we have little room to play with when it comes to profit margin,” says Lythgoe. “The slightest glitch in procurement times can have a direct impact on the bottom line.”
Clearly, a new system was long overdue. Pepco invited five of the leading IT companies to tender for the project, but it was Columbus that stood out from the rest. “Columbus had a lot of experience, having been involved in similar projects with other retailers in Poland,” explains Lythgoe. “Its solution, which is based on Microsoft Dynamics AX, met all of our criteria and we were confident that it would meet our expectations in terms of what it could do for us.”
Columbus Retail Chain Manager for Microsoft Dynamics AX is based on a high-level business model developed especially for retail organisations. The model consists of three parts: category management, supply chain management and operations. “Our solution provides integrated, adaptable functionality within a single end-to-end business management Columbus Polish operations. “The visibility that comes with such a solution can bring tremendous benefits.”
Columbus started work on the implementation early this year, getting the POS up and running as quickly as possible. “Efficiency was critical to this part of the implementation, because Pepco needed to be able to continue with its day-to-day business without disruption,” explains Nair. “Smooth integration and configuration tools make it easy to configure external POS systems from within Microsoft Dynamics AX and support a quick and smooth deployment to new stores.”
Once the POS software was installed, Columbus started rolling out its solution at the head office and across the supply chain, working closely with the team at Pepco to ensure the smooth running of the project. “The management were very hands on, and totally aware of the various stages of the implementation,” says Nair. “The highly organised nature of the company meant that training was straightforward.”
Lythgoe agrees: “We engaged key users in the project from the start,” he explains. “This undoubtedly made for an easy implementation.”
The Microsoft technology at the heart of the solution also helped in the transition period. “The majority of Pepco employees already use Microsoft technology in their personal lives,” says Lythgoe. “This means that the new system was intuitive from the start. This is a real advantage to using a solution running on Dynamics AX.”
Since the implementation, Pepco has seen a number of benefits. The Retail Chain Manager solution imports detailed data from Pepco’s existing Wincor Nixdorf POS system, which is run on all cash registers serving Pepco Poland shops. The data is then sent to head office. “Staff at head office now have a single view of all stores and all operations,” says Manoj Nair. “Concept, sales transactions, assortment, inventory levels and more can be handled from one place.”
“Staff can track and plan for demand and trade in goods at a central level and for each shop, and thereby improve management of the relationship between supply and demand,” explains Lythgoe. “If there is adrop in demand for a specific category of products in one shop, we can quickly react by moving the selected product categories to the outlets where demand is higher. Supply order is automatically generated and sent from Microsoft Dynamics AX to the IT system of the logistics operator, which handles storage and distribution on behalf of Pepco Poland.”
These new efficiencies bring direct benefits to customers. Quick access to the latest information about a customer, product, order, or payment can help Pepco fill its shelves with the products that customers want, when they want them – while helping staff to improve service levels and operations employees to control inventory turnover rates.
But this is not all. Because Retail Chain Manager for Microsoft Dynamics AX is an integrated solution, the system feeds data into the Microsoft Dynamics AX inventory management and finance modules, providing significant advantage for the finance department also. “The financial management in Microsoft Dynamics AX gives us greater insight into finances and has improved our ability to control cost and price deviations quickly,” explains Lythgoe. “Our previous issues with exchange rates are eased with the use of hedge accounting, giving us clearer monitoring of our hedging programmes and automated letters of credit.”
An integrated, flexible solution, retail Chain Manager for Microsoft Dynamics AX provides tools and functionality that give employees at all levels access to the critical information they need to do their jobs efficiently.” says Manoj Nair, Columbus
In addition to this, Pepco’s finance staff can now track any transaction from a ledger account to its origin or to its original document – for example, a sales receipt. They can also track transactions in reverse, from the vendor’s invoice to the posting in the general ledger. All invoices received on paper or electronically are matched with the physical deliveries and the trade agreements. Users cancontrol and validate all transactions. Approval routines can be defined to separate handling of approved and unapproved vendor invoices.
Overall, the solution has paved the way for a stronger future at Pepco. “An integrated, flexible solution, Retail Chain Manager for Microsoft Dynamics AX provides tools and functionality that give employees at all levels access to the critical information they need to do their jobs efficiently,” surmises Nair. “It can transform mountains of disorganised information into valuable business intelligence that can help retailers like Pepco make well-informed decisions and spot evolving customer trends fast.”
Lythgoe concurs, adding that the knowledge his company now has is priceless. “With access to crucial information and integration of that information across the system, for customer relationship management, financial management, human resources management and supply chain management, Pepco has been able to develop the insight it needs for business success.”