Catching Success via the Cloud
Super Retail Group Speeds Supply Chain Optimization With JDA Cloud Services
Founded in 1972 as a small auto-parts business, today Super Retail Group is one of the largest leisure retailers in Australia, with more than AU$2 billion in annual sales. Its seven retail brands focus on automotive products, cycling products and sporting goods, which are sold through more than 600 stores in Australia and New Zealand.
Since 2005, the company has grown exponentially through a series of strategic acquisitions. While this rapid growth has added sales volume and brand strength, it has also resulted in enormous supply chain complexity. The company operated each brand as a separate division and by 2011 it was managing seven distinct supply chains, which spanned from sourcing in Asia to distribution in Australia and New Zealand.
The huge, sparsely populated geography of Australia added another layer of difficulty to Super Retail Group's supply chains. "It is absolutely critical to optimize cost per unit and cost to move with any supply chain in Australia. That last mile of the supply chain is a very complex challenge," explained Nat Cooper, programme manager of supply chain and inventory management for Super Retail Group.
Several years ago, executives at Super Retail Group made a bold commitment to invest more than AU$50 million in supply chain and inventory management improvements from 2012 to 2015. This initiative includes centralizing a disparate set of distribution centers, consolidating procurement in Asia, further developing online sales fulfillment for home delivery and strengthening relationships with key trading partners.
Shifting to a Customer Focus
Super Retail Group's key strategic initiative of consolidating demand forecasting and replenishment across its diverse brands — which were operating at different levels of planning maturity — is the primary reason it partnered with JDA Software.
"As we acquired other businesses and expanded our scale of private-label goods, demand planning became more important. We needed to manage the lead times associated with sourcing from the Asian market, as well as extreme seasonal and promotional volatility within some of our brands," said Cooper.
Super Retail Group also added more soft goods, which have different demand patterns than hard goods. The retailer needed a forecasting and replenishment solution that could handle its geographic complexity, as well as the stock-keeping unit (SKU) complexity and demand variation across its seven retail brands.
The new requirement to manage demand signals for products that are sold in multiple retail brands, and to manage product flows into a multi-user distribution center network, represented a real mindset shift for Super Retail Group.
Super Retail Group
Super Retail Group comprises seven retail brands: Amart Sports, BCF Boating Camping Fishing, Goldcross Cycles, FCO Fishing Camping Outdoors, Ray's Outdoors, Rebel and Supercheap Auto. Founded in 1972 and publicly listed in 2004, the Group has grown to become one of Australia's leading specialty retailers, with more than 600 stores and annual revenues in excess of AU$2 billion.
Quickly launch demand forecasting and replenishment capabilities, supporting a new customer-centric approach.
A Cost-Effective, Risk-Free Launch
To integrate demand planning and increase its customer focus across brands, Super Retail Group decided to implement JDA Demand and JDA Fulfillment into its Leisure Retailing division in early 2012. Within 10 months, the solutions were live, thanks to rapid cloud deployment with JDA Cloud Services. The company elected to launch the software in a cloud environment not only to speed the implementation, but also to minimize the company's risk exposure and financial investments.
"We'd been talking about the need to get on a single demand-and-fulfillment platform for a long period of time. It's a significant investment for a retail organization, and it demands a high return," said Keith Harrison, solutions manager for supply chain at Super Retail Group.
Deploying the solutions in the cloud enabled the retailer to contain its infrastructure costs. "Determining the right hardware sizes, the right amount of CPUs, or even the right amount of disk space can be an uncertain science. Typically, you build in a little safety margin, and then somebody else adds a little more safety margin. Suddenly, the project costs become quite significant," said Harrison. "With JDA Cloud Services, we knew exactly what we were buying. There was a fixed price, and it was very easy to do."
Harrison noted that not all hardware and software expenses are obvious, and that there are often hidden costs in building a technology infrastructure. "For instance, we estimate that it would have cost AU$20,000 per month in electricity alone to host our own software. Those are the costs you often overlook, and they can make it hard to get a business case going," said Harrison.
Additionally, the retailer didn't have the internal resources to implement the solutions, or the capacity to grow the team significantly to support the new solutions. "We trusted JDA Cloud Services because they are the experts. They've got a number of customers they're rolling out. They are more proficient. That's what they do, all day, every day, and that was an advantage to us," said Harrison.
Super Retail Group began the implementation of JDA Demand and JDA Fulfillment with a pilot in its Boating, Camping, Fishing (BCF) brand. "One of the pluses of working with JDA Cloud Services was the ability to do a pilot. From a cost point of view, the cloud enabled us to easily get the infrastructure in place, conduct a pilot and see results," said Harrison. "That success of the pilot was significant because it enabled us to create a business case for moving forward with a single demand-and-fulfillment system, operating in a cloud environment," he said.
Accelerating Results for a Fast Return
The pilot initially included 400,000 SKUs and was then expanded to accommodate 1.4 million SKUs. Since there is incredible product complexity in the BCF business, it formed a good test case. "With 68 different possible targeted fishing species in Australia — more than anywhere else in the world — the BCF business sells a lot of different lures, and a lot of regionally specific product ranges," noted Cooper.
Not only has the cloud services model proven to be scalable across BCF's enormous product diversity, it has also proven very reliable. The uptime has been near 100 percent — a critical factor given the large amount of data the retailer needs to move into the JDA Demand and JDA Fulfillment applications.
After just six months of implementation, Super Retail Group realized tangible results from the pilot. "I'm very happy to say that the reduction in inventory has been significant, about a 20 percent reduction in inventory holdings and safety stock," said Cooper. "We're continuing to pilot JDA Demand and JDA Fulfillment in other business units and are realizing similar results. So we've been really happy with that."
From a strategic perspective, Super Retail Group's new focus on demand planning is helping to support the customer focus it needs to win in the marketplace. "We've made a significant shift in our organizational thinking and culture to become more customer-centric," said Cooper. "That's a key outcome that we're looking for, and JDA enables us to have that capability. In time, we'll be getting the right feeds and visibility from the customer groups and the loyalty programs, and that data will feed into our demand planning capability."
Committed to the Cloud
Initially, the company's executives had to be convinced of the feasibility of the cloud approach. "We needed to prove that business-critical systems on the cloud did not provide any greater operational risks," said Harrison. "Now that we've proven that the performance is very good, and the data is moving backward and forward between the systems, we are challenging the IT team to move other capabilities into the cloud. That is one really positive outcome of working with JDA Cloud Services."
From a support and issue management point of view, the cloud approach has delivered a lot of peace of mind. "When we need to upgrade versions or software packages, it is as simple as communicating with the JDA Cloud Services team. Then it just happens," said Harrison. "We've found the cloud approach to be seamless, very quick and non-intrusive on our other business processes. JDA is very proactive in monitoring activity and communicating with us."
Today, Super Retail Group has rolled out JDA Demand and JDA Fulfillment across all of its Leisure division and is piloting the functionality in a number of its Auto business units, all within a cloud environment. The retailer is also conducting a pilot for JDA Allocation and designing a JDA Enterprise Planning pilot that will begin soon. Based on the success achieved to date, all future JDA solutions will be launched and managed in the cloud.