Eqos/Focus Wickes Case Study
Mergers may bring long-term business benefits, but short-term there are inevitably problems with disparate IT systems and corporate culture to contend with. For Focus Wickes, with three major mergers in five years, streamlining supplier relations is a key priority - which is where Eqos helps.
Giving them the tools
It comes as no surprise that Focus Wickes has labeled its new supplier relationship initiative "Fusion": in the past five years the DIY chain has grown dramatically acquiring Do It All in 1998 and both Great Mills and Wickes in 2000, to become the UK's second largest home improvements chain. Today there are more than 270 Focus outlets, including a dozen or so trading under the discount "No Frills" fascia, and some 161 Wickes stores.
"Fusing" the inevitable disparate IT systems resulting from such expansion has been a major consideration in recent years. So, too, has been the need to build a coherent corporate culture that melds good supplier relations with a customer-centric strategy. "We have seen something of a cultural revolution in the past few years," says Justin Farrington-Smith, trading director for the Focus division. "We're now giving much greater emphasis to understanding customer needs and also working more closely with suppliers."
Wickes had been an early enthusiast for collaborative working, implementing the GXS TIE system back in 1998. "We'd had several colleague changes since then," explains Scott Holland, supply chain development controller for Wickes, "and the system had been poorly maintained so we felt it was time to take a fresh approach." Around 98 per cent of Wickes' product assortment is own-label so the company has always tended to work very closely with suppliers to develop new lines and share sales forecasts. What it wanted from the new tool was better communications to help cut lead times and improve on-shelf availability, as well as something that could help suppliers become more involved in assortment planning and ranging as the group moved towards a more structured category management model.
In recent months Wickes has aligned its business into three broad business units: "trade", "DIY & garden" and "showroom" - the sort of complete kitchens and bathrooms that tend to be delivered direct to customers. The aim was for the new integrated category teams, which make up the business units, to collaborate even more closely with suppliers. "We needed something that would be simple for our suppliers to use, easy to link into their own IT systems and would also give us more flexibility in reporting," recalls Fusion project manager Denis Antippa.
In August 2002 the company established a project group, bringing together a dozen suppliers, as well as representatives from both Focus and Wickes, to define the requirements of the planned supplier relations platform. The resulting request for information was sent to 12 IT vendors of whom six were then invited to tender. "In December 2002 we decided to go with Eqos' technology," says Scott Holland. "It best matched our current and future requirements with good flexibility, rapid implementation and - importantly - the ability to work with a wide range of IT systems so it would be easy for both our suppliers and the different parts of the Focus Wickes group to integrate."
Implementing an adaptable platform
Rather than putting in place a number of packaged solutions, Focus Wickes wanted an extensive and adaptable platform that would enable a series of collaborative SRM solutions - from performance monitoring through, to new product development and vendor managed inventory.
The company signed a three-year agreement with Eqos to develop three operational modules with the flexibility to decide precisely which functions these would address as the system developed and users - on both side of the trading partnership - began to understand the options. This total platform has been called "Fusion" with the first of the modules addressing product performance management (PPM). Work began in mid-March 2003 with the PPM component completed in 17 weeks and with 145 of Wickes' 150 suppliers live on the system by 1 August.
"Fusion is one of the fastest business system deployments that we have undertaken in recent years. We did this through running a series of workshops and training sessions for suppliers," says Denis Antippa, "As the Eqos system is web-browser based it was very easy to use and most people didn't even need to 'read the manual'." The system is driven by daily downloads of store-level sales and stock data from both Focus and Wickes outlets. This is then consolidated centrally and input into Fusion, which is hosted by Eqos.
Consolidating data across the group can be especially helpful for those vendors selling to both divisions. Suppliers can access store and depot level information about their products to check sell-through rates, delivery performance and forecasts. Lines selling better than forecast are automatically highlighted with alerts e-mailed to relevant buyers and suppliers. This alerting system is a key aspect of Fusion usability.
Fusion is already initiating dialogue between suppliers and category managers to improve forecasts and streamline deliveries. As familiarity with the system increases, suppliers of items which go direct to stores - mostly heavy or bulky goods such as sacks of cement or garden sheds - are expected to play a greater part in helping store managers revise order quantities based on better supply chain visibility.
The Benefits
Indications are that Fusion will help increase sales and margins in the first full year of operations by around 0.5 per cent, while stock-outs are on target to reduce by some 20 per cent. There are likely to be significant savings in logistics, as well, as overstocking can be avoided. It all adds up to a likely annual saving of around £10million across the group.
"Our suppliers are becoming much more proactive," says Scott Holland, "and they've been able to use the information from Fusion to improve their own production schedules which they weren't able to do with the old TIE system. In future we might see a move to vendor managed inventory and greater use of collaborative planning, forecasting and replenishment techniques."
At Focus, which began roll-out to suppliers a month or so after Wickes, similar trends are starting to emerge. "Suppliers can now see this information and suggest amendments based on greater visibility of supply chain and demand patterns," says Jan Wilson, Focus business analyst. Like Wickes, Focus is moving to category management and has reorganized into business units - "decorative", "home enhancement", "garden & pets", and "core DIY" - with some 26 category teams comprising planners, merchandisers, marketers and buyers.
Approaching 200 of the 220 Focus suppliers are live with Fusion. "We've had very positive feedback," says Justin Farrington-Smith. "This has really been a fundamental change in the way we work with our suppliers and it is very significant." Currently suppliers only have access to their individual product performance data via Fusion, but in time greater involvement with over-all category activity is likely.
Focus and Wickes are now conducting further workshops with their suppliers to decide on the next modules for Fusion. Among the possibilities are collaborative product development techniques and an "open order book" system that would give all involved better visibility of the progress and status of purchase orders to help rid the supply chain of those all-too-familiar "black holes". "We want our suppliers to drive much of the development," says Scott Holland, "and they're already coming back to us with ideas for the next stage - the 'open order book' concept, for example, is something that they're suggesting." At Focus this new spirit of collaboration is already helping to realign the strategic business model: "Traditionally Focus has sold largely branded merchandise," says Justin Farrington-Smith," but we'd like to move to around 30 per cent own-label in the near future and that means we must work more closely with suppliers."
Notes to Editors:
Eqos Ltd
Eqos delivers flexible, proven solutions for Supplier Management over the Internet. Eqos helps its customers achieve rapid return on investment from modular, integrated solutions built with change in mind, to significantly advance supply chain effectiveness. Founded in 1997, Eqos is headquartered in the UK. Eqos' Platform is recommended worldwide as a Microsoft preferred platform for collaborative working and is based on Microsoft's .NET framework. More information can be found at www.eqos.com.
Focus Wickes
Focus Wickes is the second largest UK DIY retailer in terms of turnover. Through its Focus and Wickes branded stores, the Group offers an extensive range of home improvement products to both DIY and trade customers. This dual brand approach is unique in the UK DIY Market and allows the Group to access the broader UK RMI Market. Following a number of acquisitions, as at 30 April 2003, the Group operated 282 Focus stores, 150 Wickes stores and one Focus Wickes Warehouse.
For further information, please contact:
Linda Laderman or Anne Lomax
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Phone +44 (0)20 7436 6676
Fax +44 (0)20 7580 0555
Email annel@ladermanpr.co.uk
