SKU SLEUTH …
Rick Cosmer, vice president of retail sales and operations at Mansfield Oil Co. in Georgia, has found cutting-edge back-office systems can offer huge payoffs in terms of data analysis and sales tracking.
Cosmer said the most powerful piece of his system allows him to drill down J.D. to individual products to determine at any time what the gross profit is on any products.
With that information, the user can set it within the pricebook and the system will actually alert you as to which products aren’t on par with the gross profit.
“It allows you to analyze what’s going on,” Cosmer said. “Maybe someone brought a new product in and didn’t mark it up right, or somebody is not ringing it up right at the register. It tells you exactly—right down to the candy bar—why it’s not doing what it’s supposed to be doing.”
New technology continues to improve back-office systems, giving c-store operators better business performance and putting them in an ideal position to predict future trends. Chains not investing or monitoring these emerging technologies will find themselves behind the competition.
Back-office systems, of course, typically run business-administration processes.
A good system with an accounting package records sales transactions and updates inventory records accordingly, generating all appropriate paperwork like invoices and receipts. Many back-office systems can carry shipping information and produce reports that are invaluable in analyzing the present and plotting the future.
The key for many operators is less the gathering of additional information, and more a way to manage it more effectively.
Finding What’s Right
Alon USA, for example, gathers information from its 306 stores. It’s currently working with a combination of back-office components. Most of its stores are equipped with Retalix point-of-sale (POS) office and mid-office systems backed up to a J.D. Edwards archive program. About a third of the stores work on a simple POS system backed up by Professional Datasolutions (PDI).
Alon is an independent refiner and marketer of petroleum products, operating primarily in West Texas and New Mexico under the 7-Eleven and FINA brand names. The stores are managed through its Southwest Convenience Stores subsidiary, the largest licensee of 7-Eleven stores in North America.
“Right now we’re working on the consolidation and uniform application of point of sale,” said Kyle McKeen, president and CEO of the Dallas-based oil company. “It’s a complicated process since you have to work additional systems in order to reconcile and keep your categories consistent. You have to essentially have a mapping-reconciliation process to discern your product categories. It’s not a winning long-term solution, or one that we intend to keep long term.”
How long the conversion process will take is still to be determined, though McKeen said it will probably be completed some time this year. Coming up with the total price tag for the consolidation is difficult, he added, since technology always remains a moving target.
“We’re not continuing on with 2004 technology. We have upgrades that we may or may not do, with both PDI and Retalix,” he said. “The decision matrix changes from year to year. And so today the question is, ‘Do we want to continue with the existing technology we have in our stores and just make it uniform? Or is it time for more dramatic change?’”
Another factor: “We are changing as an entity,” McKeen said. “We’re going to be spun out of Alon USA into our own independent entity.”
As part of an announcement late last year, Southwest Convenience Stores is already operating separately and plans to launch an IPO this year. The timing, again, depends on a lot of moving parts,” McKeen said.
Other operators are also working toward securing a firmer grip on the information they gather. Cheryl Thomas, vice president of retail systems for Valero Energy Corp. in San Antonio, said her company is using a combination of programs.
“We have Verifone Sapphire for transaction information together with PDI,” Thomas said. “We also use a lot of Web-based applications—probably 25 of them—that we’ve written in-house to do all sorts of functions. Those have been in place since 2000.”
If that number of applications seems high, Thomas explained, “one needs to realize that we really have narrowed down the number of programs we’re using. Each one performs its function most effectively.”
Casey’s General Stores in Ankeny, Iowa, has been using a Retalix system since 2002, in part because it permits prepared food items to be easily selected on a touchscreen.
“You couldn’t do that with our previous provider,” said Rich Schappert, senior director of information technology. “It was all code and stuff that you had to enter. This system lets us scan in all the products in the store; we weren’t doing that with the old system.”
Since adopting the system, Casey’s has added a few pieces to it. For instance, staffers use a handheld device to scan inventory, accept products from DSD vendors and order groceries.
Technology providers must be receptive to retailers’ needs. “Like any system there are things you want to add to it—new reports, new enhancements—and we work with providers on adding them or developing them as needed,” Schappert said. “Innovation also comes from vendors, driven by their experience with various users. It’s a collaboration.”
Over the last year or two Casey’s has added new reporting features. One of the most recent upgrades was a change in generating reports, specifically “to make it look more like an Excel spreadsheet,” Schappert said. “This gives us more control to sort things that you really can’t do with other reports right now.”
Mansfield Oil Co. in Gainesville, Ga., a fuel jobber that serves 520 convenience stores and provides a host of services to support store operations, has been working for nearly a year with a vendor that offers what vice president of retail sales and operations Rick Cosmer called “the most modern back-office system available in the market today.”
What is significantly different on his system is it’s set up on a virtual server that allows him to look at daily sales in real time from anywhere in the world. “If you’re an owner or operator of a store and you want to see what’s going on at any store on a day-to-day basis, you can keep track of things,” Cosmer said.
As an operator, Cosmer said the significant piece of his system is that it allows him to maintain his focus.
“If you’re shooting for a target of 28% or 32% inside-store gross profit, it allows you to stay at that level,” he said. “If a vendor comes in and changes prices on you, it will tell you immediately—as soon as you check it in—that your gross profit went down because your vendor changed his price and maybe didn’t tell you.
“It also tracks whether your store employees are marking the product up correctly when they put them on the shelves,” Cosmer said. CSD