4-page Case Study - Posted 5/8/2007
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Virgin Retail Saves 8.5 Hours a Week in Each Store with New Stock Solution
Virgin Retail is a United Kingdom (U.K.) success story. Since the first Virgin record shop opened in 1971, the company has expanded its operations to 105 Virgin Megastores across the U.K. and Ireland. The group, which prides itself on customer service, decided it needed a stock-control solution that would provide employees with real-time information and help the company stay a step ahead of the competition. After researching a number of systems on the market, Virgin Retail chose Microsoft® BizTalk® Server 2006 and worked with Microsoft Gold Certified Partner Xavor to deploy the solution at its headquarters in the U.K. All stores have seen significant improvements in employee efficiency and customer service, and, based on a recent cost-benefit analysis, the company estimates that each site is now saving about 8.5 hours a week.
Situation
Virgin has become one of the most recognisable brands to come out of the United Kingdom (U.K.). Its portfolio includes an airline, a record label, and even a line of soft drinks. The company’s continual drive to seek new and exciting growth opportunities has resulted in many successful business groups being built under its name.
As with the rest of its operations, Virgin Retail has to survive in an extremely competitive environment, and its Virgin Megastores must sell music, videos, and computer games that people want. To keep ahead of its competitors, Virgin needed a system that would better connect its business processes across the U.K. and Ireland. This would help effective stock management to deliver goods to customers when they want them.
Kevin Hepburn, Head of Software Development, Virgin Retail U.K. and Ireland, says: “Our existing system—an IBM AS/400 mid-frame, only polled point of sales in each store every 24 hours. This restricted information to employees.”
As a result, employees had no real-time view of stock inventory in stores or at head office. The point-to-point integration of back-office applications left no ability to predict customer trends or order stock more effectively than the competition.
Hepburn says: “We would go through a day of trading and wouldn’t have central visibility of what had happened until after midnight that day. It delayed our ability to report or act on that information.”
Each store has an electronic journal, but it offers no central visibility across the organisation. With centralised reporting, action could be taken in real time, using accurate reporting.
Hepburn says: “We needed to know our stock position accurately. When we start the day, our stock inventory is accurate, but, by 6pm, the inventory still reflects the stock as it was in the morning.”
Lack of accurate stock information also created customer service issues because employees couldn’t be sure if stock was available to sell. What’s more, there was increased competition, with other stores having real-time inventory.
“Initially, we wanted to connect our central system at headquarters with our in-store systems,” says Hepburn. “Secondly, we wanted to put in place an integration infrastructure so we weren’t sinking money into technology that had a limited life span or integration throughout the business.”
Virgin wanted to connect things in a simpler, more efficient way. “We didn’t want just a point solution,” says Hepburn. “We wanted a solution that would begin a new technology roadmap for us—we were making a strategic decision.”
Solution
After evaluating a number of solutions—including IBM RAIS F2 and Websphere—Virgin Retail chose to work with Microsoft® Gold Certified Partner Xavor to deploy Microsoft BizTalk® Server 2006 Standard Edition.
Hepburn says: “We’d seen BizTalk Server 2004 Standard Edition work wonders at our sister operation in the United States. And our in-house development skills are strongly Microsoft, so we are heading towards its technology more and more.”
Before it went live in September 2006, a four-week pilot programme was run in 20 stores. It was the first time people had looked seriously at information, and they had to work out how they would process that. Hepburn says: “Suddenly, there was a wealth of new tangible information that wasn’t seen before. The pilot showed us a lot of new capabilities.”
BizTalk Server is ideal for building solutions for business-process integration. With it, developers can create more flexible solutions for integrated business processes. BizTalk Server also empowers administrators and business users to monitor ongoing business processes more effectively.
Hepburn says: “The BizTalk Server sits in the middle of our solution, and every 15 minutes, it reads information from the stores’ till controllers. It compiles the data and brings it back centrally, before attaching hierarchical records to the sales information. This is then written into our merchandising system for ordering, buying, and managing inventory.”
Xavor also integrated a Microsoft SQL Server™ 2000 database for the company’s warehouse. Hepburn says: “This solution is very much about returning useful information. We don’t want people looking at the reports every 15 minutes, but at appropriate times when they can take action. At the moment, because it’s new, employees are running reports frequently.
“However, this demonstrates how popular the solution is. Our people are competitive, and they like to see how they are doing against other stores.”
Benefits
Virgin Retail now enjoys greater connection between its business processes and its technology platform, and the company is poised to realise more business return with new projects already in the pipeline. Tangible business results have already been seen. Low-volume, high-customer-demand stock items, such as video games, are now easier to get in stock.And customer service levels have increased due to employees having access to real-time stock inventory information.
Employees Save 8.5 Hours Each Week
The Virgin Retail stock inventory is now available in real time. As a result, employees can automatically see if a product is in stock by checking its system. This is making dramatic time savings at every store—on average, 8.5 hours. Time spent manually searching for stock in store is no longer required. And time spent on product recall, shelf-filling, and managing stock inventory has been reduced.
Hepburn says: “Our employees had an immediate positive response once the solution went live, both in store and at our head office. Now, store managers are keen to set daily sales targets.”
The business systems team at Virgin Retail expects operational efficiency savings of more than £250,000 each year as a result of the BizTalk Server solution.
Solution Provides Accurate View of Stock
New video games released every Friday in limited numbers used to create issues for employees at Virgin Retail headquarters. But with the new detailed and accurate reporting, employees can predict customer fads and see sales as they happen.
Hepburn says: “Before this solution, we were around the industry average with how we polled our sales information. Now, we have a competitive advantage over stores that do not have this capability, and we’re on the same playing field as those that can.”
Customer Service Levels Increased
Employees can react to market trends and access stock faster. Hepburn says: “This is a lot better for our customers and better for us as a company. We have improved our stock purchasing accuracy and head-office decision-making, especially when it comes to ordering low-volume, high-demand items.”
Now, customers can rely on Virgin Megastores to have the product they want in store. But if for some reason a store doesn’t have an item, employees can see which Virgin Megastore does and inform the customer. This prevents customers from having to wait around or going to a competitor’s store instead.
Platform in Place for Future Growth
Virgin Retail now has a strategic platform to promote future business growth by connecting its back-office systems. By automating and optimising its business processes, BizTalk will help Virgin grow its business even further.
Hepburn says: “We chose BizTalk Server to support our strategic technology development, not as a point solution. Next, we are planning to integrate it with our other business systems. The technology represents our investment in an integration hub. And we are now discussing our next steps with Xavor to determine how we can best extend this technology to our requirements.”
This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY. Document published April 2007
