Shoppers Stop Signals Two-way Traffic With Suppliers

Mumbai: | Updated: Jan 23 2003, 05:30am hrs
Shoppers Stop will soon introduce a two-way transaction system to interact with its suppliers through the Internet.

The large format retail store will be able to receive data on stocks, invoices and delivery channel from its suppliers through BconnectB, a B2B portal promoted by Siemens. The plan is even to make electronic payments for which Shoppers Stop will have to tie up with banks. The way forward is to move from the one-way system where we are providing data to the suppliers to a two-way portal. We are starting this by May, initially as a pilot project. We want to get data from our suppliers and start a system where we can autoforward the payments into the banks. This will ensure greater efficiencies and better managerial practices as user time will get considerably reduced, said Vikas Prabhu who heads IT in Shoppers Stop.

Already, Shoppers Stop is technology ready. The company has made an investment of Rs 10-12 crore in IT since 1999. Shoppers Stop has installed two ERPs for the supply chain management: the retail ERP is JDA while for financials it is Oracle. The company has a centralised architecture with one server in Mumbai. We do not have servers in our other locations. The two ERPs are related to our supplier base, said Mr Prabhu.

Suppliers, however, think the two-way link will take time. The problem is to have a software for uniform identification of products. Says Chetan Kharade who heads IT in Pepe: They have their own software. We have our own barcode to identify our products while they have their own system. We are looking for uniform identification of products as we deal with so many large format stores. We are looking for a solution which could be used for all large format stores. We are talking to our software vendor in Bangalore to see how the interface can be done.

Shoppers Stop has started working on that. Our system already has the ability to read a vendor barcode. We can activate the 2-way barcode system. We dont see a major issue in that, said Mr Prabhu.

Changing the mindset of the suppliers will surely be an issue. Suppliers may not want to share their stock position and other details with the retail store through the B2B portal. Admits Prabhu, There will be some reluctance initially.

Shoppers Stop will educate the suppliers that the gains from a two-way transaction will be mutual. While suppliers will be able to have the right stocks at the right time, the large format stores will have the advantage of getting the right product at the right time.

Besides, suppliers can send their invoices through the Internet and the hassles over pursuing payments from the retail store will be reduced. This will be a progressive step in retail technology, says Mr Kharade.

The next step in the plan is vendor management. Mr Kharade is optimistic that it will set the process for automatic order generation and replenishment. Based on the supplies, the orders can be treated immediately. But Mr Prabhu takes a cautious approach.

The logistics issues have to be sorted out first. We will wait till the two-way flow gets stabilised. It will take a minimum of six-to-eight months. There is an element of risk as well as we will have to move to a just-in-time kind of inventory set up. If the vendor doesnt deliver in time, we will in a situation where we actually would not have stocks to meet the customer needs, he says.

The progress from the one-way to a two-way B2B portal has been slow. Shoppers Stop decided on working with the Siemens promoted BconnectB portal even as its business was growing and there was more interaction with suppliers. We had an option of building the entire B2B portal. But we dropped the idea as hooking on to BconnectB would save us 30-40 per cent on investments. Otherwise, we would have had to set up the hardware and develop and manage the software, said Mr Prabhu.

With the use of Internet, Shoppers Stops interaction time with suppliers went down. In the daily span between 9 AM to 6 PM, we used to spend almost 30 per cent of time interacting with our suppliers. Now it has gone down to 5 per cent. The need for sending faxes was cut down. The interaction with officials and accounts department for following up on readiness of cheques and other issues came down, said Mr Prabhu.

The suppliers also stood to gain. Says Kharade, We could know how our brands were performing, be aware of our sales and stock position, and were able to service the stores promptly.

Suppliers will have to log on to the Shoppers Stop website from where they would travel to BconnectB, the B2B portal. Shoppers Stop would provide the information from its servers to the portal. We shared information on the stock at the distribution system and other retail details. We first integrated our financials and went down to brand and style levels. Suppliers have the option of downloading the data into their PCs, said Mr Prabhu.

BconnectB charges on the number of users connected to them. At the moment, Shoppers Stop has bought 100 logons. If we want more, we will have to negotiate with them, said Mr Prabhu.

The ERP handles 3,000 transactions per store per day on an average. Shoppers Stop has 11 stores, spread over Mumbai, Bangalore and Delhi with products ranging from apparel to toys, home furnishing and cosmetic brands. The company is planning to open a retail store at Calcutta in February. We have grown from Rs 160 crore to a Rs 310 crore company. It is important to use technology for retail management, said Mr Prabhu.

Of Shoppers Stops 300 suppliers, around 80 are on the B2B portal for sharing data on details like sales, stocking purchases related to store, brands and payment statuses. Till now, this was a one-way street. But soon retailers will have the option of sharing their data. It was tough to convince suppliers to take to the Internet. Zodiac was one of our first customers. We have grown now. We see the two-way portal concept acceptable to our suppliers, said Mr Prabhu.