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arvato services Optimizes Inventory with IBM Cognos 8 BI

  • April 11 2008, 9:29am EDT

REVIEWER: Jochen Bremshey, director of IS & T entertainment services, Europe at arvato services.

BACKGROUND: Headquartered in Gütersloh, Germany, arvato services is a subsidiary of media giant Bertelsmann AG and specializes in the distribution of entertainment products and services worldwide. As one of the world’s biggest media products and services providers, our core business includes all aspects of supply chain management. With more than 8,200 employees, we deliver tailored end-to-end solutions to a global base of customers.

PLATFORMS: The system runs on a Sybase relational database, SEEBURGER Business Integration Server and Retail Information System (incorporating IBM Cognos 8 BI reporting and analysis within).

PROBLEM SOLVED: We wanted to improve customer service and growth by establishing a system for our customers to optimize inventory management at stores; analyze sales and return quantities, top selling lists, available stock and customer trends; access and analyze timely sales performance data to respond to market changes; provide the right products in the right amount at the right time at point of sale (POS) and optimize limited merchandising space in stores. Retail-supplier collaboration and advanced inventory management processes such as vendor managed inventory (VMI) allow vendors to optimize production and availability of products by monitoring and evaluating current sales and inventory data along with historical demand patterns. To help our customers address their market challenges, we developed our own VMI solution, in partnership with a key customer, Universum Film, called retail inventory management (R.I.M.). The capabilities of IBM Cognos 8 BI are used within this system to help close gaps in retail supply chains and optimize inventory levels through analysis and reporting on sales and inventory information.

PRODUCT FUNCTIONALITY: Rapid access to accurate sales performance data ensured quick responses to market changes and trends. Our customers manage their own products directly at the point of sale (POS) and have critical business information easily accessible. In the R.I.M. system, each arvato customer is given access to a multidimensional cube that is updated daily. Cognos’ reporting and analysis capabilities provide clearly arranged graphs and diagrams for swift, concise analysis of extensive data volumes. Escalation lists make it easy to identify variations in volumes or requirements. Reports that map inventory at different stores help users plan brand actions. Reports can also be downloaded into Excel. Benefits have exceeded expectations. Our clients have seen a 90 percent improvement in stock availability, a 95 percent improvement in on-time delivery, close to a 20 percent increase in sales by avoiding out-of-stock challenges and a nearly 15 percent decrease in returns by reducing inventory levels. Product mix has been optimized by analyzing data directly from the POS, stock has been reduced in the warehouse, and sales performance has improved through analysis of market trends and regional differences.

STRENGTHS: Better insight has improved business. Product managers have a clear view of which products are selling well or not, and they can change market approaches accordingly. Integration with universal desktop productivity tools allows for customized reports and smooth interaction.

WEAKNESSES: With the previous reporting time cut down drastically, we had to revaluate the way the company processed its documentation to cater to this quicker process, thus creating a slight uptick in work on another side of the house.

SELECTION CRITERIA: We have worked with Cognos since the 1990s and have been using Cognos products in our data warehouse since 2001. With that established relationship, the Cognos reporting and analysis capabilities were the most logical fit.

DELIVERABLES: By tapping into POS data, our retailers can conduct pricing and sales impact analysis that is more insightful and more efficient than the previous method of checking scheduling lists. Inventory requirements can be addressed on demand as inventory levels dip, which optimizes the use of merchandising space in stores and the warehouse, reducing costs for production, distribution and storage space, as well as costs associated with scrubbing CDs that are not purchased because of poor demand. Having these capabilities is crucial.

VENDOR SUPPORT: Cognos support is very effective. It is possible to enter any support case into a ticket system and an expert will get back by phone or email very quickly. Most of the cases are solved within one day.

DOCUMENTATION: The documentation was extremely comprehensive, allowing us to run the product seamlessly and with little question.

IBM Cognos 8 BI
Cognos, an IBM Company
3755 Riverside Drive
P.O. Box 9707, Station T
Ottawa, ON, Canada
K1G 4K9
(613) 738-1440

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