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Virtual Strategy Provides Modell's with Real-Time Profitability Down to the SKU Level

  • July 01 2002, 1:00am EDT
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REVIEWER: Larry Long, CFO/CAO for Modell's Sporting Goods.

BACKGROUND: Modell's is the nation's oldest, family-owned and operated retailer of sporting goods, sporting apparel and brand-name athletic footwear with almost 100 stores.

PLATFORMS: Dell 8450 (8- processor) Server running Microsoft Windows 2000, IIS and SQL Server 2000.

PROBLEM SOLVED: The Virtual Strategy system eliminated our extensive labor-intensive gathering and posting of data to analyze product inventory as well as provided the ability to make key profitability decisions in near real time. Merchandisers can now spend their time analyzing product families and lines while creating their own dynamic product groups for inventory planning and forecasting.

PRODUCT FUNCTIONALITY: Virtual Strategy provided Modell's an enterprise analytics warehouse solution with the ability to manage inventories, analyze gross margin and conduct inventory planning down to the SKU level. The system imports POS data and merchandise definition data from our legacy system to provide merchandisers up- to-date, accurate information to make key decisions. We can now track inventory by location, average sell-through, product growth rate and statistical analysis that accurately predicts inventory levels. In the upcoming months, we plan to extend the solution to include corporate financial reporting.

STRENGTHS: The greatest strength was the ability to evaluate inventory down to the SKU level and organize by dynamic product family groups in near real time. The speed and flexibility of the implementation saved us more than $1 million by reducing a 24-month project to a couple of months. The solution also was able to extract data from our COBOL legacy systems without an ETL tool. We were able to load a full month of data in 15 minutes compared to 40 hours with other warehouse tools. We are able to run one year of data from all operations down to POS transactions in a 100GB database on a single Intel-based multiprocessor machine, saving hundreds of thousands in hardware and operations. We did not have to create cross-functional teams or commit any significant resources to get the solution up and running. Flexibility and extensibility allows changing our business requirements and organization at any time through easy-to-use wizards without programming or structured report generation.

WEAKNESSES: Although the solution works flawlessly, Virtual Strategy needed to add capabilities to their core product to support retail applications.

SELECTION CRITERIA: Merchandisers wanted to be able to create custom reports and analysis on the fly without programming or sophisticated training. We evaluated numerous retailing, BI and warehouse products, none of which could provide inventory planning and profitability down to the SKU, customer, product group and store level in near real time. These solutions also had time-consuming implementations, difficulty extracting legacy system data and expensive hardware requirements. Virtual Strategy was the only vendor that met all of our needs. They built a prototype with our legacy COBOL data to validate the robust functionality of the system upfront, which no other vendor was able to do quickly at a minimal cost. This application provides an ROI in months, rather than years.

DELIVERABLES: Virtual Strategy pulls data from our legacy system into a model that drives Web-based merchandising tools and reports. Merchandisers obtain up-to-date rolled-up reports that include dollar sales, gross margins, gross margin percentage, on-order purchases and current inventory levels for each of our stores, products and MVP loyalty customers. They can then update their plans and create dynamic product groups to make key decisions. This is all done in near real time, which allows us to make corrections during the selling day and address problems before they become significant as well as take advantage of opportunities to maximize profits.

VENDOR SUPPORT: Virtual Strategy worked directly with our merchandising and IT organizations to understand key problem areas and develop a solution that exceeded our expectations. The best part of working with Virtual Strategy was their commitment to make our solution a complete success.

DOCUMENTATION: The online documentation was complete and tutorial-based to provide examples of the solution for the user. Training was minimal due an extremely easy-to-use Windows-based interface. Our DBA was provided with information that covered importing data to reporting that was organized and thorough.

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