Family Dollar Stores, one of the fastest growing discount store chains in the U.S., must make the most of its IT systems. The firm, which has expanded from 3,000 stores in 2000 to more than 6,000 stores in 2006, needed an enterprise solution to integrate its batch scheduling environments for its supply chain. Enter AppWorx, a software firm and Oracle partner. Installing the AppWorx software as a centralized and automated method of prioritizing, controlling, and managing the batch processing workload has provided Dollar Stores with a beneficial centralized scheduling and monitoring system. Read how prioritizing and automating the scheduling has maximized system efficiencies on numerous fronts. The firm's Oracle Retail Merchandising System manages invoice matching and integrates invoices into Oracle Accounts Payable. AppWorx maximizes the interfaces between the two systems and enables data to pass back and forth. As a result, integration is automated, and information does not have to be maintained in two sets of systems. An added benefit is that the new software readily scales to accommodate new systems that are added as Family Dollar continues to expand.

As Published In August 2006

The Heart of Technology
By Carol Hilldebrand

Family Dollar integrates its systems to fuel an aggressive growth plan.

Retailers looking at the possibilities inherent in their information systems must feel a lot like the gold rush miners: They know there's gold there, if only they could shovel it out. The challenges for retail companies are multifaceted. They want to integrate previously unconnected silos of information to foster a free flow of integrated business information, and they want to access that information faster and more reliably.

This is the challenge that faced Family Dollar Stores, one of the fastest-growing discount store chains in the United States. The nation's second-largest dollar store chain, Family Dollar operates in a 44-state area ranging as far northwest as Idaho, northeast to Maine, southeast to Florida, and southwest to Arizona. The Matthews, North Carolina-based retailer's target customer is the low- to middle-income family, and as such, its prices must be low (most items are under US$10), and its margins are narrow. This business model means that the IT systems that support its operations are critical—there is no fat to be cut, and information technology must help the US$5.8 billion company run exceedingly lean.

One of the company's big IT challenges was to find a way to integrate the information flow within the company and speed up response time by automating as many business processes as possible. Moreover, the company needed to do so during a time of rapid growth. Since 2000, Family Dollar has more than doubled in size, from more than 3,000 stores and 4 distribution centers to more than 6,000 stores and 9 distribution centers.

Getting Off The Island

Family Dollar's dilemma is common in the retail industry, says Milind Govekar, research vice president at Gartner, an analyst firm based in Stamford, Connecticut. "What we're finding in retail is islands of automation," he says. "Roughly 70 percent or so of integration requests and automation are batch-oriented. There's no customer waiting at the other end, but it's critical in terms of time—when data needs to be available—and accuracy," he adds. "The whole system needs to work end to end."

Snapshot Family Dollar Stores www.familydollar.com Headquarters: Matthews, North Carolina Employees: 42,000 Description: Family Dollar is the second-largest dollar store chain in the U.S., operating in 44 states and focusing on good-quality, low-cost basic merchandise. Oracle products and services: Oracle E-Business Suite, including Accounts Payable, Payroll, Human Resources Management, Advanced Benefits, Transportation Management (formerly G-Log GC3), Retail Merchandising System (formerly Retek); Oracle Database; Oracle Development Tools AppWorx www.appworx.com Headquarters: Bellevue, Washington Employees: 95 Description: AppWorx is a leading supplier of software solutions for enterprise job scheduling, automating business processes, and simplifying application integrations.

With disparate platforms and multiple applications creating a complex IT environment, Family Dollar sought an enterprise solution to integrate its batch scheduling environments for its supply chain, consisting of Oracle Retail Merchandising System (formerly Retek), SAS business intelligence software, Oracle Transportation Management (formerly G-Log) data warehouses, a mainframe billing system, and nine geographically dispersed distribution centers.

For Family Dollar, the problem didn't lie with the individual applications. The Oracle Retail Merchandising System, for example, did an excellent job at inventory control and replenishment, as well as integrating with Oracle Financials. The problem was that there was no way to holistically schedule and prioritize how data batches were processed from each application. Instead, data batches ran in the order they were presented. "We had disparate applications running in sequence order," says Elizabeth Austin, vice president of information technology operations at Family Dollar. This could have spelled trouble if time-sensitive material ended up at the end of the queue. For example, "part of our nightly batches are file transfers from our data centers into Oracle Retail to integrate with the data stored there and begin the replenishment process," explains Austin. Keeping a lean and accurate inventory is a big part of running a successful low-cost supply chain, so it was vital that such data run on time.

Bringing It Together

The company was exploring different enterprise scheduling solutions when it found Oracle partner AppWorx, a software company based in Bellevue, Washington. Working with AppWorx, Family Dollar installed AppWorx software as a centralized and automated method of controlling, prioritizing, and managing the batch processing workload. "Since we do have a wide variety of systems necessary to run a combined enterprise environment, this gives us a centralized scheduling and monitoring system," says Austin.

Automating and prioritizing the scheduling has allowed system efficiencies on several fronts. In particular, Austin cites the inventory and purchasing processes as an example. "The Oracle Retail side of the system tracks purchasing and inventory," she says. "So with every transaction of received goods, Oracle Retail does invoice matching and then integrates them into Oracle Accounts Payable [a module of Oracle E-Business Suite]. AppWorx further tightens the interfaces between those systems and allows the data to pass back and forth. We don't have to maintain data in two sets of systems, and the integration is automated."

It also allows the company to run with minimal errors from manual scheduling, which Gartner's Govekar pinpoints as a common problem. "With manual handoffs, the wrong data gets past, things fall between the cracks, and the company ends up with incorrect data," he says.

By automating and centralizing scheduling, the data is not only correctly handed off, but the system will ensure that the program completes successfully before it runs another program on another system.

"It manages the successful execution of the entire environment through a centralized console," says Austin. "You don't have to check each system to see if something ran." The AppWorx software also tracks statistics such as runtime and error conditions. (In addition, it sends out error alerts at the time of impact.) By tracking such stats, the IT staff gets a chance to analyze the data and tweak the system for further efficiency. "You have the ability to build some of that stuff and reuse it," says Austin. "You get to build further efficiency from that information."

Scalability and Efficiency

The new software scales easily to accommodate new systems that have been added as Family Dollar grows, the latest being a retail data warehouse. "We build the interfaces for each system out through AppWorx, which really fosters the flow of information," says Austin. "It also allows us to select best-of-breed applications, because we can centralize them through this tool." This translates into an IT staff that can run more efficiently. "It truly allows the team to manage the scheduling system as opposed to executing the scheduling themselves," she says. They also have new statistics that help them plan better—things like how long it takes a specific job to run, or what the average runtime is. For example, if a batch processing job that normally runs from 6 p.m. to 6 a.m. is running long due to holiday high-volume sales, the IT staff can use the system to track where they are in the process and estimate how long it will take to finish. "It gives us a little bit of a crystal ball," says Austin.

For More Information Oracle Retail solutions Oracle Retail Merchandising System

As a result, according to Austin, "We've been able to manage our batch team head count growth through the efficiencies gained by automated scheduling and the management tools in AppWorx. We've been able to maintain the same staffing level and yet meet the steady growth of the company through the improved use of process automation." Supporting this continuous growth both rapidly and flexibly is one enormous benefit. Another is the increased business intelligence gained by better management of enterprise information—all vital attributes in a company that must keep its margins thin in the face of rapid expansion and increased competition. As the company continues to show excellent results—it reported profits that beat forecasts in the second quarter of 2006—integrated information management will only continue to rise in importance.

"This allows us to continue to keep growing and changing as the business dictates," says Austin. "It allows us to follow the business flexibly."

Trendwatch Q&A Gartner Analyst Milind Govekar on Technology Adoption in the Retail Industry PROFIT: We hear a lot of talk about integrated retail supply chains. How many retailers are really doing it? GOVEKAR: Not many. What we generally see are islands of automation that need to be integrated, but it's still a vital need. The criticality lies in whether the data is right, and whether the whole thing works end to end. This won't work with manual handoffs of data between functional silos. PROFIT: Why is it so important to remove manual processes from retail systems, and what are the consequences for retailers that fail to do it? GOVEKAR: It costs retailers a lot of time and money. For example, take a retail shopping chain with an online e-tailing arm. Often, many of the items in an online order get sourced from warehouses or stores, but some items on the list require direct contact with product suppliers. Those last get grouped together and printed, e-mailed, or faxed to suppliers on a regular basis. This is a largely manual process, and since the data is printed out and then reentered once it reaches the supplier, there's no way of making sure that the data is being entered correctly. One e-tailer I spoke with found out that 2 or 3 orders out of every 10 were incorrect. PROFIT: How far should the retail industry go down the automation road, and what question should they be asking themselves first? GOVEKAR: They should be asking how they can automate their entire process, end to end, like other industries have. In finance, it's called straight-through processing. In the telecommunications industry, it's flow-through provisioning. The trend is getting big in retailing, and it's because of the same imperatives that the others face—lowering costs, improving quality of service, and retaining customers. PROFIT: Sounds like the retail industry has work to do. How would you rate it overall in technology adoption? GOVEKAR: Retailers haven't generally been market leaders. I see three categories of technology adopters: type A—companies that are leading-edge adopters of technology for quick competitive advantage; type B—companies that buy technology that's fairly mature and delivers business value and lowers cost; and type C—technology laggards that wait until technology is almost obsolete before buying. For that last category, low cost is the only consideration. I see the retail industry falling somewhere between the second and third categories. Customers weren't that demanding in the past, but that's changed over the years and they've had to buck up and act accordingly. PROFIT: Are there any other changes driving this type of automation? GOVEKAR: The advent of the Web changed things completely, as it's the front door now for many customers. Companies need to pay attention to how good and automated their Web processes are in terms of giving a customer a good experience. This brings new challenges in that we have purely Web-based retailers for whom technology literally is the business. This puts pressure on classic retailers, who have a lot of legacy systems in place that must be integrated, and so they compete at a different level. It used to be that if you asked retailers to tell you the cost of processing one order from a customer, they'd have no idea. Now you've got an e-tailer competing with you that has built systems around that very cost discussion. In the end, it completely changes the approach to technology at many companies.