“Clothes R Us” Point Of Sale Initiative- Situational Analysis
Ajay Srinivasan Ravi & Pooja Prabhu
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Clothes R Us- An overview
Situational Analysis
Problem Statement
Project Management Canvas
Project Timeline
Goals and Benefits
Strategic fitment
Cascade Map
Agenda
Clothes R Us- An Overview
The following illustrates the growth of Cisco since its inception and business strategy
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Origin (1986)
Began apparel operations in
Portland
Built reputation for hip but affordable clothing for men,
women, and children
Growth (1990-1997)
Experienced tremendous growth
between 1990 and 1997
Employee base doubled and store operations
increased by 50%
Net earnings rose by 18% to $534 million and
revenue by 23% to $6.51 billion
Decline (1998-2001)
Expanded to 400 stores thereby doubling its
debt
Total headcount was down by 20% and
number of employees per store by one-thirds.
Commenced cost-cutting in 2001 and reported net loss of
$124 million
System Current State
TRADITIONALSYSTEM
Old Fashioned POS system at front end
Non- integrated credit authorization
device + Private LAN
Standardized PC (Back office)
Factors governing traditional IT system for Clothes ‘R’ Us
Front end Server Back end2
Delayed cash draw and item database pricing
Flawed integration with the server
Circuitous routing via 3 servers
Relying on standard office productivity software for back store management functions
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Situational Analysis
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Listed below are the SWOT of Clothes R Us in 2001 prior to the implementation of POS initiative
1. Strong reputation2. Leading retailer between 1990-19973. Highly knowledgeable product
managers4. Nation-wide operations(42 states)
Strengths
1. Store office operations2. Circuitous authorization methodology3. Insignificant IT capabilities4. Flawed revenue growth strategy(failed
to factor in key issues)5. Outdated product line
Weaknesses
1. Gap Inc. ,Eddie Bauer , and Pluto2. Walmart in the low price segment3. Depreciating gross margin4. Dismal sales and attrition5. Burgeoning debt
Threats
1. Leverage IT at store level2. Optimize authorization process3. Improve Customer interaction- CRM
implementation4. International markets
OpportunitiesPosi
tive
s
Ne
gati
ves
Problem statement
Problem: Clothes R Us is a retailer of hip and affordable apparels across 400 stores in 42 states in USA. Recently, the
company has been losing market share to competitors and has doubled its debt. The “as-is” store processes require the
manager to spend about 75% of his person day in reconciling close outs, cash management, inventory tracking, and staff
scheduling among others. Also, the old-fashioned Point Of Sale(POS) systems have a circuitous authorization process that
routes transactions via 3 disparate servers consuming 30-45 seconds per transaction on an average.
Impact: This has resulted in the company facing a net loss of $123.62 million and reporting its first fiscal year loss in more
than 15 years thereby causing a significant financial burden on the company. Furthermore, the cash dividends shriveled by
83% to $12,857 in 2001 from $79,503 in 2000, making the stockholders lose confidence in the company.
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Problem statement
Problem: Clothes R Us is a retailer of hip and affordable apparels across 400 stores in 42 states in USA. The current store
processes require the manager to spend about 75% of his person day in reconciling close outs, cash management, inventory
tracking, and staff scheduling among others. Also, the old-fashioned POS systems have a circuitous authorization process
that routes transactions through 3 disparate servers consuming 30-45 seconds per transaction on an average.
Impact: This has resulted in the company doubling its debt with a net loss of $123.62 million and reporting its first fiscal year
loss in more than 15 years thereby causing a significant financial burden on the company. The competition from Walmart is
intense in the low-price segment, which happens to be Clothes R Us' primary product segment. Furthermore, the cash
dividends shriveled by 83% to $12,857 in 2001 from $79,503 in 2000, making the stockholders lose confidence in the
company.
Proposal: The company looks to address this issue by freeing up the store manager’s time and automating cash
management processes via enhancing the IT capabilities at the store level to promote increased sales.
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Project Management Canvas
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The canvas talks about the overall planning of the project
Resources
Core Team• Nancy Orlin- CIO• Product ManagersStakeholders: • EMT• Operations Steering Committee• Executive Oversight Committee• Product Management Team• Store personnelABC Consulting team• Marcus Nord- Program Manager• Ben Richards- Deployment Manager• Rich Burke- Infrastructure Manager• Linda Hansen- POS Project Manager
Activities
Phase1: PlanningDecide monitoring andreporting parametersPhase2: Development• Define system objectives• Develop data and
software architecture designs
Phase 3: Implementation• Prepare Functional and
ancillary requirements• Design UI and system
interfaces• Code -• TestPhase 4: Deployment• Phased roll out beginning
with pilot stores
Deliverables
• POS and Credit Systems• Store management suite• CRM data interfaces to new CRM• Inventory data interfaces to
corporate inventory legacy systems
• Extension of email services• VOIP at stores and HQ
Goals
• Optimize store manager’ s man hours
• Automate cash management processes at store level
• Provide on-network connectivity allowing dynamic processing
• Bring down credit authorization processing times
Benefits
• $15 million per year• $20000/ year/resource in
salary and benefits• $11000/ year savings through
back office applications
Capabilities• Insignificant IT resources & systems• Highly knowledgeable Product
Managers
Cost Risk /BenefitsDelayed Sign-offsEmployee PoachingWorldCom debacle
Performance Measures/metricsCost impact Control ratio Schedule impact Monthly Total planned expenses
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Project Timeline
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The project timeframe is illustrated by means of a Gantt chart
June Jan Feb
Project Commencement
Review meeting
Jan 2002
Feb – Apr 2002
Planning phase
Product Definition & Architecture
Implementation
Completed on time
Mar April May Jun July Aug Sep Oct Nov Dec Jan Feb Mar April
2002 2003
May – Dec 2002
Jan – Apr 2003
Completed with delays At Risk
Deployment
Project Goals & Associated Benefits
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Free up the store manager to work the store instead of the store office
Automate cash management processes to include credit/debit at store level
Provide on-network connectivity
Allow cross-store inventory checking and reduce authorization times at POS
Increased Man hours(66% more time ) in the store operations
Savings to the tune of $20k per resource and
increased Customer satisfaction
Real time processing of sales data and increased efficient utilization of resources
Improved productivity and lesser waiting times
for clients from 30-25 seconds to < 5 seconds
Benefits
POS
Benefits Cascade Map
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• Store managers to spend 66% less time than earlier• Savings to the tune of $20k• Increased employee efficiency• Reduced Authorization times to less than 5 seconds
This will occur on a daily/ yearly basis
EMT and Consulting firm
• New store management suite• Automated electronic messaging ,email, and VoIP• POS ,credit systems, and CRM
• Store Manager• Customers & employees• Business stakeholders
Yes, Store managers will spend 1.5-2 hours per day as opposed to spending 6 hours per day
• Measured in man hours• Employee efficiency• CSI• Processing times• Sales figures
• Improved CSI• Long term savings of
$37k/year/store• Increased sales figures
WIP
Will be achieved in a span of 1 year by implementing new system capabilities by associating with ABC consulting firm
What?
When?
Who ?
Change?
Who? How & When?
Achieved?
How More?
Quantifiable?
Strategic fitment of benefits
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Benefit Parameter Strategic Fitment Achievability
Good Fit
Adequate Fit
Poor Fit Easily achievable
Achievable
Difficult to achieve
Store Managers spend66% more time than before working the
store
Very Very. Needs additional capability. Has to outsource to a consulting
firm.
Savings to the tune of $20k per resource and
increased Customer satisfaction
Very Very. Needs additional capability. Has to outsource to a consulting
firm.
Real time processing of sales data and
increased employee efficiency
Yes Very. Needs additional capability. Has to outsource to a consulting
firm.
Reduced Authorizationtimes to less than 5 seconds – Improved
productivity and lesser waiting times for
clients
Very Very. Needs additional capability. Has to outsource to a consulting
firm.
Strategic fitment Achievability factor
Their strategy was to reduce operating costs, increase sales by multiplying stores , improve customer satisfaction
Thank You
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Situational Analysis-2
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The company went back to the drawing board to perform a SWOT analysis
1. Strong reputation2. Leading retailer between 1990-19973. Highly efficient managers
Strengths
1. Store office operations2. Circuitous authorization methodology3. Insignificant IT capabilities
Weaknesses
1. Gap Inc. ,Eddie Bauer , Walmart, and Pluto
2. Limited schedule for additional changes and delayed sign-offs
3. Product managers lack of focus4. Hardware-software incompatibility5. Deployment deadline slippage
Threats
1. Leverage IT at Store level2. Optimize authorization process3. CRM implementation4. Revenue increase to the tune of $15
million
OpportunitiesPosi
tive
s
Ne
gati
ves
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