Edcon: Merchandise Management and Supply Chain Solution

For retailers like Edcon, mastery of the supply chain is a key to high performance.

Edcon turned to Accenture to deliver a group-wide merchandise management and supply chain solution to improve operating efficiencies and improve key business processes.

The Edcon Group is a leading South African retailer selling a broad range of clothing, footwear, textiles and accessories through a network of some 600 stores throughout Southern Africa. Edcon consists of Edgars (Edgars and ABC brands)—a national department store serving middle and upper income families—and the United Retail Group (Jet, Sales House, Cuthberts and Smileys brands)—focusing on the sales of value merchandise. The group has 3.5 million active account holders with a large focus on credit sales and customer relationship management.

Operating in a highly competitive market segment, and across a wide range of brands and stores, Edcon wanted to optimise its supply chain.

On the one hand, the group was intent on streamlining its supply chain to drive out unnecessary costs, but more important was the potential to improve its business processes and so help it to deliver a better customer experience.

Building on previous successful collaboration, Edcon teamed with Accenture to implement a new suite of supply chain systems. The solution targeted:

• Improved stock turns and in-store availability.
• Reduced markdowns through management at the stock-keeping unit level.
• Automated replenishment.
• Improved store profiling and allocations.

Accenture's combination of global insight into retailing best practices and its understanding of how to implement them through the use of technology helped Edcon create a supply chain solution geared to support its drive for high performance.

The implementation of the Retek application suite was central to Edcon's new supply chain solution. A major challenge was creating a single, innovative group-wide solution to support all five of Edcon's brands. This was essential to minimise the long-term costs of building and running the solution.

The ultimate solution included additional Retek modules and modifications to the system's functionality to accommodate special distribution needs. The solution also made extensive use of Retek's Active Retail Intelligence to manage approval workflows and raise exception alerts.

In addition, the effort was tightly integrated with the Nautilus distribution management, Arthur merchandise management, and Oracle Financials general ledger and accounts payable applications. The project also included integration with Edcon's custom-built data warehouse as well as its store back-office and point-of-sale systems.

Accenture also helped Edcon with a significant change-management effort that involved training 250 merchants, 40 head-office support staff, as well as staff in more than 450 stores. In addition, some 370 non-electronic data interchange (EDI) and 60 EDI suppliers were trained on the new supply-chain procedures.

The implementation of this complex system across all the Edcon stores was accomplished in a phased roll-out, minimizing risk and speeding the time-to-value.

Jet and Sales House were the first Edcon stores to be phased onto the new supply chain system, followed six months later, by the Edgars chain.

Edcon now has an efficient and consistent group-wide merchandise management and supply chain solution. The company is using this foundation to deliver an aggressive programme of business benefits such as improved operating efficiencies, increased stock turns and in-stock position as well as reduced markdowns.

Accenture is also managing the new supply chain applications as part of an outsourcing arrangement. The Edcon Group turned to Accenture when it was looking for a partner with an existing organisation large enough—and with the depth of skills—to handle its 600-store network. As part of this seven-year agreement, a 250-person Accenture team manages all application systems development and maintenance activity for Edcon.

For more, download the full overview of the merchandising and supply chain solution, the IT outsourcing arrangement as well as Accenture's collaboration with Edcon to build and roll-out a business–to-consumer website, edgars.co.za.