Garden Center Retailer Grows Profit Margins Up to 10 ...



Overview

Country or Region: United States

Industry: Retail

Customer Profile

Lititz, Pennsylvania-based Stauffers of Kissel Hill (SKH) operates seven garden centers throughout south central Pennsylvania and sells food, grocery, and home accessories.

Business Situation

The company could not determine the profitability of each item sold and so had no way to make buying decisions to maximize profitability.

Solution

SKH migrated from its Unisys mainframe to a solution from groWare based on the Microsoft® .NET Framework.

Benefits

■ Key inventory reduced 25 percent

■ Profit margins up as much as 10 points

■ Time to take inventory cut by 67 percent

■ Cost of taking inventory cut by 50 percent

■ Custom reports created 100 percent faster

| | |“The biggest benefit of the .NET-based solution is that we have tremendous power to make more profitable decisions than we ever could before."

Jere Stauffer, Director, Garden Center, Stauffers of Kissel Hill

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| | | |Garden center retailer Stauffers of Kissel Hill (SKH) could not tie its point-of-sale (POS) system to|

| | | |its mainframe-based inventory management system. It had no way to make buying decisions based on the |

| | | |profitability of each item and, thus, no way to maximize profit. To correct this, the company used |

| | | |Raining Data’s Pick Data Provider tools to migrate off the mainframe and adopted POS and inventory |

| | | |management software based on the Microsoft® .NET Framework and Microsoft SQL Server™ 2000 Reporting |

| | | |Services. The solution, from industry leader groWare, delivers faster, more accurate, and more |

| | | |in-depth information than Stauffers had before. The result: SKH has cut key inventories by 25 |

| | | |percent, boosted profit margins per item by as much as 10 points, reduced the time to take inventory |

| | | |by 67 percent, and cut the time to create custom reports in half. |

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Situation

Stauffers of Kissel Hill (SKH) is a privately held retail garden center based in Lititz, Pennsylvania, with seven retail locations and a pair of distribution centers/warehouses in south-central Pennsylvania. Stauffers also sells food, grocery, and home accessories. The company generates more than U.S.$23 million in revenues.

For 13 years, Stauffers ran its warehouse inventory management system off a Unisys A Series mainframe running proprietary third-party software. The system managed approximately 40,000 SKUs, but the software only supported the distribution side of the business and had no point-of-sale (POS) or retail reporting capability. Stauffers used its food and grocery POS to manage some of its garden sales, but this solution didn’t integrate with the garden inventory system, didn’t include the garden-only stores, and couldn’t accurately capture the complexity of garden sales, in which plants purchased from a variety of vendors could be combined and sold as a single flat at a single price point.

Inventory taking was a particularly difficult process under this system. It took up to 20 people three days to inventory a single location, writing down product numbers and then keying them at a desktop using a mainframe-style green screen. If a product number was entered incorrectly, the error was unlikely to be caught until days later, when the inventory was printed out and taken to the store location for confirmation.

Beyond that, there was no way for retail sales to inform the company’s purchasing decisions. “We had a ‘push’ system with the buyers making purchasing, pricing, markdown, and inventory management decisions based on what the warehouse had moved to the stores,” says Jere Stauffer, Director, Garden Division, SKH Management Company. “There was no POS-to-purchasing correlation.”

For example, buyers knew if a given product had been pushed out to the stores—but not whether it had sold at full retail or at 75 percent off during the end-of-season clearance sale. “We were dealing with grossly incomplete information based on huge assumptions,” says Stauffer. “We were managing our retail business based on eyeball estimates and two physical inventory counts per year. My reporting from retail was based entirely on the assumption that if I sent it to the store and it’s not there, I must have sold it. We didn’t know our shrinkage or average selling points. Did we make money or lose our shirts on a given item? Too often, we didn’t know. We had no real-time data, no way to drill down on data.”

Matters came to a head when Stauffers’s mainframe system was nearing the end of its lease. The company had stopped accepting updates for the software years earlier, because the customizations it had built up over time meant that its development staff was spending all of its time testing updates against the customizations. Now, Stauffers would have to spend $250,000 for a new mainframe lease “and gain nothing in new functionality,” according to Stauffer.

Or, it could consider a new solution.

Solution

Stauffer set several criteria for the company’s new solution. He wanted a solution that would capture all of the “green” products that Stauffers sold at point of sale—and all of the complexity unique to those “green” products. He wanted a solution that could be modified and scaled easily to support future growth. Most of all, he wanted a solution that would inaugurate a major change in the way Stauffers did business.

“We wanted to drive a transition in the culture within the company,” says Stauffer. “Instead of pursuing sales volume without being able to maximize margins and profits, we wanted a system that would enable us to focus on gross margin return on inventory. To get there, we needed to quickly and accurately report on SKU activity, and get data into the hands of the decision makers so they could use that data to drive better decision making.”

To achieve these goals, Stauffers turned to groWare, a Kitchener, Ontario–based provider of software for nurseries, nursery distributors, and garden centers. groWare began by installing its groWare retail POS system, running on the Microsoft® Windows Server™ 2003 operating system, part of Microsoft Windows Server System™ integrated server software, into Stauffers garden centers.

For the inventory management portion of the solution, groWare migrated its solution to the Microsoft .NET Framework version 1.1. The migration was accomplished using the Microsoft Visual Studio® .NET 2003 and Microsoft Visual Basic® .NET development systems and Windows® Forms to write an application interface called GreenPO. That software relied on the existing Raining Data Pick D3 database management software−based application logic, rather than having to re-create that logic from scratch. Pick D3 has a simple structure but allows for complex definitions of data structures and program logic.

The migration also took advantage of the Raining Data Pick Reporting Services Connector for .NET, which allows the Pick D3 database to retrieve, manipulate, and update data through the industry-standard Microsoft data access and programming model. The use of the Pick Reporting Services Connector enables the Pick database and application logic to participate in real-time, service-oriented architecture-based solutions.

As a result of the .NET−based tools, the ability to preserve much of its existing software investment, and the ability to use the same Pick database instead of creating a new one from the ground up, groWare had its .NET-based GreenPO ready in three months and at a cost of $25,000—compared to the 2.5 years and $250,000 it took to fully reengineer the groWare application running on Oracle.

In addition to minimizing development time and cost, the .NET-based approach also enabled groWare to minimize testing because the solution’s core code and business rules did not change. The subsequent process of designing the .NET-based solution for Stauffers took additional time, requiring customization of the application logic for Stauffers’s company-specific processes.

For the crucial reporting portion of the solution, groWare utilized Microsoft SQL Server™ 2000 Reporting Services. SQL Server 2000 is part of Microsoft Windows Server System integrated server software. The groWare solution uses SQL Server Reporting Services in three ways:

■ •The direct use of SQL Server Reporting Services for new reports that take full advantage of the caching, delivery options, drilldown, and dynamic formatting options of Microsoft software.

■ •Migration of existing Pick-native reports to SQL Server Reporting Services, where they can be accessed by decision makers within the company. Stauffers has about 100 existing reports and uses 25 to 30 on a regular basis.

■ •Enabling employees to create SQL Server Reporting Services−based reports from Pick-native data files without having to know or understand Pick data dictionaries or multivalues.

Another key enhancement of the solution is the use of Windows Forms to create a rich, graphical presentation tier to replace the text-only interface of the former inventory management and retail POS solutions (see Figure 1). The result uses tabs, drop-down boxes, and other graphical controls to present far more data on a single screen than was possible before, while making that data more intelligible than in the prior environment.

Figure 2 shows the solution and includes the following components:

■ A computer server in corporate headquarters that supports the groWare application and Pick D3 database. It also supports one of the two warehouse/distribution centers—over wireless broadband capability—and provides POS server-side support for the four stores that sell both garden and food items. This computer also supports the company’s Microsoft Dynamics™—Great Plains® accounting software, now part of Microsoft Dynamics business software.

■ A second computer for the groWare application at the second warehouse/distribution center.

■ Three computer servers, one in each of the garden-only stores, to support POS and connection to GreenPO.

■ A computer, based at headquarters, for SQL Server Reporting Services. Stauffers is also using SQL Server Reporting Services to create and access reports from the Microsoft Dynamics GP software.

■ A development server.

Benefits

With the .NET-based groWare solution, Stauffers has been able to cut a key inventory by 25 percent, boost profit margins by as much as 10 points, cut the time to take inventory by 67 percent, and cut the time to create custom reports in half.

Better Data Yields Higher Profits

“One of the best ways to improve margins is to improve inventory turns,” says Stauffer. “Our goal is to have all managers and buyers make better decisions on inventory items and levels, to increase inventory turns and profits,” says Stauffer. “Thanks to the .NET-based groWare solution, that’s happening. We’re getting out of ‘dogs’ quicker. We’re seeing margins in poorer-performing areas stabilize and in some product lines they are coming up strong.”

Some Stauffers locations have seen a 10-point rise in profit margins in under-performing departments, to about 35 percent from prior performance in the mid-20 percent to 30 percent range, by eliminating less-profitable inventory. For example, Stauffers has reduced inventory by more than 20 percent among the 40,000 SKUs in its home accents department based on information available through the .NET-based solution.

“Our reports showed us what wasn’t selling in as early as April—when we otherwise might not have had this information until August, if at all,” says Stauffer. “We could run a sale in late June and July to get items out of the way, instead of holding onto them for months. That information in turn is passed along to our buyers and enables them to order more profitably.”

In another example, Stauffers formerly ran a daylong off-site meeting for 10 of its buyers in an attempt to determine what had sold well and what had sold poorly over the course of the year. The buyers had then used their best guesses out of this meeting to evaluate products at garden trade shows and to make buying decisions for the coming year.

Now, armed with highly detailed and accurate data on the profitability of each of its 60,000 SKUs, Stauffers was able to cancel that off-site meeting and, instead, institute a meeting after the trade shows to make highly effective decisions about what would likely sell well based on the available data.

“Having information in a timely and accurate way, and being able to use that information to define a more effective program for the coming year—that’s a shift from ‘push’ to ‘pull’ if I ever saw one,” says Stauffer.

“The biggest benefit of the .NET-based solution is that we have tremendous power to make more profitable decisions than we ever could before,” says Stauffer. “It’s a bonus that this solution not only outperforms the mainframe, but also costs less. The ability to leverage Pick data tools and groWare software instead of continuing on the mainframe is immensely valuable to us.”

Time to Take Inventory Cut 67 Percent

One of the keys to the faster and more accurate information on which Stauffers’s buyers are now making decisions is faster and more accurate inventory reports. Thanks to the solution, the time to take inventory per store has been cut 67 percent, from three days to one. Stauffers now has the single-day inventory snapshot that it wanted to boost accuracy.

That accuracy is further enhanced by the use of handheld devices that eliminate the time-consuming and error-prone steps of manually recording data and then rekeying it into the system. Stauffers has been using Symbol 1750 devices and now is considering a move to adopt Pocket PCs running Microsoft Windows Mobile® software because of their greater ease of use.

In addition to increasing timeliness and accuracy, the new inventory-taking system also cuts costs. Stauffer estimates that labor costs associated with taking inventory have declined by 50 percent.

“We have eliminated the tons of work we formerly had in correcting errors during inventory,” says Stauffer. “Beyond the benefits in lower cost, greater accuracy, and speed, it also makes the process far less frustrating for everyone.”

Report Creation Time Cut in Half

The use of SQL Server Reporting Services gives buyers and other Stauffers employees real-time access to reports based on the inventory counts as well as on 20,000 daily transactions throughout the stores. The result is the faster and more accurate reporting on which Stauffers is now basing its decisions.

“Thanks to SQL Server Reporting Services and Raining Data’s Reporting Services Connector, we can create custom reports in half the time we could before,” says Stauffer. “That means we get our information more quickly and it costs less to produce it. We also have drilldown capability to explore and truly understand the numbers in ways that just weren’t possible before.”

Microsoft .NET

Microsoft .NET is software that connects people, information, systems, and devices through the use of Web services. Web services are a combination of protocols that enable computers to work together by exchanging messages. Web services are based on the standard protocols of XML, SOAP, and WSDL, which allow them to interoperate across platforms and programming languages.

.NET is integrated across Microsoft products and services, providing the ability to quickly build, deploy, manage, and use connected, secure solutions with Web services. These solutions provide agile business integration and the promise of information anytime, anywhere, on any device.

For more information about Microsoft .NET and Web services, please visit these Web sites:



msdn.webservices

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“Thanks to SQL Server Reporting Services and Raining Data’s Reporting Services Connector, we can create custom reports in half the time we could before.”

Jere Stauffer, Director, Garden Center, Stauffers of Kissel Hill

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“[W]e get our information more quickly and it costs less to produce it. We also have drilldown capability to explore and truly understand the numbers in ways that just weren’t possible before.”

Jere Stauffer, Director, Garden Center, Stauffers of Kissel Hill

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Figure 1 Windows Forms enables a rich presentation layer, replacing the text-only screen of the former solution.

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Figure 2 The groWare solution uses Raining Data’s Reporting Services Connector to integrate SQL Server Reporting Services with Sales Core data in the Pick D3 database.

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“It’s a bonus that this solution not only outperforms the mainframe, but also costs less.”

Jere Stauffer, Director, Garden Center, Stauffers of Kissel Hill

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| |Software and Services

■ Microsoft Windows Server System

− Microsoft Windows Server 2003, Enterprise Edition

− Microsoft SQL Server 2000

■ Microsoft Visual Basic .NET 2003

■ Microsoft Visual Studio .NET 2003

■ Technologies

− Microsoft .NET Framework version 1.1 |Microsoft SQL Server 2000 Reporting Services

− Windows Forms

Hardware

■ Dell PowerEdge computer server

Partners

■ groWare

■ Raining Data | |

© 2005 Microsoft Corporation. All rights reserved.

This case study is for informational purposes only. MICROSOFT MAKES NO WARRANTIES, EXPRESS OR IMPLIED, IN THIS SUMMARY.

Microsoft, Great Plains, Microsoft Dynamics, Visual Basic, Visual Studio, Windows, Windows Mobile, Windows Server, and Windows Server System are either registered trademarks or trademarks of Microsoft Corporation in the United States and/or other countries. All other trademarks are property of their respective owners.

Pick, D3 and Reporting Services Connector are registered trademarks of Raining Data Corporation.

Document published November 2005 | | |

For More Information

For more information about Microsoft products and services, call the Microsoft Sales Information Center at (800) 426-9400. In Canada, call the Microsoft Canada Information Centre at (877) 568-2495. Customers who are deaf or hard-of-hearing can reach Microsoft text telephone (TTY/TDD) services at (800) 892-5234 in the United States or (905) 568-9641 in Canada. Outside the 50 United States and Canada, please contact your local Microsoft subsidiary. To access information using the World Wide Web, go to:

For more information about Raining Data products and services, call (949) 442–4400 or visit the Web site at:

For more information about groWare products and services, call (519) 748-9199 or visit the Web site at:

For more information about SKH Management Company products and services, call (717) 626-4771 or visit the Web site at:



“We have eliminated the tons of work we formerly had in correcting errors during inventory.”

Jere Stauffer, Director, Garden Center, Stauffers of Kissel Hill

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