Gaining Competitive Advantage Through Technology with the Poor Man’s BMW

During the last year of my programming career, I had the opportunity to design and build a computer assisted ordering system for Co-op Atlantic. The company had been suffering from overstock and out of stock problems in the Co-op Basic stores for some time. The total value of lost sales was unknown, but was estimated to be quite significant. The money tied up in inventory had the stores in a very precarious financial position. Something had to be done, so we set out to design a system which would alleviate the situation. We looked around the industry to get ideas on what style of system to purchase/develop. One of the most well known ordering/replenishment systems was the one utilized by Wal-Mart. Unfortunately, we did not have millions of dollars to spend. After considering our options, we embarked on a development effort with a shoestring budget of less than $50 K.

We decided to use the Pocket PC technology, with Symbol technologies being selected as the supplier of handheld computers. Essentially, the system worked as follows:
1. On a nightly basis, the store’s sales figures were loaded into a SQL Server database located on a back-end PC.
2. The average daily sales of each product were calculated for the past 8 weeks.
3. The average daily sales figures were then transferred to the handheld Pocket PC.
4. The store employee would begin the ordering process by entering the dates for the next two scheduled deliveries (for example, if it was Monday morning, he may enter Wednesday as the next scheduled delivery day and Friday as the following scheduled delivery day). The goal was to order just enough inventory for the next delivery that would last until the second delivery. The system design was our attempt at creating a Just-In-Time inventory system.
5. The employee would then walk the aisles, scanning the bar codes of the products. The handheld Pocket PC would then calculate the number of units to order based on the average daily sales figures and the days between scheduled deliveries. The employee had the option of accepting the recommendation or ordering a different quantity.
6. After walking the aisles, the Pocket PC would transfer the order information to the back-end PC.
7. The back-end PC would transfer the order to head office via existing communication technology.

We launched the system in 30 stores within the first month of rollout. We estimated the first year savings to be $500K. Last I heard, the system had been successful in achieving its objectives. After I left the organization, I came across an article which referenced the system.