Maximize ROI on SAP Business One with transaction rollups in iVend Retail

Modern Retail Systems are known to generate enormous amounts of data, irrespective of the size of operations and their spread. This data, which mainly comprises of historical transactions, is used for all the analysis purposes. Reduction in hardware prices, specifically of storage space and the need to ensure business continuity in scenarios of network breakdowns necessitates the duplication of data across applications and databases across the enterprise.

In order to understand the situation better, it is important to understand the evolutionary cycle of a mid-market retailer from the view point of investment in technology.

In the formative stages of the business, a mid-market retailer has his focus set on setting up and expanding his business. At this stage, issues pertaining to sourcing the merchandise, finalizing the price points, where to open store(s), overall marketing, take precedence than a big investment in a formal fully integrated retail solution. From the initial years to the point where the business gets established and the retailer has found that niche; focus on IT investment is relatively less. Most of the mid-market retailer we have interacted with started with in-store automation, which is not a bad or a wrong place to start with.

As the business grows, more stores are opened, the merchandise and their mix increases, the retail chain starts diversifying into related and complimentary offerings around the niche. The complexities around sourcing, pricing, promotions, start consuming more time of the merchandise manager.

The retail solution, which in more cases than otherwise is just a billing application generates billing data and sends it to the back office accounting application in batches. The growing volume of such transactions not only increases the frequency of these batches, but also increases the size of such batches. The nature of these billing applications is such that they post all the transactions generated at the sales counter or the till, into the accounting application. And it is this voluminous data that chokes the accounting system.

A need to sift through the transactional data generated at the store to find out profitability by store, margins by product groups, the best selling product, inventory aging, maintain and manage customer information, analyze customer behavior and buying patterns to find your ideal customer, promotional effectiveness, profit drivers – all become serious agenda items in the now fortnightly review meetings.

Till now all the analysis done by the merchandise manager and the management team was conducted on spreadsheets resplendent with complex macros. And it is the choking of the accounting application that becomes an impediment in generating this information, well in time for the management review meetings.

This is the tripping point in the evolution of the retailer. The retailer has now reached a point where he no longer remains a classical mom-and-pop store chain. The retailer is now a classical mid-market retailer.

There is a growing need at this retailer to increase the operational efficiencies of the retail solution landscape where data collection & collation, its analysis and recommendations are all done in as smooth a manner as it can be. For effective decision making the overall speed of the application landscape has to increase manifold and it is imperative that analytical reports are so designed that they do not look at the same resource pool of raw data. There is a need to segregate retail transactional data from the core financial data stored in the accounting application.

Just as the retailers, most of the retail solutions have also evolved from being a classical billing, in-store automation applications to full scale merchandise and retail solutions with deep integration with (at least one) a core ERP application. Most of these mid-market retail solutions are designed so that the retail transactional data is kept in a different database than the database of the core accounting or ERP application.

Consider the following scenario involving 2 stores, 3 customers, 5 products in 7 transactions across the retail chain.

The table below depicts a snapshot of the transactions as they would traditionally be recorded in a billing application running in the stores.

In this case all the transactions that are carried out at the stores are recorded “as they are” in the accounting application. As discussed above, this poses a tremendous load on the accounting application and the processing horsepower whenever this data is to be churned for the purpose of any analysis.

Modern Retail Solutions store this data in one database, and post only consolidated information /data in the core accounting or ERP applications. The raw transactional data can be grouped / rolled up based on different criteria, some of which are mentioned below.

• By Store
• By Customer
• By Transaction Type, i.e. – Sale or Sale Refund / Sale Exchange
• By SKU Code
• By Item Price
• By Tax Code

Additionally, payments by Credit Cards and Checks attached to the transactions being rolled up can also be included in the roll up process. Based on different settings, the payments will be grouped by Credit Card type and all checks payments will be rolled up when posting payments into the back office ERP application.

In the above example, the transactions can be rolled up and can be represented as a consolidated set detailed in the table below.

In this case the transactions are rolled up only on one criterion – customers. The logic of the roll up / consolidation is:

• Since there is only one transaction for Customer C1000 in Store S1, therefore transaction T10001 has not been rolled up. This transaction is posted as is into the ERP and is allocated a new transaction number TC0001.
• Customer C2000 has 3 transactions T10002, T10003 and T10004 in Store 1, therefore these are rolled up. Also since item P3000 is used in transactions T10002 and T10004, quantities of these 2 lines are clubbed into a single line. The rolled up result of these transactions is posted into the ERP and is allocated a new transaction number TC0002.
• Customer C1000 has 2 transactions T20001 and T20003 in Store 2, therefore these are rolled up. Although item P5000 is used in transactions T20001 and T20003, their Tax Codes being different the quantities of these 2 lines are not clubbed. The rolled up result of these transactions is posted into the ERP and is allocated a new transaction number TC0003.
• Since there is only one transaction for Customer C3000 in Store S2, therefore transaction T20002 is not rolled up. This transaction is posted as it into the ERP and is allocated a new transaction number TC0004.

Clearly, there is a significant reduction of over 40% in the transactional data that is posted into the ERP application; all this without losing the raw transactional data which remains in the database of the Retail Solution.

Elapsed time from the inception to being a mid-market retailer is not high. Investments in IT if done early in the evolution of a retailer go a long way in further strengthening the competitive advantage that a retailer has. The mid-market retailer should carefully choose a Retail Solution seamlessly integrated with an ERP solution. And one of the criterion being the scalability of the application without adversely impacting the investments.

iVend Retail from CitiXsys is an end to end Retail Solution for mid-market Retail Store Chain companies covering all aspects of Retail Business ranging from Head Office functions to Back Office Store and POS operations. Feature rich with deep integration with SAP Business One, the application grows as the business grows. iVend Retail is scalable from a single store specialty retail operation to retail operations having hundreds of stores spanning geographies.

High levels of scalability are brought about by latest technology, simple & intuitive interface, with robust Head Office engine backed by SAP – and industry leading business management application.