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Working it out at HTF: Retailers and suppliers collaborate on technology initiatives

BY Brae Canlen

MEMPHIS, TENN. —Stephen Hainey and Jim Rohde from Design House were first-time attendees at the Hardlines Technology Forum (HTF) this year. Since they do different jobs—Hainey runs distribution and Rohde is head of IT for the decorative plumbing and outdoor living manufacturer—they followed different seminar tracks at the annual technology conference. Their company is already synchronizing its data with Lowe’s, and both men say they’re fully behind the effort.

“We need to move towards global trade numbers,” said Rohde. “That’s what it takes to do business with the big boys. We’re trying to stay ahead of the curve.”

When data synchronization was formally introduced to the vendor community in 1998, many saw it as a curve ball, and an expensive one at that. Attendees at previous HTF conferences wrung their hands over data synch mandates by Lowe’s, Home Depot, Ace Hardware and Wal-Mart. But suppliers are now reconciled to exchanging product data with their retail partners. There have been lots of hitches, however, and the conference provided a format for trading partners to air their grievances and work on solutions to streamline data exchange.

There was also plenty of time for networking at the four-day conference, held at the Peabody Hotel from April 21 to 24. The event organizer, the American Hardware Manufacturers Association, stationed a retailer at separate “networking tables” on opening night, and vendors took full advantage of the opportunity. Howard White, manager of sourcing and vendor management for Home Depot, seemed astonished by his constant stream of visitors. “I’m not used to being this popular,” he said.

Home Depot made no formal presentations this year, and Ace Hardware did not send anyone to the conference. But Lowe’s, Do it Best and True Value each led separate “How to” sessions for their existing and prospective vendors, sharing information on current initiatives, future plans and pet peeves. They were joined by a representative from Orgill for the Retail Panel, one of the high-lights of the annual conference.

Unlike previous years, there were no major announcements of new IT mandates from the retail panelists. RFID is not on anyone’s near horizon, and neither Do it Best nor True Value is ready to start synchronizing their data with vendors. But Do it Best will launch a new vendor portal next month, and this will enable its suppliers to register for its markets and market bulletins, check on contracts, freight terms, warehouse and drop ship logistics, and other functions. Vendor scorecards will soon follow.

The Fort Wayne, Ind.-based co-op is implementing a supply chain solution that gives it real time visibility, from purchase order to warehouse receiving. Do it Best is also trying out collaborative purchasing and forecasting replenishment with some of its vendors, said Kay Williams, vp-information technology. “I think there’s opportunity for more vendors to get involved,” Williams said.

Both Do it Best and True Value are putting in a visible supply chain solution, through Sterling Commerce.

According to True Value’s Greg Linder, director of supply chain operations., the Chicago-based co-op now does collaborating on purchasing with approximately 100 of its key vendors. When asked about his plans for data synch, Linder said he’d rather have his suppliers focus on the basics right now. “We have a lot of receiving people crawling over boxes, trying to find out where the barcode is,” he said. “You can synch all the data in the world, but it’s [data] accuracy that keeps us up at night.”

Brett Hammers, vp-marketing from Orgill, deflected a question about vendor score-cards with, “We just don’t put [the information] out there. It’s in our best interest to handle [feed back] strategically rather than globally.” Hammers scored even more popularity points when asked about RFID. “I don’t think, in this climate, we can add to the cost of goods,” he answered.

Lowe’s seems to have its hands full with its current IT initiatives and has no new plans for the next 12 to 18 months. The industry’s second largest retail chain has implemented data synchronization with most of its and has moved on to a marketing data pool initiative. Last year the Mooresville, N.C.-based retailer began collecting product images and data for Lowes.com and in-store use through Big Hammer, a division of Edge Net. (Home Depot has embarked on a similar initiative using the same data pool provider.) Lowe’s is doing the project in phases, with the last three categories, lumber, rough electrical, and rough plumbing, set to be completed by the end of 2008.

A session called “How to do Business with Lowe’s” was conducted by an all-female Lowe’s team, clad in red shirts and blacks pants, representing the EDI/vendor support, electronic commerce, product information, accounting and PCM initiative departments. They responded to specific inquiries and dispensed advice on the basics of setting up new items, sending advanced shipping notices and ironing out the kinks in invoices and purchase orders.

Accounting manager Krystal Clonch also advised against making informal agreements with store managers or other personnel. “If there’s anything you’ve negotiated with anyone, it needs to be documented,” she said. Clonch also suggested contesting chargebacks in a timely fashion, advice that was later echoed in a session devoted entirely to “Understanding Compliance Issues to Eliminate Chargebacks.”

Other sessions dealt with future EDI applications, mining point-of sale data and case studies in data synchronization. Technology vendors peddled everything from EDI out sourcing to data encryption to help with U.S. Customs requirements.

David Williams, general manager of Hardware Suppliers of America, a nationwide distributor of security hardware that does business with Lowe’s, Ace and Do it Best, said he came to Memphis for “the opportunity to talk to the technical people [because] the marketing group doesn’t always know about data synch initiatives.” Other attendees arrived with lists of questions from their warehouse manager or customer service department. In one open session, a vendor asked if he could find out how well his product test was doing at Lowe’s. A company representative said she’d find out and get back to him.

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Home Depot to close 15 stores

BY HBSDEALER Staff

Home Depot will close 15 underperforming stores, the company has announced, and remove 50 future openings from the new store pipeline. The closings will include layoffs of about 1,300 employees.

The closings, at locations in the Midwest and Northeast, will generate approximately $547 million in pre-tax charges in the company’s first quarter. The company will release first-quarter results on May 20.

The stores to be closed are as follows:

• Store no. 2015 in East Fort Wayne, Ind.

• Store no. 2032 in Marion, Ind.

• Store no. 2310 in Frankfort, Ky.

• Store no. 379 Opelousas, La.

• Store no. 2819 Cottage Grove, Minn.

• Store no. 6901 East Brunswick, N.J.

• Store no. 6904 Saddle Brook, N.J.

• Store no. 6171 Rome, N.Y.

• Store no. 3702 Bismarck, N.D.

• Store no. 3874 Findlay, Ohio

• Store no. 3865 Lima, Ohio

• Store no. 4552 Brattleboro, Vt.

• Store no. 4932 Beaver Dam, Wis.

• Store no. 4933 Fond du Lac, Wis.

• Store no. 4913 Milwaukee, Wis.

Home Depot said in a statement it still intends to build 55 new stores this fiscal year, including 36 new stores in the United States.

As for other stores in the works, the company said it has “determined that it will no longer pursue the opening of approximately 50 U.S. stores that have been in its new store pipeline, in some cases for more than 10 years. Accordingly, the company will record a charge of approximately $400 million related to capitalized development costs and ongoing obligations associated with those future store locations.”

“This is a continuation of our disciplined approach to capital allocation that we outlined last year,” said Frank Blake, Home Depot chairman and CEO, in a statement. “We will invest in our core retail business, in this case our existing stores, which drive our most profitable sales. Our capital efficiency model will also provide improved returns for our shareholders through dividends and share repurchase.”

Home Depot added that investments in existing retail stores will continue to include “maintenance, merchandising resets and other initiatives to improve all elements of the customer’s shopping experience.”

The company reiterated that its total capital spending for the current fiscal year is projected to be approximately $2.3 billion, down from $3.6 billion last year.

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Sherwin-Williams earnings fall in the first quarter

BY HBSDEALER Staff

Sherwin-Williams saw earnings fall in the first quarter of 2008, but the worldwide paint and coatings giant is still seeing strength in international sales.

Earnings fell 30.3 percent in the first quarter to $77.9 million from $111.8 million in the same period last year. Net sales grew just over 1 percent to $1.78 billion from $1.76 billion in the same period last year.

The stronger net sales were in large part due to strong Global Group sales, as was the case last quarter. Favorable currency rates and eight acquisitions since last year’s first quarter helped aid international sales, according to the paint company.

In the company’s retail Paint Stores Group, net sales were $1.031 billion in the quarter, 1.9 percent lower than in last year’s first quarter. Sales were weak due to “soft architectural paint sales and weak sales in non-paint categories partially offset by improved industrial maintenance product sales.”

Same-store sales decreased 6.5 percent compared with last year, and earnings decreased 31.9 percent. Earnings were weaker because of increased product and freight costs, the company noted.

The company’s Consumer Group, which includes paint products like Dutch Boy, saw sales decrease 4.8 percent in the quarter to $286.9 million. The sales decline was due primarily “to soft DIY demand at most of the segment’s retail customers.” Earnings in the Consumer Group were down 23.7 percent due to higher raw material costs, as well as a lower volume of movement at the company’s distribution centers.

The Global Group’s net sales increased 14.8 percent to $461.9 million due to market share gains, selling price increases, favorable currency translation and acquisitions. Earnings for the Global Group increased 21.7 percent to $7.7 million.

“Paint demand in the domestic new residential, residential repaint, DIY and commercial markets was weaker during the first quarter than we had anticipated at the start of the year,” said Christopher Connor, chairman and CEO of Sherwin-Williams. “We continue to be pleased with the strong sales improvements of the foreign business units in our Global Group and the continued growth they have been achieving in the architectural, industrial maintenance, OEM and automotive finishes product lines.”

Connor also noted that the Paint Stores Group opened 17 new stores in the first quarter and closed 23 “redundant stores.”

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