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Book Contents

Ch. 2
Gaining Competitive Advantage with DSS

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Wal-Mart Case Example

Wal-Mart Partners with NCR
Gains competitive edge with new customer preferences data

Wal-Mart partnered with NCR in 1997 to dramatically increase the size and information analysis capabilities of its data warehouse by adding new customer preferences data.

As part of the contract, NCR supplied a WorldMark(TM) 5100M massively parallel processing (MPP) server and upgraded a second installed NCR 5100M from 32 to 96 nodes. The contract also covered NCR professional services, including database design, data transformation and data management, as well as maintenance.

The two WorldMark 5100M servers -- running NCR's Teredata(TM) relational database management system (RDBMS) -- tripled the size of Wal-Mart's existing data warehouse from 7.5 terabytes to over 24 terabytes.

With the increased capacity, Wal-Mart retained its position of having the `world's largest commercial data warehouse,' with more than 30 applications running on the system and handling as many as 50,000 queries in one week.

"This expansion is part of Wal-Mart's drive to deliver what its customers want: the right item, at the right store, at the right time and at the right price," said Randy Mott, senior vice president and chief information officer for Wal-Mart. "It's the ultimate form of customer service."

"Our business strategy depends on detailed data at every level," Mott explained. "Every cost, every line item is carefully analyzed, enabling better merchandising decisions to be made on a daily basis. It is the foundation for maintaining Wal-Mart's competitive edge and its continuing success in providing everyday low prices and superior customer satisfaction."

That competitive edge and commitment to customer satisfaction is underscored by the unique aspects in Wal-Mart's implementation. For example, although Wal-Mart's data warehouse incorporates information on a nationwide basis, that information can be tailored by store to allow merchandise buyers to gain insight into local purchasing patterns.

"Our extended partnership with Wal-Mart is another significant milestone for NCR," said Bill Eisenman, senior vice president of NCR's Computer Systems Group. "It underscores NCR's commitment to customer service -- as it does Wal-Mart's -- and NCR's expertise in building very large data warehouses to support complex customer information and decision-support systems."

Information stored in the data warehouse -- which is collected from the retailer's 2,900 stores -- will be used to enhance Wal-Mart's Decision Support System, particularly for the retailer's rapidly growing chain of Supercenters and Wal-Mart International units. Using the 65 weeks of data kept by item/by store/by day, Wal-Mart buyers and vendors can query and analyze information to make informed decisions on replenishment, look at customer buying trends around the world, analyze seasonal buying trends, make mark-down decisions, and react to merchandise volume and movement at any time.

The NCR WorldMark servers were installed and upgraded by mid-97. One system is configured with 32 nodes, 256 Pentium Pro 200 processors and 8 terabytes of storage; the second server will be upgraded to 96 nodes, 768 Pentium Pro 200 processors and 16 terabytes of storage. For more historical information, read the press release from January 9, 1995 announcing "Wal-Mart buys world's largest decision-support system from AT&T".

Wal-Mart (www.walmart.com) also implemented a Strategic Decision Support System called Retail Link. It is an example of an Inter-organizational DSS. Managers at Wal-Mart felt that by integrating their processes and information flows with their suppliers they would bind the suppliers to their organization, resulting in improved revenues for both parties.

In 1991, Wal-Mart launched Retail Link which allows Wal-Mart to collect sales data from various stores, consolidate it into useful reports, and distribute it to suppliers with weekly forecasting information. In addition to forecasting information, suppliers get electronic order forms that help ensure there is an adequate supply of the items that Wal-Mart needs. This system used existing electronic data interchange (EDI) and satellite technologies to create a competitive advantage that other retailerís have tried to mimic but none have replicated. The result of Retail Link is less inventory in stores, more inventory of the right products at the right time and place, improved revenues for both supplier and retailer, and better partner relationships with suppliers.

In 1998, Wal-Mart and Warner-Lambert began using the Internet to communicate interactively about sales forecasts. They have reduced the time a product is in the supply chain by 2 1/2 weeks. That translates into millions of dollars in reduced inventory. Check on the Collaborative Forecasting and Replenishment Initiative (CFAR) website at http://www.benchmarking.com.

About Wal-Mart

Well-known as the world's largest retailer, Wal-Mart had annual revenues of over $104.4 billion for the year ending Jan. 31, 1997, and has more than 2,900 stores and over 700,000 employees. Based in Bentonville, Arkansas, it has pioneered concepts such as Supercenters and its SAM's Club, which is a members-only shopping club that carries products at wholesale prices. A highly successful offshoot of Wal-Mart's traditional retail stores, SAM's Clubs comprise 20 percent of Wal-Mart's business.

More information about Wal-Mart can be found on the World Wide Web at: http://www.wal-mart.com .

About NCR

NCR Corp is a leader in delivering commercial open computer systems for transaction processing and decision-support solutions to customers in all industries. The company, with headquarters in Dayton, Ohio, has 38,000 employees, including 20,000 service professionals in 1,100 locations and 130 countries. NCR solutions help improve businesses by turning customer information into results, protecting existing information technology investments, reducing risks and ensuring success.

More information on NCR can be found on the World Wide Web: http://www.ncr.com . NCR WorldMark is a trademark and NCR Teradata RDBMS is a registered trademark of NCR Corp. All other product names are trademarks of their respective holders.

Questions for Discussion:

  1. How large is a terabyte? How much processing power is needed to support 50,000 queries a week?
  2. Why does Wal-Mart have a data warehouse? Does it provide a competitive advantage? If so, what type of an advantage?
  3. What is Retail Link? Who uses it?
  4. What does it mean to say the NCR WorldMark server is configured with 32 nodes, 256 Pentium Pro 200 processors and 8 terabytes of storage?
  5. Does the NCR website help you understand how a data warehouse is developed?
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