In the information age, where competitiveness is at its peak and it is increasingly difficult to excel, the Retail industry is involved in stiff competition.
The offer is great and the market, although it has been growing, is becoming increasingly demanding and fickle.
For this reason, the retail industry must seek tools and solutions that allow it to maintain and increase that niche market they have.
The Data Warehouse has become the ideal tool to help executives make the appropriate decisions that allow them to continue competing in the market.
Content
With sales of around 25 billion pesos per month, and that only counting the companies affiliated to the National Association of Self-Service and Department Stores (ANTAD), retail trade is one of the main economic activities in the country.
Its market is one of the largest, since we could estimate that it reaches 99% of the population in Mexico.
With a market of this magnitude, one could think that the opportunities for development and growth are quite acceptable, but if we consider that there are dozens of transnational chains operating in the country, hundreds of medium-sized businesses and thousands of small stores, the fight for the market it becomes very aggressive and complicated.
Over time, retail trade has evolved with the rhythm of technology.
Decades ago, when technology was almost nil, businesses were only focused on satisfying their local market, where the attention was personal and each of the customer's tastes was known in detail.
The shopkeeper was concerned about having the product that his regular customers asked for and he did not have to suffer much to get it, recurrence in the purchase was the key to knowing his buyers well.
As the years went by and the market became bigger and bigger, causing more competition and the appearance of large commercial chains, it became increasingly difficult to achieve that aspect that the shops of before had, which was to meet the customer at the perfection. It simply ceased to exist the majority of recurring customers, and if there were, many times the commercial chains did not notice it.
With all this growth, technology went hand in hand with businesses to stay in the market and achieve their goals.
First with inventory control systems, then linking them to points of sale and back room systems. Later the ERP appeared, where the financial and accounting information of the company was also linked; once the information was kept in a single central data repository, tools were devised to exploit the information contained therein, mainly with decision support systems.
What are Decision Support Systems?
Like most technological concepts, there are various definitions and interpretations of what a DSS (Decision Support Systems) is.
In the early 1970s, the definition given was "An interactive computer-based system, which helps decision makers use models and data to solve unstructured problems" (Gorry Scout Morton, 1971). Then, with the advance of the years, it was found that engaging a DSS in unstructured problems, where there is a high degree of uncertainty and the system is only taken into account for a small part of the decision, was not the most appropriate.
We began to take the problems as semi-structured, where there are data, rules and models that offer us the best solution, but the decision finally falls on the human.
Finally, the most widely accepted definition today is "System created to support decision-making in semi-structured decision situations".
There are various types of decision support systems, although one of the most booming has undoubtedly been the Data Warehouse.
The name in English refers to a data warehouse, which could easily be confused with a simple database, which does is store information.
In reality they are not so different from each other, only that a Data Warehouse is designed to provide specific information for a certain group of people.
We could see him as a kind of librarian who provides us with only the book we require, without having to go looking for book by book within a library.
Its main boom and market has been within financial companies, for example brokerage houses, insurers, banks, etc.
In fact, it is highly unlikely to find a banking institution that does not have such a system.
The reason? It is simply a market where a bad decision can mean losses of millions of dollars, and the financial sector has always been characterized by being a pioneer in the use of technology.
But not only the Data Warehouse is exclusive to financial institutions, it has also found a large niche in the retail trade industry, where most of the commercial chains have a project of this type within their companies.
How does the Data Warehouse benefit the Retail industry?
As we already analyzed at the beginning of the article, despite the fact that the market for the industry is very extensive, also the competition that exists in this field is very bulky and fierce.
The use of tools to achieve a competitive advantage is very important, and large commercial chains have been much more involved with technology than small and medium-sized companies.
It is easy to understand why, the availability of resources to invest is very different from one to the other. However, each one of the retail stores has been concerned with acquiring technology according to their possibilities, some with a simple computer, and others with very sophisticated information systems.
Those that have been concerned with including data warehouses in their projects are those that already have an ERP system or independent systems that are somehow communicating and sharing a central database with enough information.
Implementing such a tool, in a company with little data and little structure, would be a great waste of money.
A successful implementation requires that the 3 main actors in the project are aligned and advancing at the same time.
These three actors are: the technological tool, the processes, and the administration of change.
If one of the 3 does not work, it will be very difficult to have a good implantation.
Now, a company that considers that it has a good quality in its systems and data can think about implementing a Data Warehouse. It should be noted that it will not be an easy task. These projects are usually long, expensive and immediate results are not obtained.
It takes a lot of analysis and a good education for users, who ultimately want to exploit the information to make better decisions.
If the desired objective is achieved, which is to have a successful implementation of the system, the benefits will be many, and we will analyze them from the different areas in a typical retail business:
Management:
It is one of the main beneficiaries and users in a data warehouse. The managers of the company are normally those who structure the information they want to review in certain periods of time. The consultations that are made usually do not change, since decisions are usually based on a few indicators; If many indicators were taken into account, the decision making would be much more complicated. The types of queries that are made are, for example, sales of a certain product segment in a certain area or store for a certain date.
With this type of information it can be decided that more bronzers will be purchased for the Acapulco store between July and August, for example.
Finance: For the financial area, the use of the Data Warehouse becomes an extremely important tool, since it is much easier to decide when to invest, where to invest, in which products to invest, which branches are profitable, which are not, what time of the year is the most complicated for the company financially, and with it, to be able to foresee in times of abundance for those of austerity.
It is undoubtedly a tool that will save the organization several thousand pesos.
Operations: For the operations area, having this type of tools means, in a nutshell, having the right products in the right place, and therefore guaranteeing the sale. In addition, for the area of operations, the issue of inventories is of vital importance. With the use of a Data Warehouse, we would be making sure, in a certain way, that inventories will never be over-inflated, and that merchandise will not be missing either.
Of course, with its due reservations that not everything happens as planned in real life.
Client: For the client, who in reality is the one that makes it possible for a company to survive, the fact that the company has a decision support tool such as a Data Warehouse, benefits from having better products at better prices, in addition of other implications such as quality products, promotions, quality of service, assortment, etc.
As we could review throughout this article, having a decision support tool is very useful for companies, especially in the retail sector, where competition is increasingly aggressive, especially with the entry of large transnational companies.
Those companies that fall asleep on their laurels will undoubtedly have problems in a short time and will probably have to close because they are not profitable.
In the information age, there is no place for those who do not have it.
conclusion
Technology and, especially information systems, are usually said to be magic wands that will solve all the problems that companies face. It would be sinful of vain who says that.
We know that it is not an easy task, and that many projects fail in the attempt, which means millions of dollars in losses. However, we also have to review successful implementations, which also exist, and which have allowed various companies to grow, increase their profits and continue competing in the market.
In the particular case of decision support systems, I think that implementing one is not as complex as, for example, the implementation of an ERP. The reasons ?, is summarized in a fundamental one. Experience.
DSS projects could be classified as complementary systems to other systems. They extract information from systems already in place, and on that they base their success. If we consider that for a system of this nature to be implanted, there must have been a previous implantation of other systems, we could assert that the company already has some experience in implantations, which would facilitate to a certain extent a new implantation.
Now, one of the main risk factors that a Data Warehouse implementation encounters, for example, is the quality of the information. It is a fundamental factor, since if we have deficient data, the decisions that can be made based on that information will not be the best ones.
There are always pros and cons in all the projects that are undertaken. In the case of technology, they are usually analyzed and studied more for the amount of resources required to carry out a project of this nature.
In the end, any project that yields better benefits for the company will be good. It is worth investing in technology, but you have to remember that resources are not infinite, so you have to invest well, conscientiously and leaving nothing to chance.
Bibliography
1.- Garza Ruiz Oscar Luis. Decision support systems one more option for SMEs.
Turban Efraim, Aronson Jay E. (2001) Decision Support Systems and Intelligence Systems, Prentice Hall. Sixth Edition
Treviño Cantú Alfonso. (1999) Data warehouses: Support systems in decision making. Integratec No. 34. Tec de Monterrey.
Equal sales for ANTAD Mexico members drop 2.5 pct Feb. Reuters (2005).
Gaona Vásquez Norberto. (2000) Data warehouse, the fight for power.
