Code Blue - Goal: Make Stores Compelling

Goal: Make Stores Compelling

Of course, making BlueLight.com efficient pales beside the need to make stores more effective.

Conaway wants Kmart's supply chain to be second to none, and the revamp was supposed to start in early 2001 with the "rapid, methodical rollout" of the dozen business releases, and 93 distinct improvements by August 2002.

Following the methodology prescribed by i2, a "business release" aims to achieve an incremental improvement in business efficiency, which may be based on partial implementation of several modules.

For example, the first business release might include implementing the basic features of supply chain and inventory planning modules, in concert with changes in the ways goods are received at distribution centers. The second business release might include an aggressive calculation of how many kitchen appliances or tennis rackets might need to be kept in distribution center inventory, building on the efficiencies created by the first release. In this manner, Conaway hoped to march steadily toward his goal of world-class supply chain performance.

But the project is not going that smoothly. "[The project at] Kmart is definitely not dead," insists i2's West. "But they definitely have challenges."

Kmart is under pressure to show bottom-line results, West says. Part of how i2 sold this project was with a "value assessment" of the results the project would deliver.

"They're having trouble getting it to work so that they derive the value they were expecting," West concedes. "We're looking very hard at how can we help them get this implementation to where they want it to go."

While he admits to some difficulties, West maintains the project has slowed down or stalled because of "operational issues" at Kmart, not because the software didn't work. He wouldn't be more specific. But supply chain overhauls face some common hazards.

Covill, the senior retail analyst at AMR Research, says these hazards include the difficulty of combining new software with systems a company has long used, cleaning up data so it produces useful results, and the need to define and, often, redesign business processes.

Kmart may also have underestimated the difficulty of the task when it agreed to partner with i2 on the joint development of a retail distribution system, says Gartner analyst Karen Peterson. "They had scads, hundreds of Deloitte people in there, and it got so expensive that they had to cut back," she says. "One of the things we've seen with i2, is that they often seem to be using consulting resources to do things that i2 should have done in the first place."

"It's more people and processes than it is the technology," says Judi Malec-DiGioia, one of the founders of the i2 User Group, an independent organization that works with the vendor. "You could actually do a lot of this stuff without software, but what the software gives is the rapid reconfiguration of your planning."