Clothes ‘r’ Us Point-Of-Sale Initiative

Clothes ‘R’ Us Point-of-Sale Initiative:

Managing IT Programs Case Analysis

Executive Summary

Clothes R Us is a retailer of hip and affordable apparels across 400 stores in 42 states in USA, the current store processes requires the manager to spend 75% of his person day in reconciling close outs, cash management, inventory tracking & staff scheduling among others. Also, the old fashioned POS systems have a circuitous authorisation process that routes transactions through 3 disparate servers consuming 30-40 seconds per transaction on an average.

This has resulted in the company doubling its debt with a net loss of $123.62 million and reporting its first fiscal year loss in more than 15 years thereby causing a significant financial burden on the company. The competition from Walmart is intense in the low price segment, which happens to be Clothes R Us’ primary product segment. Furthermore, the cash dividends shrivelled by 83% to $12,857 in 2001 from $79,503 in 2000, making the stockholders lose confidence in the company.

The company looks to address this issue by freeing up the store manager’s time and automating cash management process via enhancing the IT capabilities at the store level to promote increased sales.

The initial plan and design of the project is not always a god parameter to judge a projects deliverability, this was a classic case where we had observed it. Even though the design and planning was very good, the project still was affected by different contingencies and the handling capacity of a manager is tested in such cases. Thus this is a very good example of handling and dealing with projects where anything can happen and a manager should be prepared to face such challenges to finish the project positively.

Project Goals, Associated Benefits & Achievability

Their main strategy was to reduce operating cost, increase sales by multiplying stores & improve customer satisfaction. Four major tasks/goals assigned to the project team to implement their strategy were:

1) Free-up the store manager to work the store instead of the store office. Corporate planning showed that with new POS systems, combined with automated electronic messaging & e-mail, store manager would reduce the time spent on back-store management from 6 hours to 1.5-2 hours per day.

Benefit Parameter: Store managers spend 67% more time than before working on store.

Strategic Fitment: Very Good fit

Achievability: It was difficult to achieve as this tasks required additional capabilities including outsourcing the task to a consulting firm. Clothes R Us doesn’t possess skilled resource to accomplish the task.

2) Automate cash management processes to include credit/debit at store level.

Benefit Parameter: After automating cash management helped in reduction of resource & even with a single resource saving company will save almost $20K annually.

Strategic Fitment: Good fit

Achievability: Difficult to achieve as Clothes R Us doesn’t possess skilled resource to accomplish the task. Hence they had to outsource the task to a consulting firm.

3) Provide real time on-network connectivity for store management & performance monitoring.

Benefit Parameter: Real time processing of sales data & increased employee efficiency.

Strategic Fitment: Adequately fit

Achievability: It was difficult to achieve as this tasks required additional capabilities including outsourcing the task to a consulting firm. Clothes R Us doesn’t possess skilled resource to accomplish the task.

4) Allow cross-store inventory checking and reduce authorisation times at POS.

Benefit Parameter: Reduced Authorisation times to less than 5 seconds, which will in result improve the productivity & lesser waiting times for clients.

Strategic Fitment: Very Good fit

Achievability: Difficult to achieve as experts were required to complete the task, which Clothes R Us’ lacked in skilled labour.

The First sign of trouble

Getting the sign-off from the operations steering committee presented the program’s first obstacle. Given the importance of the new POS system, the committee was especially demanding when it came to the design of the POS graphic user interface (GUI). There were many other events which lead to the delay in the project. But most noticeable were four. In this section, we will discuss current status of the program when that particular event occurred & their impact on various project activities or entire project in general.

Note: We will take a deep dive only for the first event, i.e. GUI sign-off, & will try and figure out its schedule and cost impact. In addition to this we will show its impact on each of the project activity.

Event 1: GUI Sign-off

In the first few months of the project implementation, there was no cost and schedule impact on both the parent company as well as the consulting company. At the stage of acceptance review, schedule performance indicator (SPI) and cost performance indicator (CPI) are appearing equal to 100% resulting in control ratio equal to 1. The first delay occurred as a result of the product managers delaying in submitting the GUI of the POS project to the operations steering committee. Reason was that the committee was pretty demanding on design and product managers wanted to add certain features to the design of GUI to facilitate its use for the store managers.

The increased demand to improve POS GUI resulted in the delay which eventually impacted the following projects/activities:

• POS: Graphical User interface was the major component of POS system which would be the focal point of interaction with store managers and clerks. This was intended to minimise keystrokes and touch screen clicks for transactions. Hence delay in approval of the GUI had majorly impacted development of POS system.

• Credit: GUI was directly integrated with credit application and hence due to delay in its approval credit application was also delayed.

• Quality Assurance: This process was to check the system integration and structure, thus due to delay in one component of software, will impact the quality assurance of whole system.

• Testing: