Virgin Retail to save £500,000 with inventory system

Virgin Retail hopes to save up to £550,000 by implementing an inventory management system.

The retailer is using a Microsoft BizTalk business process management core, supported by an IBM merchandising system and an SQL database to boost sales reporting and inventory planning across its estate of 130 stores.

Prior to the new system being implemented, the retailer only gathered sales and stock data every 24 hours, which meant it was unable to react quickly to changes in customer demand. And staff had only an anecdotal impression of stock availability.

The problem was most readily felt with products that had limited availability, such as some computer games. Games are released on Fridays but buyers didn't get stock information until the following Monday, so there was a danger they would miss out on stocking the top titles.

Virgin Retail's head of software development, Kevin Hepburn, told silicon.com: "The system gives us more flexibility on how we stock the stores. It also gives store staff the ability to check what's actually on the shelves. It means that they are more efficient at replenishment, because they don't go looking for products that aren't in stock. It's also a boost for customer relationships, for the same reason."

The retailer expects to save £315,000 in stock-outs in the first 12 months and £240,000 in saved man-hours on the shop floor.

Virgin Retail originally had BizTalk installed in its 15 US locations but purely for fraud checking. Hepburn explained that because the US strategy focused on a small number of large format stores in major US cities, his approach in the UK - where Virgin has a presence in most towns - was a little more fundamental.

He said: "We aren't using the system for fraud checking, because we wanted to build something that we could add to later. However, that is on our roadmap for the future."