Magazine Article | April 1, 2002

From Information To Operations

Source: Innovative Retail Technologies

CxOs Talk Tech

Integrated Solutions For Retailers, April 2002
Stephanie Roussel-Dupre

At most retail companies, the CIO and the other executives who run the IT department control the selection, development, and implementation of technology systems. But the ultimate value that a company places on technology - whether it views technology as just a cost of doing business or as a strategic enabler of the company's goals and vision - is determined by its upper management, the C-level executives who run the company.

It is therefore of more than passing interest to find out what those C-level execs are thinking regarding technology. That is the purpose of this new column. Each month, Michael Garry, former editor in chief at Retail Tech magazine, will interview a top executive at a retail company to find out his or her views on the use of technology as a business driver.

In this first installment, the focus falls on Tracy Parks, COO of Factory 2-U Stores, a San Diego-based chain that operates 279 off-price stores in 15 states, selling apparel and household merchandise. Factory 2-U made $21 million on sales of $556 million in 2000, though last year same-store sales slumped 8.7% in the down economy. Parks, who came to Factory 2- U in March 1998 as the CIO/executive vice president of logistics, was promoted to COO last summer. He had previously worked in systems at Guess, Inc. and Thrifty Drugstores.

How important is IT to Factory 2-U?
Very important. We don't spend a fortune on technology, but we need systems that can gather information quickly so we can make decisions. That's what it's all about for me. Having an IT background, I can grab data fast, analyze it, and quickly make changes that affect the bottom line.

How does your IT background help you as a COO?
The COO usually comes from store operations or some other operational part of the company. Having been CIO, I have done a lot of system installations in every part of the organization. That gave me background on every piece of the company - financials, human resources, payroll, distribution, truck runs. As COO, I can look harder at the ROI of technology than a guy who just does technology. He may just look for the coolest tools. I look at how much it will save the company or how much more efficient we would become. And as a former IT person, I can manage by exceptions because I know what to look for.

How involved are you in making IT investment decisions?
I'm more involved than the typical COO. In many places, you get the executives in a room and nobody knows what the IT guy is talking about. They'll say, "$5 million? OK, do it." But they don't understand why they're doing it. I can say, "We don't need this machine because it doesn't work in our structure." And a lot of companies have a multitude of machines, operating systems, databases, and people to take care of them. Our IS staff has only 24 people, and the majority are in lower-level jobs. I don't mind investing in people, but not just to administer one box.

Which IT system had the biggest impact on the company?
JDA Software systems have had the greatest impact. We installed MMS (Merchandise Management System), Arthur Planning, and Retail Ideas (data warehouse). They really changed the way we viewed our company processes. Before, it was very hit or miss. In the past, when we closed the books, it was a three-week process; now we do it in three days. We never had a perpetual inventory; now I know our SKU (stock keeping unit) level for every store every day. And we don't screw up our purchase orders any more.

What systems are you looking at now?
Because of the economy, I'm cautious about big projects. I wouldn't spend $3 million or $4 million on a new transactional system, but I would look at $250,000 investments if they make sense. We're doing little pieces now - e-mail in the stores and a payroll piece. I would like to change the POS (point of sale) down the line.