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April 6, 2010

Digital Signal Repository: Will it usher in Retail Utopia

The latest buzz word in Retail Enterprise systems is Digital Signal Repository, DSR. Is this another passing fad or is it worth the investment in time, money and resources.

Let’s step back a bit, and exhume the reasons for the genesis of yet another acronym, and yet another technology, that is making rounds in the hallowed portal of enterprise systems.

The ultimate panacea for all the ills that ail the retail industry is data; integrated, analyzed, normalized for offsetting any spikes, and harmonized across various systems, that work both in silos and tandem. Data that has the precision of neurosurgeon, but a mere collation of data from various systems, is not mined/layered and often does not lend itself for razor sharp analysis.

Data in Retail is required for various reasons:
• Better forecast, which in turn drive better ramp up/slow down of upstream demand from vendors
• Maintaining an optimum inventory level, not too large to cost me money, for not having a fast enough turn around cash conversion, not too small for leading to stock out
• Batter category management, better pricing malleability, better promotions and markdowns, better incentives for customers, better loyalty programs
• Maintaining a healthy top line and bottom line, and ensuring a good return to all stake holders
The more fine grained the data, up to each item (SKU) in inventory/shelf, the better.

Data is funneled from various resources:
• The most real time and minute form of data is point of sale (POS) systems, which update store inventory, deal with vendors for replenishment of stocks and is the fountainhead for the raw data for customer buying patterns.
• Data fed from shelf movements. Infy’s own 360 Shopping tool is one good example of this data collection.
• Data fed from DCs and warehouses. This is done using normal scanning or RFIDs at a more zoomed in level.
• Data from outside providers, who track market trends and record for data for industry in general.

Key characteristics of this data cleansing exercise are:
• It is data mining exercise, on top of the entire enterprise database.
• It is a big Master data management exercise that needs expertise to collect, analyze and produce results,
• It needs proper alignment of data to fit in the normalized grids.
• It should have interfaces to all external and internal data.

Handling all this deluge of data to see a trend through it is Herculean task. This is where DSR kicks in, with ready to wear solutions. It is a product that has been prepared, cut to tailor made length, in recognition of demand for data sensing, by doyens of data mining experts such as Oracle and Terradata. DSR is available as an extension of your existing ERP package, as standalone package, both at the retailer’s premises or as SaaS.

Is DSR the last word in Retail IT. And is it worth it.
My take on this question is yes. In today’s fast paced, highly competitive environment, where each dime counts, the value for DSR might be recouped in a matter of months.
After all when the customer’s tastes are fickle, loyalty is a passé, new products/varieties/services are name of the game, old products are interned without any one even blinking, and wallets are thin, if I can have an Oracle tell me my next blockbuster product, I would not mind paying for the Oracle. Alexander paid obeisance at Delphi. So will I.