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Clothes 'R' Us

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by

Ronald Blanco

on 22 April 2015

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Transcript of Clothes 'R' Us

Clothes 'R' Us
Clothes “R” Us - Company Evolution
Leading appareal retailer compnay in the United States

Between 1990 and 1997
Growth and financial success
Expanded its stores from 200 to 300
Almost doubled its employees
Revenue of ~$6.51 billion
Net earnings of ~$534 million

In 1998
Growth began to slow

In 2000
Expanded to more than 400 stores
Doubled its balance sheet debt

Program Chronology
Conclusion
Recommendations
Address warning signs when first noticed
Evaluate what issues occured and ways to address if happens again
Before making a decision, evaluate the costs vs. benefits
Create parallel work schedules
Consider dependencies
Work and communicate continuously with key people
Agile Software Development Methodology
System Design
Group 5:
Ronald Blanco
Anabel Fernandez
Ashley Fuchs
Stephanie Licea
Anabel Lopez

Plan

Product Definition and Architecture

Requirements

Design

Code

Test

Initial Deployment
Plan
Project Manager
Project Management Office
Weekly reports on project status
Spreadsheet with important metrics and ratios is prepared
by the PMO
Product Definition & Architecture
Requirements
Design
Code
Test
Initial Deployment
Details of the system objectives were thoroughly defined
Business Information Requirements
Technical Requirements
Operational Requirements
Architecture Team worked in data & software design
This phase was very successful due to the EMT's and
Project Managers' depth of experience with the business
Requirements
Clearly defined the objectives of the software for the system
Software Requirements
Functional & Conceptual Designs
User Interface Designs
System Interface Designs
Projects were scrutinized by various groups including:
Operations Steering Committee
Obstacles
Graphic User Interface (GUI) for the POS system
Planned to present the Committee in June
GUI was presented on the last week of June
Committee approved GUI 4 weeks later after numerous changes
The delay in the approval of the POS system GUI by the Operations Steering Committee resulted in delayed sign-off
for the credit application

Store Management
Custom development of a new store managment application
Adopt latest internet development tools
Modern, browser-based user interface
Easy integration with in store server
XML data transfer to stores
POS & Credit
Integrated POS and credit application had to interfere with store servers
Credit authorization was routed through the storer server directly to HQ
Private network connecting each store to HQ
Delay due to final requirements sign off
Program manager, Nord, bothered by product managers' lack of availability
Orlin wasn't aware of lack of focus on POS program
EMT was asked to investigate further
Four out of six product managers had submitted their resignations that day
build,
acquire, implement
Customer relations management
Four weeks behind schedule
Hardware had shipped from vendor earlier in the week
Hardware came with latest version of operating system
Development environment had used earlier version of operating system
Caused estimated delay completion of infrastructure project by four weeks
Allow store manager and regional operations manager to access their store's performance at any time
Implementation of a customer relations management system (CRM)
How can a CRM system benefit Clothes "R" US?
Despite major setbacks, two months of testing were still thought to be sufficient for demonstrating system readiness.
Setting up private network would take a month longer than originally anticipated
Orlin wanted to have a few pilot stores up and running
Positive momentum for team
Needs to have overall project plan figured out
Avoid the trap of over-committing and under-delivering
The new system will have provisions for:
Clothes “R” Us - Company Evolution
POS & credit systems
Store management suite
CRM system
Inventory itegrating all stores & HQ
Extension of corporate email to the stores
Implementation of VoIP at stores and HQ
Wall Street View of the company in 2000
Company over-expanded
Had the worst gross margins in the industry

In 2001
Closed 40 stores
Total headcount reduced by 20%
Number of employees per store was reduced by one-third
Company reported its first net loss of ~$123.62 million

Benefits
Store managers reduce time spent on back-store management from 6 to 2 hours
ROI would be $15 million per year after development
Increased operating efficiency in stores due to improved CRM systems
Reduction in store associates would result in cost reduction in salaries
Clothes “R” Us - Business Case
Stores
Running back-store management functions on standards PCs

Desktop fax

Dial-ups modems for remote corporate dial-up

Applications for handling nightly sales closing figures

Old-fashioned POS systems for cash draw and item database pricing

POS with nonintegrated credit authorization device with its own phone line

Credit authorization were processed through the HQ

Program Description
Clothes “R” Us - Business Case
Orlin & her IT department would lead the development
Planned to implement system in less than 12 months
8 peices: POS, store management, network services, CRM, inventory, infrastructure, technology management & operations, and training
Most of the people involved in overseeing each aspect of the new system were internal within Orlin's staff
Performance goals
Free up the store manager to work the store instead of the store office

Automate cash management to include credit/debit at the store level

Provide always-on-network connectivity, allowing real time push/pull polling of store sales and inventory data, ordering, employee time reporting, and payroll processing

Allow cross-store inventory checking

Reduce credit authorization processing time at the POS from 30-45 seconds to less than 5 seconds

Implementation
Outsourced jobs
Consulting firm did the following:
project management office
applications development
infrastructure engineering
quality and assurance (QA)
testing
technology management and operations during the project life cycle
training
not enough IT resources
BAI Stages
Program Phases
Review Meeting
Cost of each week of delay:
$92,000 of additional costs
$288,000 of lost savings
Events with most impact:
4 week delay with GUI sign off
4 week delay product managers leaving
4 week delay due to infrastructure
4 week delay for setup of private network
Cost and Impact of 4 week delay in GUI sign off
Cost Impact:
Can look at estimated lost or actual costs for June and July
Overall Impact:
Delay in crucial development stage
Estimated Lost: ($92,000+$288,000)*4= $1,520,000
Schedule Impact in June: approximately $792,000
Cost Impact in July: approximately $1,650,000
Actual Costs:
What projects or activities will be impacted by each delay?
Could there be any way to detect the delays before they took place?
Revisit timing of program
addressed but never changed
If GUI was area of concern for committee, propose draft before June
Look for any unusual activity
Communicate more
Total Cost and Impact of all Delays
Total Estimated Delay: 16 weeks
Total Estimated Cost of Delays:
($92,000 + $288,000) * 16 = $6,080,000
Re-Plan Program
Recreate Baseline Costs by adding an additional month to the each phased delayed
Focus on increasing cost impact percentage
Better estimate budgets- create new budgets
Cut costs associated
How is this good? bad?
Orlin and the EMT developed a baseline plan in 2001
Store manager tested alpha version
Full transcript