The Computerworld Honors Program
Honoring those who use Information Technology to benefit society
LOCATION:
Houten, N/A, NL

YEAR:
2007

STATUS:
Laureate

CATEGORY:
Business and Related Services

NOMINATING COMPANY:
Progress Software

ORGANIZATION:
Boekhandels Groep Nederland (BGN)

PROJECT NAME:
Selexyz 'SmartStores'

Short Summary
The retail industry demands a balanced combination of operational efficiency and customer service. With competition as close as a web browser, successful 'bricks and mortar' retailers must exploit new enabling technologies and embrace new processes that improve internal operations and enrich the customer experience. No retailer better embodies the innovative approach required for success than Boekhandels Groep Nederland (BGN), a Dutch retailer that has opened the world's first customer-focused, automated retail stores.
BGN is the premiere book retailer in the Netherlands with more than 40 stores, 730 employees, and over a million visitors a year. Its stores carry between 25,000-275,000 books, with the chain selling between 15,000-40,000 books per day. BGN serves more than 11 million customers each year that visit one or more of its stores. The company is focused on growth and technology is essential to help BGN achieve its business goals.
BGN has successfully implemented the world’s first commercial deployment of item-level RFID technology, bringing RFID utilization to the consumer level. The company embarked on a Progress-based automation solution that integrates its business applications with a service-oriented architecture (SOA) and implements item-level radio frequency identification (RFID) tagging to optimize its supply chain and enhance the customer experience.
BGN has launched two new, fully automated Selexyz-branded “SmartStores” that combine RFID tagging and SOA to deliver a tightly integrated warehouse-to-customer supply chain. BGN implemented the world’s first commercial deployment of item-level RFID, improving operations, increasing customer loyalty and shopper “basket size”, and revolutionizing bookselling in retail stores.


Introductory Overview
BGN has embarked on a Progress-based automation program that integrates its business applications with SOA and implements item-level radio frequency identification tagging to optimize its supply chain and enhance the customer experience. BGN has launched two new, fully automated SmartStores that combine item-level RFID tagging and SOA to deliver a tightly integrated “warehouse-to-consumer” supply chain.
Leveraging Progress OpenEdge, Sonic, Apama, and RFID third-party technology, the company has trimmed manual inventory steps, reduced the opportunities for error, and dramatically improved management of its supply chain process. Productivity improvements are dramatic; finding a book manually in a box of books previously took five-to-six minutes, and books can now be found online in seconds. BGN formerly had to shut down the store and engage 20-25 staff members to conduct inventory reviews, and the company can now complete inventory reviews in a couple of hours with only two staffers.
Progress EasyAsk technology enables dynamic natural language book search for customers, both online and instore. This entire application was built and implemented in only four months, and the success of the application captured the attention of the global media. In November of 2006, BGN CEO Matthijs Van Der Lely was presented the “RFID Visionary Award” by the RFID Networking Forum at an annual meeting in London.
The Progress-based SOA distributed solution requires no in-store administrative staff, a critical component for the future scaling of the system, and the OpenEdge architecture allowed BGN to implement the application in approximately 60% of the time required with other solutions. An accelerated "model-to-deployment" approach provided BGN with an accelerated time-to-market solution.
The Progress Apama Event Stream Processing (ESP) application enables instant recognition of the books in a shipment and gives employees immediate handling instructions as the tagged books pass through the RFID tunnel, eliminating the need to unpack boxes and search for books. BGN’s systems can automatically inform staff on the composition of the shipments—reducing the time and labor needed to process inbound deliveries while increasing shipment handling accuracy.
Progress EasyAsk provides retail customers with an elegant way to find the books they seek, as well as assistance when they're not sure what they might want. Customers can query in their own language ("Find me a book on sailing") and continue to search on iterative results, narrowing down search results until they find the book that matches their needs ("Now search [the books on sailing] for any written for children"). This intuitive query model, with its browser-based interaction with the inventory system, enables customers to quickly refine book searches of an inventory that exceeds 900,000 titles. Enriching the customer experience also reduces the demands upon sales associates and ultimately leads to greater book sales.
All the elements of the distributed systems are connected by the Sonic Enterprise Service Bus, which provides a SOA-based communications backbone. Back-office functions are integrated within the retail store operations and RFID event data management.
CaptureTech provides BGN with the RFID infrastructure required to support the implementation. CaptureTech provides the readers, antennas, and associated services that enable both BGN and Centraal Boekhuis to deliver market-leading RFID capabilities. With the assistance of CaptureTech RFID expertise and the decision to use Gen2 RFID tags, BGN is achieving high fidelity scanning of books while in their shipping boxes, enhancing data capture significantly.


Benefits
Has your project helped those it was designed to help?   Yes

What new advantage or opportunity does your project provide to people?
While BGN has automated its supply chain and developed a scalable solution for store automation, consumers have also reaped tremendous rewards. Store-based inquiries about the availability of books formerly took at least five-to-six minutes, since employees needed to go into storage rooms, open boxes and search for available titles. But since each book is tagged, inquiries are conducted online in a few seconds. This not only improves customer service, it also allows BGN to more efficiently utilize personnel.
Unlike automation projects focused exclusively on operational efficiency, this initiative is equally focused on value to retail customers. In addition to using RFID to improve management of its regular book inventory (with customer access via kiosks), the new system also greatly enhances the handling of customer-ordered books.
Upon delivery of special orders to the store, the books are now easily identified and routed to a separate stockroom, with automatic notification to customers via email or SMS. In the past, the process required opening the boxes for manual identification and alphabetic sorting on the stockroom shelves; now the books can remain in their boxes.
In the stockroom, tags on the stockroom shelves enable the systems to correlate the book identity with its location. When customers come to the store to pick up their order, the shop staff can find the book by querying the RFID-enabled system. A previously cumbersome manual process, with ample opportunity for error, has been significantly improved.
More than 50,000 book titles are now RFID tagged, and the two SmartStores receive and handle more than 2,500 books each day.


Has your project fundamentally changed how tasks are performed?   Yes

How do you see your project's innovation benefiting other applications, organizations, or global communities?
The combination of item-level RFID tagging, powerful and scalable integrated platforms for the rapid development, deployment, and management of business applications, an enterprise service bus, event-driven applications, and sophisticated but easy-to-use natural language search and query can change the retail industry by optimizing the supply chain, streamlining shipment preparation and processing, enhancing central operations processing, and automating store receipt and processing.
While RFID has long been valuable to retailers at the pallet level, item-level RFID has been viewed as too difficult to deploy and manage. But by relying on proven software technologies, retailers can automate the tracking of each item to improve business operations and enhance customer service.


The Importance of Technology
How did the technology you used contribute to this project and why was it important?
BGN’s strategy for store automation leverages the unique technical strengths and business value of the Progress Software portfolio. Progress OpenEdge is the core business platform for the applications managing the book inventory. Progress EasyAsk, a natural language search application, helps power in-store customer kiosks that inform consumers whether a store carries a book, if it is in stock, and where the book is located in the store. In turn, EasyAsk leverages Progress Webspeed to access the book tracking application—Atlas—which is also based on the OpenEdge platform.
The Progress Apama ESP Platform provides RFID event processing services that monitor and analyze (in real-time) inbound RFID data received at the store. Information captured by Apama is correlated with data sent by the distributor via Advanced Shipping Notices (ASNs). And bringing it all together is the Sonic ESB, the Progress SOA-based integration fabric built on a standards-based messaging infrastructure.
The result is a distributed solution that requires no in-store administrative staff, a critical component for future scaling of the system. Unlike RFID solutions that tag at the pallet or case-level, BGN is using RFID to track the movement of individual books. Item-level tagging provides the retailer with unique real-time visibility into both store inventory and its supporting supply chain activities.
BGN is able to trim manual inventory steps, reduce the opportunities for error, and dramatically improve management of a supply chain process that begins with Centraal Boekhuis (central book warehouse). Centraal Boekhuis is Holland’s leading book distributor of 50 million books annually throughout the Netherlands and originator of 80%-90% of the store inventory. BGN’s automation initiative spans a process that begins with the distributor and ends at the hands of the customer, and it relies on proven, leading-edge technologies to automate inventory management and improve customer service.


Originality
What are the exceptional aspects of your project?
Unlike early-generation RFID solutions that tag at the pallet-level or case-level, BGN is using item-level RFID to track the movement of individual books. This provides management with unique, real-time visibility into both the store inventory and the overall supply chain. BGN is deploying technology from four Progress product lines to deliver this unique retail application: Progress OpenEdge as the platform for all transactions processed by the stores, Apama ESP for processing the RFID data, Sonic ESB as the integration backbone for the store automation applications, and Progress EasyAsk for natural language access to the application by end users.

How is it original?
BGN has implemented the world’s first commercial deployment of item-level RFID tagging. By developing a scalable, end-to-end automated solution for inventory and supply chain management, BGN has developed a model that retailers worldwide can use as a benchmark for leveraging automation to improve inventory management, supply chain efficiency, and customer service.

Is it the first, the only, the best or the most effective application of its kind?   First

Success
Has your project achieved or exceeded its goals?   Exceeded

Is it fully operational?   Yes

How many people benefit from it?   >1000

If possible, include an example of how the project has benefited a specific individual, enterprise or organization. Please include personal quotes from individuals who have directly benefited from your work.
RFID tags are generated and affixed to the books, with each tag encoded with an item-level serial number. The books are packaged for shipping, with an Advance Shipping Notice (ASN) generated that lists each book in the shipment. The ASN is sent to IT operations, where it is automatically updated with customer and order information from the Progress-based back-office system and distributed to the individual store through the Sonic ESB. As shipments arrive at a store, the boxes pass through an RFID tunnel where RFID readers scan the book tags while the books remain in their boxes. Each RFID scan generates a Sonic message event that is sent to the event-processing platform.
"The key to our success is our ability to deliver an outstanding customer experience when a customer enters one of our stores," said Jan Vink, IT Director for Boekhandels Groep Nederland. "Equally important for us is providing the tools to our marketing teams that allow them to better merchandise books. With infrastructure software, event stream processing, SOA, and intelligent search applications from Progress, we have accomplished all of our business goals for this deployment. On top of that, we have built the world's first, fully-automated item-level RFID tagged store. This pioneering set of applications will go far to enhance the strength of the BGN brand with book buyers."
"Our new system implements a process that is now completely automatic and real-time, reducing both the cost and time burden on our finance department associated with reconciliation, said Matthijs van der Lely, Chief Executive Officer for Boekhandels Groep Nederland. "Our investment in item-level RFID and SOA enables us to streamline our processes and reduce costs across the supply chain, improve our profitability and respond more quickly and effectively to shopper requests."


How quickly has your targeted audience of users embraced your innovation? Or, how rapidly do you predict they will?
The key to the success of this automation program has been BGN’s ability to deliver an outstanding customer experience when a customer enters one of the stores. Customers immediately embraced this innovation and began reviewing book availability from in-store kiosks. The technology was also immediately embraced by BGN personnel. For example, marketing teams now have more data available to analyze buying patterns and develop merchandising programs, and store managers can more accurately forecast demand and stock inventories appropriately.

Difficulty
What were the most important obstacles that had to be overcome in order for your work to be successful? Technical problems? Resources? Expertise? Organizational problems?
Perhaps the greatest obstacle to overcome was selecting the right set of technologies to develop a tightly integrated “warehouse-to-consumer” supply chain. BGN analyzed alternatives and selected an integrated solution based on Progress technologies, and leveraged the OpenEdge platform for developing and running critical applications, Sonic ESB for simplifying the integration and flexible reuse of business components using a standards-based SOA environment, the Progress Apama Event Stream Processing platform for monitoring rapidly moving event streams, and Progress EasyAsk technology for enabling dynamic, natural-language book search for customers and employees.
By selecting established products proven to work together successfully in other applications, BGN was able to develop an innovative solution while overcoming technology limitations that had until then prevented other retailers from capitalizing on the advantages of item-level RFID tagging.


Often the most innovative projects encounter the greatest resistance when they are originally proposed. If you had to fight for approval or funding, please provide a summary of the objections you faced and how you overcame them.
We reduced resistance in the BGN-organization to communicate the RFID-project supported by the board of BGN. Approval was already taken care of by adding the RFID-investment to the ICT-budget preparations in 2005. A few weeks after opening the first smart store we encountered some hesitation about the results so far and the reliability of the data. From that moment we decided to support the store on site and create action lists to solve the (relatively small) issues. By communicating on all levels within the company we were able to explain the status of the project and discuss the issues. By distribution the last status of the issue lists and actively solving problems employees accepted this solution and the implementation of the second smart store was no longer a subject of discussion. A further roll out of RFID within BGN selexyz bookstores is one of out mid term targets. Communication via short lines and active involvement from senior management level and listening and talking to the users influenced the process of acceptance positively.
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