Evelyn Follit Evelyn Follit Evelyn Follit Evelyn Follit Evelyn Follit Evelyn Follit Evelyn Follit Evelyn Follit Senior VP and Chief Information Officer Senior VP and Chief Information Officer
Agenda Agenda Overview Overview Improve the Bottom Line Improve the Bottom Line Increase the Top Line Increase the Top Line On the Horizon On the Horizon
Overview Overview Over 7,100 Locations Over 7,100 Locations Six Distribution Centers Six Distribution Centers Seven Manufacturing Locations Seven Manufacturing Locations Over 80 Service/Installation Centers Over 80 Service/Installation Centers 220 Field Administrative Offices 220 Field Administrative Offices 4 Asian Plant/Product Sourcing Locations 4 Asian Plant/Product Sourcing Locations
Overview Overview Standard Information Technology Services Provided Standard Information Technology Services Provided • Enterprise-wide Network • Enterprise-wide Network – Infrastructure – Infrastructure – Apps Availability – Apps Availability – Maintenance and Security – Maintenance and Security • Advertising/Marketing Support • Advertising/Marketing Support • Desktop, Laptop, Telecommunications • Desktop, Laptop, Telecommunications • Data Warehousing • Data Warehousing • Asian Operations, Importing / Customs • Asian Operations, Importing / Customs • Systems and Support • Systems and Support – Company Stores – Company Stores – Dealer/franchise Locations – Dealer/franchise Locations • Website • Website • Planning and Decision Support • Planning and Decision Support
Overview Overview
Improve the Bottom Line Improve the Bottom Line Offshore development Offshore development $96 2.5% $96 2.5% $84 $84 IT Expenses as % of Sales IT Expenses as % of Sales Benchmark - outsource Benchmark - outsource $72 $72 where appropriate IT Expenses (in mil.) where appropriate IT Expenses (in mil.) 2.0% 2.0% $60 $60 $48 $48 Manage Lease vs. Buy Manage Lease vs. Buy $36 $36 1.5% 1.5% $24 $24 Monitor vendor Monitor vendor $12 $12 performance performance $0 1.0% $0 1.0% 1999 2000 2001 1999 2000 2001 IT Expenses IT Expenses / Sales IT Expenses IT Expenses / Sales
Improve the Bottom Line Improve the Bottom Line Benchmark I/T costs Benchmark I/T costs • Why is it done? • Why is it done? • Why is it done there? • Why is it done there? • Why is it done then? • Why is it done then? • Why is it done that way? • Why is it done that way?
Improve the Bottom Line Improve the Bottom Line High Speed Connectivity In Stores High Speed Connectivity In Stores (a.k.a. Answers OnLine) (a.k.a. Answers OnLine) • Suite of 70 productivity applications available to • Suite of 70 productivity applications available to connected stores and admin offices connected stores and admin offices • Runs at the cash-lane and backroom servers • Runs at the cash-lane and backroom servers • Facilitates efficiency of sales associates • Facilitates efficiency of sales associates • Provides answers for customers • Provides answers for customers • Infrastructure’s performance regularly benchmarked • Infrastructure’s performance regularly benchmarked for acceptable response for acceptable response
Average Minutes Per Activity Average Minutes Per Activity 7 7 6.46 6.46 6 6 5 5 3.78 3.74 3.78 3.71 3.74 3.71 4 4 3.23 3.23 3 3 2 2 1.22 1.15 1.22 1.15 0.84 0.82 0.84 0.82 0.73 0.73 1 1 0 0 Battery Finder Product Product Info RSU Parts Ticket Lookup Battery Finder Product Product Info RSU Parts Ticket Lookup Availability Availability Without Answers Online With Answers Online Without Answers Online With Answers Online
Improve the Bottom Line Improve the Bottom Line Foundation Application Packages Foundation Application Packages • Automated DC Replenishment • Automated DC Replenishment – Improve vendor communications so DC’s stocked (95%) – Improve vendor communications so DC’s stocked (95%) with right products at right time to provide timely with right products at right time to provide timely distribution to stores distribution to stores – Reduce inventory capital and carrying costs – Reduce inventory capital and carrying costs • Transportation Management System (Manugistics) • Transportation Management System (Manugistics) – Improves RadioShack’s ability to plan/control end-to- – Improves RadioShack’s ability to plan/control end-to- end supply chain operations and decrease overall end supply chain operations and decrease overall freight expenditures freight expenditures – Optimizes carrier selection and load building – Optimizes carrier selection and load building
Strong Financial Returns on IT Projects Strong Financial Returns on IT Projects Est. 3-Year ROIC Cap Ex (mil.) $12 100% Est. 3-Year ROIC Cap Ex (mil.) $12 100% $10 $10 $8 $8 90% $6 90% $6 $4 $4 $2 $2 $0 80% $0 80% DC Replenishment TMS DC Replenishment TMS Cap Ex ROIC Cap Ex ROIC
Improve the Bottom Line Improve the Bottom Line Foundation Application Packages (cont’d) Foundation Application Packages (cont’d) • RETEK Merchandising System • RETEK Merchandising System – Master Stock File and Integrated Inventory – Master Stock File and Integrated Inventory Management Process Management Process – DC/store perpetuals, DC Accounting – DC/store perpetuals, DC Accounting – Foundation for all future Merchandising and Supply Chain – Foundation for all future Merchandising and Supply Chain initiatives - $20 Million capex initiatives - $20 Million capex • PeopleSoft • PeopleSoft – HRMS (8.0) enables employee self-service HR enterprise wide – HRMS (8.0) enables employee self-service HR enterprise wide – Also use PeopleSoft Fixed Assets, General Ledger and – Also use PeopleSoft Fixed Assets, General Ledger and Accounts Payable Accounts Payable
Increase the Top Line Increase the Top Line Revenue enhancing initiatives Revenue enhancing initiatives • Point-of-Sale Features – Foster accessory sales, • Point-of-Sale Features – Foster accessory sales, associate rewards associate rewards
Increase the Top Line Increase the Top Line Revenue enhancing initiatives Revenue enhancing initiatives • Point-of-Sale Features – Foster accessory sales, • Point-of-Sale Features – Foster accessory sales, associate rewards associate rewards • Optimize Pricing • Optimize Pricing – Some categories to drop some to rise – Some categories to drop some to rise – Maximize gross profit, drive turns – Maximize gross profit, drive turns – Eventually enable shelf and zone pricing – Eventually enable shelf and zone pricing • Supply Chain Initiatives • Supply Chain Initiatives – Ensure on time delivery – Ensure on time delivery – Replenishment accurate – Replenishment accurate • Store connectivity – 3rd party activation, Answers Online • Store connectivity – 3rd party activation, Answers Online locates products faster for associates locates products faster for associates
On the Horizon On the Horizon Scientific Retailing – Software analytics to sustain revenue Scientific Retailing – Software analytics to sustain revenue and profit growth – builds on our foundation packages and profit growth – builds on our foundation packages Wireless LAN technology – Growing rapidly – perk to Wireless LAN technology – Growing rapidly – perk to customers/business partners customers/business partners RFID technology – Emerging payment technology that RFID technology – Emerging payment technology that promises to shorten checkout and sales transaction times promises to shorten checkout and sales transaction times Continuing reduction in recurring costs of connectivity Continuing reduction in recurring costs of connectivity enables further productivity enhancements enables further productivity enhancements
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