Keeping the Store Running

Keeping track of procurement and related expenses is never an easy task. For The Container Store, the job has become a lot more manageable over the past two years.

Previously, the chain managed purchase requests much like any other retail operation. When store personnel needed supplies, they would e-mail a request to corporate headquarters. There, the request would be approved and a record of the order entered into an inventory control sheet: The supplies, which were maintained in a corporate inventory warehouse, would be shipped out.

“We knew our purchasing system was antiquated, so we looked at other options in the market,” says Scott Jones, purchasing agent for The Container Store. “We needed an automated system that was low cost and easy to use. We wanted something that did not require a lot of programming and that our store personnel could learn how to use quickly.”

What The Container Store chose was an e-procurement and expense management system from San Mateo, Calif.-based Coupa Software. The web-based Coupa system allows employees to request supplies much like shopping online — they find the item on a preapproved catalog page and add it to a shopping cart.

Records of the request and cost are automatically transferred to a central database at corporate headquarters, eliminating the need for re-entering data and reducing the opportunity for data errors. Furthermore, supply request information can be analyzed so that both store employees and corporate purchasing agents can evaluate and compare the efficiency of each store’s use of supplies.

“Before, we could not get as much visibility as to the cost of supplies,” Jones says. “Now, we can manage the costs better.”

The ability to analyze those costs is key. Store and corporate managers can compare the performance of stores within a region, so store managers can see if other stores are more cost effective than they are, and, if so, what they are doing differently.

“The system is pretty user-friendly in that we can tell it what we want to compare and it can do that,” Jones says. “We can compare costs store by store or item by item.”

Additionally, the Coupa system allows some supplies to be shipped directly from the supplier rather than the corporate warehouse. That means the warehouse does not have to maintain as much inventory and employees can often get items quicker.

“Before, if a store employee requested an item from our warehouse, they had to wait until a truck was sent out to their store. That might take up to a week,” Jones says. “Now they get it in one or two days.” Employees also tended to order “more than they needed because they were afraid of running out.”

Before implementing the Coupa system, The Container Store assigned the cost of supplies to individual stores based on their percentage of sales. Now stores are accountable for their own spending, and the chain can track each store’s specific spending and allocate cost based on actual use. This makes store managers more aware of what they are spending and encourages them to be more efficient.

Customizing the system
The Container Store looked at other automated procurement systems, but found that most were linked to specific suppliers. “Various vendors have automated systems that manage orders that go through them, but you can’t use them for other vendors and we did not want to be restricted as to what suppliers we can use,” Jones says.

With The Container Store program, employees are given a list of 300 items they can order, including office supplies and most of the day-to-day items stores need to keep running. Other retailers have taken the Coupa system to another level, allowing managers to compare prices and shop at outside vendors while maintaining corporate oversight, says Jason Hekl, Coupa’s vice president of marketing.

For example, the system can be set up so that a manager at a store wishing to purchase a laptop can pull up listings from preapproved vendors, compare prices and features and select the best system for his store. Then a request for that item is sent to corporate office for approval.

At corporate headquarters, supply managers can look at the request and check to see if the manager is getting the best deal and approve the request — all online, Hekl says.

Some retailers have also used the system to manage services like housecleaning and window washing. Individual stores can compare their local service provider’s price with that of other stores to see if they should try to renegotiate their fee. Meanwhile, corporate purchasing officers might notice that one store is paying more for a similar service than a store nearby and suggest the store with the higher cost look into using the other store’s service.

“Store managers often find that what appears to be a good deal isn’t a good deal by comparing what other stores are paying,” Hekl says.

An advanced budgeting feature also helps store managers with purchasing decisions. Stores can compare mid-cycle spending with their budgeted amount, and alerts can be sent out if a specific store appears to be going over budget. Such analysis can be adjusted for seasonality — i.e. marketing spending may need to be higher during the fourth quarter to assist with holiday sales. Additionally, spending reports can be compared with sales reports.

“You might find you are over budget on marketing and promotions,” Hekl says, “but if sales have been increasing proportionately, you may decide to readjust your budget rather than reduce spending.”