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Boots Group plc Nov 89 – Mar 95
Senior Projects Analyst
Commercial Finance – Boots The Chemists Nov 89 – Aug 90
Specific Projects & Achievements
- DPP Support
Boots The Chemists (BTC) was operating an industry leading Direct Product Profitability (DPP) analysis and reporting system. My role was to support and develop the system. This involved development of cost allocation rules, data quality checking, system functionality review & enhancement, and reprocessing of analysis.
In a user facing capacity, I had to support the user education and usage of the system. A major project was the launch of a single line modelling capability, where I was involved in the roll out to the business users, in small group coaching sessions.
- Payless / Do It All Merger
Boots acquired Payless DIY during the Ward White acquisition in the summer of 1989. In 1990 a joint venture was set up with WH Smiths to merge Payless with Do It All. Although unrelated to my DPP responsibilities, I was seconded to the Corporate Development department to support this merger because of my business modelling skills. I was the only non-director level executive involved in the exercise.
I produced the initial one-sided business model to determine the operational financial viability of the merger from the Boots perspective. This then led to a model which evaluated the financial benefit to Boots of alternative deal scenarios. This model was used interactively (in recess sessions) during the final CEO led deal negotiations. Finally, the model was further developed (collaboratively post-deal) to create the integration basis. My model was chosen by WH Smith in preference to their own pre-deal one-sided model, for this purpose.
Decision Support Project Manager / Financial Modelling Manager
Commercial Finance - Boots Retail Division Head Office Aug 90 – Aug 94
Boots Retail Division was formed to collectively manage all of Boots retail interests other than Boots The Chemists, which remained as a separate operating division. The Retail Division merged the ex-subsidiaries of the Ward White acquisition (Halfords, AG Stanley (t/a FADs), Payless DIY) with Boots’ other acquisitions (Boots NZ, Sephora) and its start up operations (Childrens World, Boots Opticians).
The aim of Retail Division Head Office (RDHO) was to provide a centre of excellence where Boots’ retailing expertise could be disseminated to these smaller operations, and act as a focal point for control and standardisation of best practice. RDHO was a satellite of the Corporate Head Office and contained a team of only 20 individuals. The operating companies were kept as separate legal entities with their own respective head offices including all of the normal support functions.
Specific Projects & Achievements
One of my tasks was to implement DPP solutions into a selection of the operating companies. First, I had to develop a solution which could be portable across each business and tailorable to each business. The BTC mainframe solution was neither portable nor tailorable and replicating the mainframe solution appropriately was cost prohibitive to these smaller operations.
I developed a solution which used the latest Lotus 123 functions. This enabled data extraction from host systems to be held in DBase format, which could then be manipulated via 123 and presented through a GUI style interface to users. The GUI was also 123 based, but had point and click EIS style capabilities and required no 123 expertise. Indeed the macro driven GUI did not allow use of any 123 functions. It mimicked a VB style solution over Excel.
Whilst greeted with initial scepticism by the more conventional IS management within the Group and the Division, this solution was successfully deployed in four of the Retail Division businesses: Halfords, AG Stanley, Childrens World and Do It All.
At Halfords the system was credited, in the Boots Annual Report & Accounts 1993, with making a significant contribution toward the £14.2m (4.3% points) turnaround in the operating profit in a single year. See scan here (107kb).
At Do It All, the current Boots Group plc Chief Executive, Steve Russell, was then Do It All Managing Director. Click here (124kb) to see a scan of what he had to say about the DPP system that I put in.
- DPP Projects
My four DPP projects were major exercises in change management. By the early 1990s DPP was a fading technique in most retailers eyes, as it had been often tried, and often failed. The main reasons for failure are the text book ones of poor change management.
I had the advantage of the learnings from BTC to draw upon where DPP had been successfully implemented and it was my challenge to replicate this winning formula. The projects had the following facets:
- an appropriate steering committee commitment involving the client’s directors
- designated project leaders from both the IS and business communities within the client
- truly participative multi-functional teams for rule setting
- a structured launch programme of communication and training
The stages of the projects were:
- project launch
- rule setting
- data gathering (including the systems development required to do so)
- data processing
- results launch & training
The biggest challenge to face up to was scepticism over the use or abuse of the results, the accuracy of the results, and the degree of latitude the clients had in rule setting.
In addition to overall project management of each project, I facilitated each of the multi-disciplinary teams in rule setting. I won the business’ commitment by adopting a truly participatory approach to the rule setting which were 100% tailored to each business, within the limitations of their systems and data availability.
There was also a lot of effort put into the appropriate use of the results and aids in using the system in practice. These included:
- The DPP 10 Commandments
- The 6 Evils
- The 3 Steps to Heaven
As a result all businesses successfully implemented, maintained and exploited the DPP solutions. From a personal stand point it is disappointing for me that only one carries on in operation at Halfords, as Boots sold off the other three companies where a condition of the sale was the cessation of the use of DPP, as it was Boots’ intellectual property.
- Value Based Management (VBM) Strategic Planning
Boots engaged Marakon Consultants to roll out a VBM approach to Strategic Planning. Boots Retail Division was the test Division for this exercise prior to rolling out to the other divisions subsequently. I was part of the team that worked with Marakon in facilitating the approach amongst the operating businesses.
As part of the exercise I produced a VBM planning model, which had the following features:
- Incorporated the VBM algorithms for valuing a business
- Provided a facility for archiving and comparing alternative scenarios
- Allowed "off-line" modelling to be integrated into the valuation model
- Provided the basis for driving, sales, margin and store based costs on a matrix of store format and category assumptions, supported by store opening, closure, and relocation plans.
The model proved very valuable in encouraging each operating business to identify which store formats were profitable, and why, and what needed to be done to improve the profitability of a store format prior to pursuing an opening programme. This changed the emphasis from a pursuit for growth, to a pursuit for profit.
- Capital Investment Appraisal Model (CIAM)
The Retail Division businesses had very different histories and consequently different approaches to evaluating capital projects – particularly new store openings. For example the Ward White businesses operated on a simple 3 year pay back approach. The requirement was to bring uniformity of appraisal across all of the businesses, utilising Boots preferred Net Present Value (NPV) approach.
I developed a 123 model which was store-centric and allowed assumptions on category mix, flexible margins, maturity rates, as well as specific location costings. Having produced the model I then had to roll it out to the businesses, both explaining the model’s operation to the designated operators as well as communicating the model’s rational to the business stakeholders.
In monitoring the usage of the model, I had to spot check specific proposals and also act as the challenger on both standard assumptions (eg. maturity factors) and specific assumptions.
Boots The Chemist subsequently adopted the model as well.
- Management Accounts & Forecasting Consolidation
Another process that required uniformity was the details that needed to be submitted for the monthly management accounts. This included a rolling Year End forecast.
In addition to producing a submission template, I took the opportunity to provide each business with a multi-functional forecasting tool, to aid in the year end forecasting process. Adding this functionality smoothed the adoption of the template by the businesses.
The process was facilitated by a data extract from the template, which was then reconstructed at RDHO and consolidated. Further data processing was done in order to reformat the data for submission directly into the Corporate Commander Executive Information System (EIS).
Commercial Finance – Boots The Chemists Aug 94 – Mar 95
Specific Projects & Achievements
- Merchandise Process Review
Historically BTC had operated a business unit approach revolving around category business centres, with store assortment and planogramming being a subsidiary process, to category management. An organisational reshuffle changed the emphasis toward Format Management, with assortment being a primary driver, and Category Management dovetailed in, in a matrix structure. The Business Centres remained and worked alongside Format Management.
As a consequence of these changes the merchandise processes needed to be re-aligned and the supporting systems reviewed to better support the revised structured. With my DPP and VBM work within the Retail Division, I had done a number of exercises in incorporating profit analysis within space planning, planogramming and assortment. I was therefore recruited onto the Merchandise Process Review to facilitate dialog between the business departments and IS, as well as help specify requirements of any new systems.
Activities that I engaged in included:
- Reconciliation of conflicting needs between the old and new business structures
- Review of merchandise processes, particularly in connection with range selection and assortment planning
- Information and decision support requirements of the processes incorporating a reconciliation with functionality of existing centrally provided solutions, as well as local solutions, typically spreadsheet based.
- Vendor review and selection of components to the solution set including planogramming tools.
- Unified Reporting Approach
Following the rollout of VBM across all Boots Divisions, I was again called on to work with Marakon. There was a need to identify common and division specific KPIs for central reporting within Corporate Head Office.
I worked with Marakon and the operating businesses to define the appropriate KPIs and to provide an on-line reporting delivery mechanism back to the operating businesses with equal functionality to the centrally used Commander EIS system.