7-Eleven Turns To HP To Streamline Operations

When customers pulled up to their local 7-Eleven store this Labor Day holiday weekend, the individual store managers and the corporate directors of the convenience store chain were confident they were quickly sending those individuals on their way with the specific products they needed.

That assurance comes in part due to latest step in a multiyear effort by 7-Eleven to streamline and more efficiently run its thousands of stores, including the recently completed installation of Hewlett-Packard servers and networking switches in each store location.

The rollout, which took place over the past eight months, is part of a five-year, $55 million agreement between the two companies aimed at supporting 7-Eleven's Retail Information System, a product traffic-management process that lets individual store operators specify inventory for reordering to meet varying needs in the different geographic regions where the stores are located.

Perhaps even more important to 7-Eleven CIO Keith Morrow, the platform provides a foundation that can adapt to the changing needs of its customers. "What's convenient today for customers is going to be different tomorrow," he said. "We feel we now have the horsepower and base capabilities for a number of years to come."

7-Eleven has 3,300 franchise-owned stores and 2,500 company-owned stores, each of which keeps about 2,500 items in stock. But products that are big sellers in New York may not meet the tastes of customers in Texas or California. Individual store owners or managers are the best judges of what best serves their customers, Morrow said, and its retail information system is aimed at putting the decision-making power in their hands.Early this year, HP completed a pilot program in the Dallas area, where a ProLiant ML330 server running Microsoft Windows Advanced Server 2003 was installed, along with a ProCurve Networking Switch. The store equipment is able to communicate with the corporate data center in Dallas to track inventory, and make specific update requests.

The company also installed an internally developed software program for fresh-food management and in-store computer-based training for employees, and an HP program for proactive monitoring of in-store peripheral devices.

"Believe it or not, it's a fairly complex problem to know how many hot dogs to put on the grill in the morning while also understanding the managing of possible write-off and ensuring there's enough ready for customer demand," Morrow said. "The models are built using sales history, and historical geographic trends."

Once the HP pilot proved successful, it was used as a blueprint, and HP began deploying the platform during off-peak hours of midnight to 5 a.m., completing installation of as many as 90 stores in a single night, says Robert Corbett, director of retail industry solutions at HP.

"It was relatively seamless to the operation of the stores," Corbett said. "They were able to transition from one day to the next, starting the day with a brand-new system with a lot of new capabilities but no disruption to the store."One of the main things the new equipment provides the stores is ready access to inventory data and other information that could be slow to access in its older, more proprietary existing system, he says.

With its infrastructure in place, 7-Eleven is already making plans for additional IT upgrades, Morrow said. The next step will be the installation of two custom-designed and rugged mobile-ordering devices, which are similar to PCs and will operate in a wireless environment at each store. The devices will let personnel make instant ordering decisions on the floor, or watch training videos at the related work stations such as the Slurpee machines or the store drink vaults, Morrow said.

7-Eleven is negotiating with vendors on the design and delivery of the systems, and expects to have a pilot program running by the end of year, with full-scale deployment scheduled for 2005.

Beyond the wireless terminal upgrade, Morrow said the company wants to be flexible and react quickly to the next trend. "It's all based on customer demand," he said. "We're already starting to see more demand for smart-card and RFID-type payment alternatives, which could be the next move for the company."

The work with 7-Eleven is part of an overall retail industry thrust that has been emphasized at HP over the past year, said Leigh Morrison, VP of retail industry solutions at HP. Part of the effort has been to try to help its retail customers implement the same types of supply-chain effort HP has been implementing internally.As an example, HP is a top-100 supplier to Wal-Mart Stores Inc., and has been working to meet Wal-Mart's mandate for use of RFID tagging devices on products shipped to the retail giant. HP has also been working with other top 100 suppliers to try to create a collaborative approach to achieve compliance, she said.

Another recent effort in the retail area was with the Publix grocery-store chain. HP is installing 16,000 point-of-sale terminals, and 2,000 servers at the chain's stores.

To meet Publix's needs, HP developed a "retail-hardened" PC that is enclosed in a metal case, and committed to a five-year warranty, much longer than the 8-to-12 month life cycles generally associated with PCs. Said Morrison, "They can't afford to go out and replace a point-of-sale terminal every eight months."