Every morning at 11:30, the computers at Convenience Retail Asia Ltd. start crunching the numbers on how much Coca-Cola (KO ) the retailer sold the previous day. The Hong Kong company, which owns 141 Circle K convenience stores, is a leader in using the Net to collect and sift through mounds of data to help order fast-moving items like Coke. By 1 p.m., CR Asia has tallied yesterday's sales figures and zaps an order--over a private network--to the local Coke distributor. Within a few hours, trucks unload cartons of Coke at the company's distribution center. From there, the drinks go to the Circle K shops.
Sound mundane? Not when you check out the return on the $8 million investment in online systems that comes from streamlined inventory, greater staff productivity, and always having product in stock: $3.5 million, or over half of CR Asia's $6 million in earnings last year, stemmed from its investment in Web technology, says Chief Executive Richard Yeung.
The company wasn't always so Internet-savvy. Before Yeung joined, in late 1998, its stores ordered goods the old-fashioned way: by phone, fax, or handwritten invoice. Yeung changed all that. He deep-sixed cash registers and replaced them with scanners. To get the data to headquarters, Yeung made sure that each shop had a computer linked over the Internet to 20 servers in a new information hub. And he invested in software to mine the data to identify the fastest-selling items.
The results have been impressive. CR Asia has slashed its average inventory by more than half, to just 13 days. For the first half of 2001, CR Asia reported a 17% increase in sales, to $81 million, and a 29% jump in profits, to $3.7 million.
Although the economy is suffering, Yeung is not scaling back. He wants to refine data-mining operations so a Circle K with a rival nearby can charge different prices than one with less competition. "The details make the difference, whether you make money or not," he says. Clearly, Yeung is detail oriented.
By Bruce Einhorn in Hong Kong