Fireworks Company Retakes Control of its POS System
December 13, 2011 Alex Woodie
A new point-of-sale (POS) system from VAI is paying big dividends for BJ Alan Company, a national fireworks chain that operates from more than 1,000 locations. By canceling its POS outsourcing deal and bringing the operation and management of the new POS system in house, BJ Alan was able to cut costs, eliminate manual data entry, and gain access to real-time sales data that helps them make better business decisions.
Founded in 1977, BJ Alan is one of the largest distributors and retailers of fireworks in the United States. The company sells its private-label line of Phantom Wolfpack fireworks through a network of 54 permanent stores and approximately 1,200 temporary stands set up during the fireworks season, which extends from the end of April, peaks at the Fourth of July, and continues into mid summer. Like most fireworks companies, it imports most of its goods from China, but it is also the last U.S.-based manufacturer of sparklers.
About five years ago, the need to become PCI compliant became a big issue for the company, and a major driver in the need to rethink the company’s POS system, explains Mike Koocher, BJ Alan’s IT director.
Initially, Koocher favored addressing the PCI security issues without replacing its existing DataVantage POS system, which MICROS Systems had run for it in an outsourced manner since about the year 2000. “DataVantage was a good fit for us because they hosted the solution. It helped us keep a smaller staff on hand and it allowed us to grow,” he says.
The thought of replacing an older but working POS system with something unproven and new was a source of stress for Koocher. “I’m not going to lie: It scared me to know that under the best of circumstances we were going to have to develop the package sometime between July 5 and essentially April 1, and have new package in place that essentially the entire company rested on,” he says. “But the president and owner Bruce Zoldan insisted on taking the time, since we were going to be doing all this work essentially, to upgrade and install a more robust package.”
While the DataVantage POS system worked, there were several shortcomings that, if addressed in the new POS system, would make BJ Alan a stronger and more efficient competitor. In January 2011, BJ Alan–a VAI customer for many years–took the plunge and began the roll-out of VAI’s new POS system, called S2K Enterprise for Retail.
One of the biggest shortcomings of the old hosted POS system was that it took at least a day to get retail sales data into BJ Alan’s ERP system, which is based on VAI’s S2K and runs on an IBM System i server in the company’s Youngstown, Ohio, headquarters.
Under the old POS system, store data would be downloaded each night by DataVantage, which would then upload all store data to BJ Alan around 7 each morning, assuming everything went smoothly (which it didn’t always go). During busy weekends, it was often late afternoon before the company’s general ledger was updated with the latest sales data.
“We were always working with data that was at best a day behind,” Koocher says. “And because just the sheer volume of transactions that occur in June and July, especially on the weekend, it would push accounting back by a couple of days, just waiting for the system to finish the import.”
Changing prices also occurred during DataVantage’s nightly POS updates, and added another 24 hours to the loop. This delay handcuffed the company’s ability to respond to competitors’ promotions by raising or lowering prices in stores.
Coupons and promotions are a very big deal to BJ Alan, as they are to the other companies in the competitive fireworks industry. But until BJ Alan installed its own POS system, it never had a way that it could completely automate the coupon and promotion process.
The company runs its own premiere club, under which it gives customers deals on fireworks. Customers that buy early in the season through the company’s telemarketing department get extra bonuses throughout the year as well.
While the old POS system had some of this functionality built into it, most of it required manual work by the cashiers, Koocher says. Under the new POS system, all promotions and coupons are automatically handled by the software and barcode scanners. Cashiers can even scan coupons into the system and automatically trigger other processes.
None of this was offered out-of-the-box in VAI’s POS package, and would need to be programmed to fit BJ Alan’s needs. VAI did the custom programming to handle the premiere club, coupons, and promotions. Koocher’s fears about a long and drawn out customization process were unfounded, as the New York software company completed the changes in short order. “They make it appear effortless at times,” he says of VAI. “The stuff I thought was going to be a nightmare with the promos and deals and going back in and recalculating–that might have been one of the easier parts of the conversion.”
The best part is there are no more manual processes, Koocher says. “We’ve made it so that all of our deals, all of our coupons, can be programmed here. And as soon the entries are updated, the store is back in business and the automation kicks in,” he says.
Rollout and ROI
Koocher was worried that any glitch in the rollout of the new POS system would hurt BJ Alan’s ability to be ready for the big summer fireworks season. But by the time the last store had been upgraded to the VAI POS system, the only fireworks were on the shelf (not in the IT department), and the biggest problems were run-of-the-mill network and hardware issues.
“I had aged about 20 years, but the system held up incredibly well,” he says. “There were bumps on the road, but I don’t think we had a problem that lasted more than a day. By April 15, all 54 stores were up and running on VAI. Credit cards were being handled. We didn’t pass PCI compliance until about June. But sales were up over previous years, and they all went through the new system.”
Koocher doesn’t have hard return on investment (ROI) figures, but knows where the savings will likely come from. One of the biggest time savers comes from having a direct, real-time connection between the POS devices and the ERP system. “From an IT perspective, eliminating the whole ‘he said, she said’ of what happens in integration, cut our headaches in half,” Koocher says.
The company will also save real dollars by running and supporting its own POS network, and not paying room and board for traveling DataVantage technicians. “But it’s also a morale boost, in that stores can call the home office and find out that we’re watching and helping,” he says. “I think the managers were very happy … that there’s no more level 1 help support for them. They simply talk to my department. There’s no more waiting online while somebody reads a script and says, ‘Do you have power? Is the monitor connected?'”
Over the next year, BJ Alan plans to build another three or four stores, all of which will be integrated into the POS network and directly connected to the company’s System i server. Having ownership of the POS certainly gives BJ Alan more flexibility, but it wouldn’t have been possible without VAI, which gave them the confidence to take on greater challenges.
“VAI had promised that once we started rolling it out, they would be there to answer questions,” Koocher says. “They knew our business livelihood rested on being ready, and they stood up to that.”