RONA's Financial Insight

Canadian home improvement retailer taps SAS to provide route-to-market cost modeling for growing supplier base

Chicago — June 12, 2003 — At the Retail Systems 2003 Conference & Exposition, business intelligence software provider SAS said RONA Inc., a Canadian hardware and home improvement retailer and distributor, is using SAS Value Chain Analytics and SAS Activity-Based Management software to provide route-to-market cost modeling for its growing supplier base.

A large and growing organization, according to SAS, RONA traditionally used an average cost system to determine the expense of getting products from suppliers to its stores (the system incorporated RONA's transportation, labor and other expenses to provide an approximate cost per supplier).

Recent acquisitions in 2000 and 2001, however, increased its supplier base by 1,000. To reduce the strain this placed on its distribution network, the company needed to negotiate with vendors on as many as seven different stocking options, and it needed a new system to provide all the specific potential costs both to RONA and its suppliers.

So RONA selected the SAS solution to provide the visibility into its finances. SAS said its Value Chain Analytics 6.0 calculates cost for the extended distribution network while SAS Activity-Based Management provides the warehouse activity rates.

Collectively, this allows RONA to model different scenarios for each vendor, including direct and cross-dock. SAS explained that, in the future, this foundation would allow the retailer to negotiate with suppliers to move 150,000 products to its more than 500 company-owned, franchised and affiliated stores in the most efficient and cost-effective manner.

"You can't make distribution decisions without knowing their financial impact, much less expect trading partners to accept change without knowing how it affects their bottom line," said Martin Beauregard, chief financial analyst, RONA Inc. "SAS Value Chain Analytics provides a retail specific-focus that, in combination with SAS Activity-Based Management, is helping bring cost transparency to RONA's supply chain."