You wouldn't think Hallmark, a company that has been helping people share love and laughter for over 100 years, would need to get more personal. But that’s exactly what it’s doing.
In the fall of 2013 Hallmark launched a new specialty retail concept called HMK. At HMK stores shoppers can create unique, personalized gifts that reflect an individual’s sense of style and carry the artistry and emotion that comes with the Hallmark brand.
To kick-start the creative process for customers, HMK provides a specially curated selection of greeting cards and quality gifts from Hallmark as well as items made by local artists and other suppliers. Knowledgeable HMK specialists are on hand to provide assistance with services like custom printing, embroidery, laser cutting, and engraving, allowing customers to apply their personal touch on wide range of gift options.
The first HMK store opened in Hallmark’s home town of Kansas City with resounding success. A second store followed in Texas and a third recently opened in Denver. Based on the success of HMK’s model, Hallmark is quickly extending personalization into other areas of the business. By the end of 2014, about 30 Hallmark Gold Crown stores will offer personalization and customization capabilities and hundreds more will follow in the years ahead. This level of rapid change will have a big impact on company operations.
Personalization energizes supply chain innovation
Across the network of Hallmark Gold Crown stores carrying cards and gifts, the company follows a make-to-stock inventory model. Hallmark knows the card assortment each store needs based on linear feet of shelf space, sales history, and demographics. But at the HMK stores inventory planning is not that simple. “Gifts and personalization require a more demand-driven supply chain,” said Jason Porterfield, Manager of Enterprise Architecture at Hallmark Cards, Inc. “It will drive us from make-to-stock to engineer-to-order, and some of the engineer-to-order will be done on site.”
Hallmark already has to deal with a mix of fast and slow-moving inventory across more than 40,000 specialty and general merchandise stores that offer its products. The personalization paradigm introduced by HMK will only add to that challenge. To help reduce the complexity, the company needs an efficient and flexible supply chain. Fortunately it has been working hard to transform its business processes and simplify the IT landscape for several years. “We had a culture of either building the IT systems we needed ourselves or using best-of-breed point solutions,” said Porterfield. “We moved to SAP to get away from all that.”
By implementing SAP solutions, Hallmark gained an integrated business process and IT platform. Over time it has been extending SAP applications to new areas of the business, eliminating legacy systems as it goes. The first phase of the SAP software implementation covered procurement and accounts payable. The second phase followed with supply chain and manufacturing. “We know SAP isn't a silver bullet, it can’t do everything, but it gives us a common platform that lowers our TCO and simplifies support,” said Porterfield. His goal is to cut the number of different applications used in the landscape by half.
Going real-time and mobile
Now Hallmark is implementing SAP Mobile Platform to gain near real-time visibility into inventory and service activities. At a majority of the 40,000 stores carrying Hallmark cards, part-time staff maintains stock in the shelves and sets up new assortments as seasons and holidays change. Hallmark’s old solution could not keep track of store inventory changes or service activities in real-time. “The service team members had to put the handhelds in a cradle to sync overnight for us to collect inventory and store visit data,” said Porterfield. By the end of the summer, 12,000 employees will be armed with the new mobile solution from SAP and Hallmark will have a much more fluid supply chain.
In addition Hallmark is rolling out the SAP Cloud for Sales solution to 1,500 field merchandising supervisors. “Real-time connectivity and access to contextual daylight maps and routes, which they have never had before, is big step forward for Hallmark,” said Porterfield. And because SAP Cloud for Sales runs on the SAP HANA platform, it speeds up and simplifies the IT landscape. “People in the company can see that we need to take complexity out of our business and SAP is a catalyst to drive that change,” said Porterfield.
Benefits of the new vision are clear
For Hallmark, the advantages of SAP HANA are obvious. “We did some rough prototyping with SAP HANA and the benchmarks from that on a nontuned, nonproduction environment were phenomenal,” said Porterfield.
If you just look at the number of stores and the number of cards each one carries, it’s easy to see that Hallmark has a lot a lot of moving parts and lot of data to manage. “The volume of data and transactions forces us to be heavily batch-oriented today,” said Porterfield. “Moving our entire business to real time on SAP HANA would be a huge step forward for the company.”
Greeting card sales remain a huge and profitable business – the Greeting Card Association estimates people still exchange more than 6 billion cards annually – but it’s a mature business, which makes growth challenging. The good news for Hallmark is that it deeply understands the basic need of humans to connect in meaningful ways and has the knowledge and expertise to make it happen.
Porterfield envisions a bright future for Hallmark. “Hallmark is a vibrant business with plenty of opportunity for growth both in store and online. We can extend our brand into a whole slew of new products and services that people wouldn’t think to buy from us today.”
If Hallmark continues to simplify its business on the inside and deliver new and innovative experiences like HMK to customers on the outside, I think he’s right.