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Location Intelligence Conference 2006

Location Intelligence Conference 2006. Advanced Spatial analysis is changing location strategy at Walgreens: How science transforms the process of decision making. John Baronello Manager, Strategic Modeling Walgreens Market Strategies L.L.C. Walgreen Co, 847.315.4837

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Location Intelligence Conference 2006

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  1. Location Intelligence Conference 2006 Advanced Spatial analysis is changing location strategy at Walgreens: How science transforms the process of decision making. John Baronello Manager, Strategic Modeling Walgreens Market Strategies L.L.C. Walgreen Co, 847.315.4837 John.baronello@walgreens.com

  2. Walgreens Bio: Company Figures REAL ESTATE GOALS •7000 stores by 2010 •$42.2 Billion in sales •475 openings/year •$1.6 Billion in earnings •MPR Reviews  1,000 Locations/Year •480 Million prescriptions sold •170,000 Employees •4,950 stores in 45 states (+ Puerto Rico)

  3. Advanced Spatial Analysis Transformed Market Planning & Walgreen’s Ability to Make Profitable Location Decisions Brief History of Walgreens Market Strategies 2000 2006 Next Generation • Ability to Understand the Network & Optimal Location Strategy • 30 Market Managers/Analysts • Market Concentration • ESRI Enterprise GIS • 4 GIS Managers/Analysts • Enterprise GIS strategy • 3 Strategic Modeling Managers/Analysts • Advanced Modeling & Optimization • Advanced Location Strategy Segmentation Model • GIS Network Optimization Model • Optimization of Growth Vehicles in Markets • Location Intelligence integrated with Marketing, Advertising, etc. • Advanced Quantitative Methods Utilized to Derive Strategy • 9 Site Analysts, “dirt kickers” • Restricted Productivity • Best Estimation of TA • Analog Forecast • ScanUS Desktop • Forecast Sales & Dilution • Do not address optimal strategy or network effects • Very limited quantitative evaluation

  4. Culture Shock of Art & Science at Walgreens: Strategic Modeling Implementing Advanced Analytics for Strategy Evaluation: The specialist & generalist equilibrium • Generalists need specialists to simplify complex systems with modeling • Specialists need generalists to “see the system” How the specialists and generalists interact: • Location Models need to be analyzed spatially • Logic of the models need to be clearly defined & analyzed spatially • Goodness of fit is the least important attribute How did Walgreens Market Strategies change so drastically in 6 years? • Enterprise GIS, Advanced Modeling, Optimization Methods, & Development of Market Strategists • Hammering location relationships and data that supported our strengths and repeatedly proving the link to ROI. • Evolving Market Managers from Site Analysts • Defining the “generalist” & “specialist” • Spatial Modeling Techniques Applied to Strategy Evaluation • Implementation!!!

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