business

One weekend early in 2004, a half-dozen colleagues with long experience in retail management and technology got together with the idea of creating a software product. The goal was to dramatically improve market forecasting and simplify the complex process of inventory planning to meet rapidly changing consumer demand.

It took them nearly a year to develop what is now called the "Q" platform, but the ensuing results have been spectacular.

In four years their company, Minneapolis-based Quantum Retail Technology, grew from a $420,000 gross in 2005 to $9.8 million of sales in 2009 -- with revenue growth on track in 2010 to reach well into double digits once again.

In August 2009, Inc. magazine ranked Quantum as the 11th-fastest-growing privately owned software company in the country.

It was not the first time the company had attracted attention. In July 2008, Quantum's software won the "Supply Chain Excellence" award in a European competition. Four months later, the British trade journal Retail Systems named the "Q" platform "Supply Chain Solution of the Year."

And in October 2009, Vicki Raport -- Quantum's CEO and the one who arranged that 2004 planning meeting -- was named as one of nine Entrepreneurial Winning Women in a national program sponsored by the accounting firm Ernst & Young.

What's the attraction? To answer that question, it helps to get a glimpse of the problem.

Inventory planning for large retail chains is "a very complex environment, involving tens of thousands of products in thousands of locations across the country and around the world," Raport said.

We're talking transaction data ranging from point-of-sale systems to a mountain of inventory figures that changes daily to the wave of information coming out of the growing radio frequency identification (RFID) chips that track the movement of product in the supply chain.

There are software products that assemble all that data, "but it's very difficult to translate that information into action," Raport said. That was the Quantum partners' objective as they began developing the "Q" product.

Retek roots

Members of the founding group, all of whom once worked for Minneapolis retail software company Retek Inc., offered an ideal collection of experience and talent to develop, market and sell the software.

In addition to Raport, whose background is in retail strategy and operations, the founders include Linda Whitaker, whose expertise is in applied retail science, including predictive analytics; Morgan Day, chief technical officer in charge of product development; Chris Allan, Quantum's chief strategy officer; Wyndham Albery, managing director in the United Kingdom, and Mike Hrabe, executive vice president of international sales.

The partners are spread around the world: Raport, Hrabe and Day are based at the Minneapolis headquarters; Wyndham and Allan are based in London, and Whitaker works out of her home in the Virgin Islands.

Together, the group fashioned a product designed to help retailers forecast and plan inventory needs, product by product and store by store, depending on the location, size and demographics of each outlet's market area. The system works off a lengthy list of product sales and inventory histories -- sort of a "product DNA," as Raport put it.

OK, if you want to get technical, it involves 35 "performance metrics" ranging from average demand, average sales and seasonal affects to product life-cycle patterns, shelf life and maximum sales per day. Not to mention average inventory by date, actually in stock and in transit. All of which helps retailers calculate potential consumer activity.

And there's more. All the data gathered and manipulated by the "Q" platform are applied on the basis of a retailer's goal for each product in stock: as a profit maker, a traffic driver, a loss leader or a promotion.

Add it all up and it comes down to one simple, but crucial point: The Quantum software helps retailers "track and anticipate rapidly shifting patterns of consumer behavior," Raport said.

The Quantum system has attracted only a handful of clients so far, but the list includes some sizable retailers, both in the United States and Europe. The group includes Wisconsin-based Kohl's Department Stores, California-based Guitar Centers and three large operators based in the United Kingdom: New Look, a women's fashion chain; department store chain Marks & Spencer, and, most recently, discount fashion chain Matalan.

By all accounts, it's a satisfied clientele: We don't have as many over- and under-stocks as we had in the past," Bret Hayden, Guitar Center director of business process design, said in an e-mail to Raport. "Not only does 'Q' help us identify when to buy and how much to buy, it also helps us identify how to navigate through our supply network to support seasonality, life-cycle and promotional activity."

New Look CEO Phil Wrigley put it a tad more succinctly: "Q enables us to synchronize our supply chain with the unique demands of each of our stores," he wrote.

And the result, added New Look IT and e-commerce director Adrian Thompson, is that "Q actually paid for itself in five months."

Dick Youngblood • 612-673-4439 • yblood@startribune.com