1. Retail Merchandise Processing and Related Systems
Where Is The Integration?
Retailers have made significant progress during the past two decades in going
from largely paper systems closer to a paperless environment. Merchandise
ordering, merchandise information, planning & allocation, distribution
processing, routing, store receiving, base files, vendor management, a/p systems,
and in-store inventory systems have all been automated across most retailing
sectors. Moreover, the timeliness and availability of information has improved
ten fold in the past two decades as retailers across the country have demanded to
quickly analyze and review business performance. Why then, is the work of
buying, vendor communications, distribution & logistics, store merchandise
processing, advertising, and other activities so labor intensive and the system so
disparate?
The answer lies in the design…not simply the design of single modules but in the
design of a fully functional, complete and fully integrated merchandise
processing and related systems. As retailers have rushed to answer the question,
“Why can’t we have what I saw at retailer “x” last week” or to placate various
functional heads who have demanded more from their IT department, they have
been remiss in looking at their systems strategically and holistically. Just as
retailers have a tendency to make operational changes and to undertake new
operational initiatives without strategic evaluation of the whole operating model,
so do they have a tendency to not look at strategic design and integration as
something that can eliminate thousands of man-hours weekly and dramatically
improve executive decision making capabilities. In an effort for quick and less
costly fixes, retailers have often selected ready-made software solutions. These
solutions were designed for a specific, and often discrete, purpose resulting in a
lack of integration between the various package solutions.
Systems integration also encompasses the integration of static or dynamic
activities that require human intervention as well as full integration of business
processes and technology. Examples requiring intervention often include, at
least some, forecasting, planning, allocations, tracking, advertising, vendor
communication, price change initiation, stock balancing, a/p disputes, several in-
store activities, freight management, claims management, special orders, reserve
stock management, performance management, scheduling to merchandise based
activities, and reporting. To further illustrate the point, do we typically know
real-time if an ad is in copy, layout, production, how long in each work-group,
year-to-date ad performance for their area, automated text & graphical
dissemination to appropriate areas and automated timing of ad and merchandise
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2. release from vendor? On the other hand, do they call, walk over, e-mail
consistently, or use some other type of labor-intensive means? Are retail stores
using labor- intensive operations for price-changes, damages, scheduling,
receiving, special orders, ordering, stock balancing, signing, etc. because of a lack
of a coherent systems strategy?
Real productivity improvements will not only come from efficient processes but
also from “efficiently integrated systems” or EIS for short. Just as inefficient
operations cannot serve as a basis for systems design, technology should not
dictate our business requirements, certainly not our integration requirements.
Operating environments are littered with examples of productivity issues
resulting from lack of integration. Systems integration can improve productivity
by 20% to 30% in some instances. The savings often becomes more dramatic
with enhancements to executives time.
The 8 major steps to complete systems integration are clear, given a coherent and
concise business strategy and operating model:
• Articulate the systems integration objectives
• Document the current process environments and complete a gap analysis
• Define key strategic systems integration opportunities aligned with the
business strategy
• Develop the integration model
• Prepare the business case
• Document key functional requirements around the cornerstones of the
operating model (people, process, organization, customer service,
strategy, technology and performance management)
• Execute and test
• Refine and improve
Perhaps the most important aspect of integration development is in building the
right team. Team members must include members of Senior Management, who
have perspective on corporate strategy and a vision for short and long-term
improvement in shareholder value; members from Information Technology,
who understand integration requirements from a functional and technical
perspective; members of functional departments, that has a stake in improving
quality of life and lessening frustration resulting from poor integration.
Furthermore, these team members should come from the top 15% of the
organizations high performance list which sends a clear message that the
systems integration effort has top priority and helps ensure success in the
process.
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3. The systems integration team must be a dynamic entity…while team members
may change over time, the team itself is on-going and committed to articulated
business objectives. Moreover, the team must work closely with industrial
engineering to be effective. Integrating systems often requires close study and
analysis of business process and business dynamics. To simply integrate systems
without a change to the business process results in undesirable performance and
often leads to “throwing the baby out with the bath water”.
Buying another package based on the “flavor of the month” mentality may
reduce costs in the short-term but will not, in the long-term, reduce the business
impact resulting from years of discrete implementation and complacency with
regard to integration activities. Cross functional integration teamwork serves to
enhance relationships between departments developing improved alignment
with the retailers strategic objectives and core business processes. Moreover, it
develops a better executive as they gain additional insight and begin thinking,
“out-of-the-box” on issues effecting more than their area of responsibility.
The GARR Consulting Group has the retail, project management, and industrial
engineering support to assist your team with the task of systems integration. For
additional information, please contact Pat Jones at 256-682-3510.
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