Retail Dude

CRM (Customer Relationship Management) is regarded as key to the success of any Retailer. Most of the retailers across the globe are investing in Customer Retention and Loyalty Building Programs. In case of a Specialty Retailer who caters a niche variety of product, these can be achieved by well designed CRM Program. But in case of Large Format Retailers like Wal-Mart, Tesco, IKEA or Big Bazaar for that matter, it will not be solely depend on CRM, though it plays an important role. Customers of such Retailers expect Best deal in comparison to others and 24X7 Availability of products. Thus Supplier Relationship Management (SRM) plays pivotal role in success of Large Format Retailers.

SRM is a process which helps Retailer in identifying there key suppliers and integrating them in there business to create a win win situation for both the parties. SRM fills the gap between suppliers and retailer’s understanding of market demand and thus create a win win situation by aligning retailer’s sales plan and supplier’s manufacturing plan together. It ensures that retailers get the best contract and suppliers get long term commitment. Moreover it eliminates the possibility of any kind of dispute between both parties by bringing them on same page in regard to all policies like returns, facing, pricing etc.

The process of SRM can be penned down as follows:

• Identification of potential suppliers based on qualification required.
• Evaluating and selecting suppliers on various parameters like product, price, capability, background, brand etc.
• Entering into agreement with selected supplier in terms of price (term of sale); return policy, ordering policy etc.
• Identifying key suppliers in different product categories based on sales volume and demand of product.
• Selected strategic suppliers will be CPFR (Collaborative Planning Forecasting and Replenishment) Vendors and will have limited access to Retailers Sales Plan so that they can align there Manufacturing Plan accordingly.
• Retailer need to regularly monitor the performance of Suppliers.

In my next post I would be discussing on CPFR in detail

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- Rajeev Damani

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The “I” is now synonymous with the retailers, having accepted the change needed in the hour to “Integrate” processes of the business with “Information” technology.  With the increase in the scale of operations of retailers and the globalization of the whole business, Indian retail could only bank upon Information technology to come to its rescue. From the point of sale to the point of supply, the seamless working can only take place with the IT bone in place. However it’s the, retailers who must make sound decisions supported by a rigorous business case that delivers quantitative benefits far greater than the costs with the multiple technologies in place right from RFID’s, touch screens, smart shopping carts to interactive consumer consoles.

Most of the retail operations in functionality are complex and highly customized to the format or the chain itself. The high degree of product complexity, supply chain dilemmas all along with the multiple touch points that retail face (manufacturing, C&F, distributors, retail outlets and the customer himself) calls for an integration which can only be process driven through systems. But in reality retailers who do not manage the IT systems effectively will find that this becomes the pain point more than the alleviation of it. IT networks effectively impacts the cost of goods sold, through better management of critical processes like inventory management, supply chain management and to an extent merchandising activity. We all agree that retail scope varies across geographies even within the same borders. The only way to address this variability will be to track, measure and implement the optimum products at the right places. We cannot imagine doing that effectively today without information systems in place.

There will also remain a need to maintain a proper data architecture since many a decisions are accumulated from past records ie the measure of a given sales scheme or a particular seasonal discount in the past years that was successful. Some of the most critical decisions based on data warehousing will be forecasting of trends. Our new mantra of customer centric retail is unfinished without a CRM database for that matter. A strong base of customers is what all retailers look for; and in fact the Govt felt the need of a “Do Not Disturb” policy for the telecom products. Effective use of such databases for service retail is essential, although having such a huge database of customers is nothing short of a goliath act.

Retail analytics is one of the emerging fields to conceptualization of the business from scratch to its improvements, mainly a field based on numbers and its dynamics. Most large chains of the world like Wal-Mart, Tesco, Sears and likes had set up back offices way back into early 2000’s just to support their sourcing activities in India and now slowly foraying into their front ends once when their system architecture is now robust enough to compete. ERP’s have now become a necessity to most retailers than just a showcase for better and effective management, since the prominent retailers now have a vertical integration of their products. Life is surely made easier even when your products are outsourced. Optimization can only be achieved when you can track real time. RFID’s the next gen technology can only lead to smarter supply chain and inventory management. Touted as the revolution, we have previously seen what a smart store connected to your kitchen can do. The only dampener which is the cost will surely see a reduction in future.

The cost of implementation of IT structure as said earlier has to prove its mettle and managed properly. The initial set up cost is certainly high, which reduces over time as we head towards a more profitable business reaping its benefits. Other challenges in the IT landscape would be to manage the lack of standards to move to a universal platform or towards highly customized solutions which escalates cost. This is a double edged sword to walk for the sector. However to talk of its intangible benefits, the knowhow of an advanced retail solution can be relevant to the retailer’s long-term strategy and competitive positioning. Some of the mentionable aspects would be the brand perception (by using cutting edge technology to stay up beat), to a more brand evangelist and heightened brand or store experience for its customers.

So to say, that IT can support the strategic decisions, the operational moves and the customer interfaces is only a pool to be dived into. Certainly the way ahead will be to re integrate the IT structure itself from the customer POS to the back end supports. We could productively see spends on the store itself being the hallmark of a customer experience and also the point of customer delight. We could see more value added services like Mobile POS and intelligent systems which identify the store loyalists in an informed world.

To keep up to the shifting consumer spending patterns and trends, IT is definitely IN.

 Cheers!

Sudip

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We all agree that supply chain is a backbone of retail business, but if retail is all about customers centricity and for the past 10 years it strived hard to change its product centric strategy to customer centric strategy and developed a face, a face that cares about customers, for whom customer is a king, then it definitely need its behind the scene player i.e. their supply chain to be customer centric. That strategic shift has weathered recent economic uncertainty, and we have seen it grow in both scope and complexity as retailers look to tackle localization and customer service that increasingly crosses channels. But this strategic shift from supply chain 1.0 to supply chain 2.0 have lots many hurdles in  its path, and one of is as usual the evergreen challenge that is getting the forecast to match demand. Apart from that due to globalization the supply chain is extended and require more resource to operate effectively, moreover the virtual stores also depend on the supply chain for their proper operations, these increases the pressure on precision in planning and execution of supply chain. The other challenges that are there on the way to shift are localization of assortment, SKU proliferation, and even customer demands for more supply chain precision – are putting new and different pressures on supply chain.

Now if we talk about solutions or about what will be new in the supply chain 2.0 than I will like to say that “the visibility” is what is a one word answer from many problems that supply chain faces today. With the help of latest technologies like RFID, intranet and real time information movement/Electronic Data Interchange (EDI), data synchronization and defined Universal Product Code (UPC), evolved and more enhanced and powerful Transport management systems (TMS) & Warehouse management systems (WMS) and other optimizer packages, the face of supply chain will definitely changed. But along with these technology enables the supply chain require to work out of their silos in collaboration with retailers.

Ultimately the customer will be satisfied with the combined efforts of both the retailers and their supply chain.

In last what I think I forgot to mention one big block in the path of supply chain 2.0 to be implemented in India is the infrastructure, so along with visibility the Indian supply chain requires good support from the infrastructure of the country.

-Prateek Katiyar

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JDA acquires  i2: Creation of a global leader in  supply chain planning and optimization market:

        JDA Software Group Inc. a leading provider of supply chain planning and execution optimization solution  and i2 Technologies, Inc. the supply chain results company, yesterday announced the signing of a definitive merger agreement for JDA Software to acquire i2 Technologies, Inc., a leading global provider of supply chain solutions, for an enterprise value of approximately $346 million in cash. The acquisition of i2 by JDA has created a global leader in the supply chain planning and optimization market.

       By combining JDA and i2, the resulting company will have significantly improved operating leverage and a strong financial position. The near-term cost synergies identified in operations, general, administrative and infrastructure resulting from this combination are expected to produce annual cost savings of approximately $20 million. As a result of the pending Merger, i2 is withdrawing its previously provided outlook for third quarter 2008.

       This acquisition will strengthened JDA’s Market Position in Retail Software Solution Space.

- Rajeev Damani

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