Retailing in India is an evolving science, and is getting more complex by the day. What does one mean by organised retail? How can selling evolve into retailing science? How can a one-shop retailer scale up to systematically grow mainfold? Or a multiple outlet retailer optimise operational efficiencsy? Hemani Kashikar finds out
The challenge called retailing
Retailing today is a fast-paced world that throws up challenges that can be exciting if one is prepared to meet them and look for solutions. The same challenges can be daunting and deathtraps if the retailer refuses to acknowledge and understand them.
Today, the consumers are more powerful than ever. Retail landscape is expanding and the new customer is demanding more accurate information and in real time. They want alternative payment terms and different delivery options. The consumer is continually learning on the web and they come into the stores armed with all that information. For a retailer who has invested time and effort to update himself and the business, this is the consumer who will help him grow his business to the next level because this consumer:
- Has the money to buy – increasing double income households, plastic money
- Is not wasting time when he comes into the store with the knowledge of what exactly he wants
- Is vociferous with his feedback and that helps the retailer raise the bar on his own performance and the product
- Is more accepting of the innovations (read internet friendly) and is fashion savvy
This emerging consumer profile directly translates into the following retail business essentials:
- The trend cycles are becoming shorter necessitating speed to market more than ever before in the business of fashion.
- Accurate forecasting with shorter database – although this may sound like an oxymoron, this is the way forward. The only way retailers will be able to do this is if they do it continually and make Business Intelligence integral part of their decision-making process.
- Reduced lead-times – this would support speed to market.
- Optimised inventories – improved control across the supply chain
- Investment in a good Customer Relationship Management system
Retail sector has continually evolved to meet the increasing consumer demands and the dynamic market conditions.
Let’s look at a medium-sized business and its requirements. As soon as a sale is made, point of sales data is generated along with customer data. The retailer captures this data not only to manage the finances but also to understand the trends of his sales and customer profile. If the retailer has multiple outlets, data capturing becomes tougher and more important. Here, the retailer requires a POS software that can enable reliable data capturing.
This data can then be integrated in the backend with the retailer’s-
- warehouse data – this will automate inventory management and replenishment and reduce the time required to do this manually
- finance – this will automate purchase order, invoicing and other related verticals creating transparency within the system and reducing manual time.
- Logistics – this will help track the order movement and reduce lead time.
This transactional data (from inventory, finance and logistics) can then be analysed to understand the trends of the particular business. A SWOT (strengths, weaknesses, opportunities, threats) will reveal how the business needs to align itself to the market. It will also lead to planning and scheduling the processes (manufacturing/sourcing) and will help strategic business decisions.
Investing in technology is no more optional if a retailer wants to grow. Often, it appears daunting, however, it’s fairly logical and in the long run a very prudent investment. Essential hardware and software tools of the retailing industry can be divided into 3 broad categories:
- Customer Interfacing Systems
- Advanced Planning and Scheduling Systems
- Strategic Decision Support Systems
Customer Interfacing Systems include
1.1 Point of sale systems: These use scanners and bar coding to identify an item, calculate the cost with reference to the database and generate bill. The payment options, specially credit card readers are a part of this system. There are many advances on the way and it pays to keep abreast of innovations to take them on when the time is right for you.
1.2 E-commerce and digital communication: Virtual shopping is a large part of the emerging retail scenario. More and more customers are shopping without visiting the stores. An attractive and safe e-commerce interface ensures customer loyalty to your brand and retail outlet. Your websites and other digital communication you may make through partnering websites is an important link with your customer.
1.3 Enterprise Resource Planning(ERP) is not a direct customer interfacing system, nevertheless it supports customer interfacing by integrating retail functions – right from warehousing to distribution, front and back office systems and merchandising. ERP gives an improved control over the entire supply chain helping the retailer reduce costs and save time, manage the inventory better to avoid stock out and hence service his customer better.
ERP is an integrated computer-based system used to manage internal and external resources including tangible assets, financial resources, materials, and human resources. It is a software architecture whose purpose is to facilitate the flow of information between all business functions inside the boundaries of the organisation and manage the connections to outside stakeholders. Built on a centralised database and normally utilising a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise wide system environment.
An internet research reveals the following as the top ERP solution providers today
a. Microsoft: The company offers several solutions in Enterprise Resource Planning and Business Management. Although it is one of the leaders, Microsoft solutions are known to better suit the requirements of small and medium enterprises. The company has a large market share and is very local vendor friendly. The support is good world over. Microsoft offers the following solutions:
Microsoft Dynamics AX 2009
Microsoft Dynamics AX 2009 is a comprehensive business management solution, also called ERP-solution, for midsize and larger organizations that works like and with familiar Microsoft software. Microsoft Dynamics AX is built to make it easy to do business across locations and countries, by consolidating and standardizing processes, helping to improve productivity, providing visibility across the organisation, and helping to simplify compliance.
Microsoft Dynamics GP
Microsoft Dynamics GP has proven itself as a flexible, powerful business management solution. But despite its long track record, it still sets the standard for innovation, with powerful tools for creating insight and efficiency across your business.
Microsoft Dynamics GP has been designed to meet the challenges faced by midsize businesses. Everything you need — your operating system, database, personal productivity tools, and e-mail — all work together with Microsoft Dynamics GP to help lower implementation and long-term ownership costs while increasing business productivity. Microsoft Dynamics GP frees you to harness the power and flexibility of an award-winning business management solution.
Microsoft ERP Navision Software
Since 1984, Microsoft Dynamics NAV (formerly called Navision) has established itself as a choice for mid-sized organizations looking for a complete ERP solution that is fast to implement, easy to configure, and simple to use.
Microsoft Dynamics NAV provides companies and people with industry specific functionality that’s relevant to the local needs of their regions of operation, even for the most highly specialised industries and organisations. It is easy to use and offers rapid adaptability and simplified customisation enabling companies to easily add functionality, custom applications and online business capabilities. With close visual and functional ties to Microsoft Windows Vista and Microsoft Office, it’s easy to learn, simple to use, and quick to implement. With integrated financial, manufacturing, supply chain management, sales and marketing, project management, human resources, and services management information from across the organization stored in a centralized database, people can work quickly and effectively.
Microsoft Dynamics SL
Project-driven organisations face many challenges when managing clients, people, projects, and profitability. Microsoft Dynamics SL is designed to meet the unique needs of project-driven businesses. With powerful solutions for professional services, operations, field services, and construction management, you can be confident that projects are estimated correctly, completed on time, and meet your customers’ requirements. If your business needs accurate forecasting or real-time status reports about resource usage, project costs, or profitability of individual projects or customers, Microsoft Dynamics SL can provide the information you need — when you need it.
Here’s how Microsoft Dynamics SL can help improve business insight:
- Analysing all of the costs of a project or product line to determine whether a project is on budget or whether a product line is profitable.
- Monitoring critical business processes or operations on a daily, hourly, or real-time basis
- Creating web-based displays of key performance indicators for your company, your team, or individual staff members
- Providing tailored views of order status, production schedules, or supply needs for customers, partners, and suppliers
b. Oracle – Oracle E-Business Suite is a comprehensive suite of integrated, global business applications. In 2005, Oracle acquired Peoplesoft, bringing to its customers the best features of the two products.
Within the overall rubric of Oracle Applications, Oracle Corporation’s E-Business Suite (“EB-Suite” or “EBS”) consists of a collection of enterprise resource planning (ERP), customer relationship management (CRM), and supply-chain management (SCM) computer applications either developed by or acquired by Oracle. The software utilises Oracle’s core Oracle relational database management system technology. The E-Business Suite contains several product lines, including:
- Oracle CRM (Siebel)
- Oracle Financials (Siebel Analytics)
- Oracle HRMS (PeopleSoft)
- Oracle Mobile Supply chain Applications
- Order Management
- Oracle Project Portfolio Management
- Oracle Quotes
- Oracle Transportation Management
- Oracle Warehouse Management Systems
Each product comprises several modules, each separately licensed. (source:oracle.com)
c. SAP ERP MySAP ERP is a comprehensive solution and the application is transparent. Its strength lies in its easy fit to standard processes. SAP ERP, however, is a large business solution and the market opinion is that the application is difficult to customise beyond a certain point.
SAP ERP, an application included in SAP Business Suite software, delivers these solutions:
- SAP ERP Financials
- SAP ERP Human Capital Management
- SAP ERP Operations
- SAP ERP Corporate Services
1.4 A Customer Relationship Management (CRM) system supports the retailer with data warehousing and mining to understand and anticipate his customer needs and service his customer better. It is not always possible to find a CRM solution that meets your business needs. However, you can find a vendor who can customise a solution to service your business requirements.
When choosing a provider, check for the following:
- Can the application be customised for the number of users you want
- Is the backend database strong and will it store data in a single secured location that can be viewed easily.
- Check for the solution readiness on – improving marketing strategies, attracting fresh customers and generating more business from existing customers.
- Can the data be viewed on the internet on demand
- Is the application user-friendly and can it be used to contact customers without launching other email programs
- Is the application compatible or at least customisable to interact with the existing database.
Most ERP providers offer CRM solutions. There are several freewares available as well, that can be customised at a small cost to meet your requirements. Most used solutions in India today are SugarCRM, openCRX, vtiger and salesforce.
Advanced Planning and Scheduling Systems (APS)
APS is a tool that uses data from ERP and plans and schedules operations. Basically, APS envisages several ‘what-is’ situations keeping the priorities in mind and helps organisations optimise processes. The tool realises the bottlenecks in advance, evaluates alternatives, thus, reduces costs and improves profits. APS also supports strategic decision making in supply chain design. It is a tool used for strategic, tactical as well as operational planning.
Thus APS is:
- A decision support tool for managing throughput, inventory and order/demand management
- A modelling technology that enables the supply chain planning process by:
a. Modelling ‘what if’ scenarios to solve problems
b. Incorporating resource and capacity constraints
c. Optimising plans and schedules around those constraints
Most used APS tools in the market today are nMetric, Advanced Process Combinatorics, Fast React Systems Ltd, i2, NETRONIC, SAP, Taylor Scheduling Software and there are several freeware too.
Strategic Decision Support Systems
Several decisions support the business without being figured into planning or execution. These strategic decisions like ‘store site location, size and floor space’ and ‘visual merchandising’ are no more dependent on gut instincts or one individual’s experience in the filed. Technology now supports these decisions as well. The SPACEMAN Store Suit from AC Neilsen and ModaCAD are example of products helping in modelling a retail store design.
Choosing the best solution for your business
Even if you think that computers and technology is something that young people deal with, it will be worth your time and money to sit down and understand the solutions being offered because you know your business best. Technology is not a technical decision, it is a business decision that you have to make. This task cannot to delegated to a young executive in the company, it needs complete clarity on business processes and its requirements in each vertical.
When evaluating and understanding a solution, follow these basic guidelines
- Map your core business carefully and list your priorities.
- Depending on the investment budget and your priorities, decide whether you want a high-end POS retail system only or do you want to integrate it with the backend right away. Build a list of features and prioritise.
- Solutions don’t map to your specific business 100 percent. Choose a solution that is closest to your requirements and then have it customised. Remember that this is an ongoing process and will keep evolving.
- One size does not fit all. Single store retailer needs will be very different from a multi-store retailer.
- Focus on ease of use and training needs.
- Remember to negotiate on upgrade and support, both cost and are important.
- Lastly, evaluate vendor viability. Don’t buy a cheap solution from a vendor who doesn’t have a viable or sustainable business. You are getting into a long-term relation and you will need the vendor support.
With support from GINESYS, an IT solution provider specialising in retail and manufacturing business practices and solutions.