Why Planning Systems Must Be Priority for Retailers

It’s no surprise to learn that retailers are in a rapid investment period in terms of IT systems. Historically slow to invest in technology, retailers are now playing catchup in an arena that punishes slow-movers. A retail CIO is faced with the daunting challenge of solving a myriad of complex issues fast, including:

• delivering the CRM and order management capabilities to support quality omnichannel customer engagement;
• providing a first-class e-commerce experience that grows profitable sales, again, within a fully integrated omnichannel customer experience;
• solving the complex inventory challenges related to multichannel and omnichannel sales and product returns;
• improving efficiencies throughout the organization; and
• satisfying the competing budget and resource requests from all the stakeholders in the organization.

It’s an overwhelming, elephant-size situation for most retailers.

As one of my former bosses used to say, “The only way to eat an elephant is one bite at a time." In other words, retailers only have the capacity to handle a finite amount of work at any one time, therefore it’s important to prioritize and get started.

Perhaps not surprisingly, I propose that replacement of obsolete planning systems should be at, or near, the top of the priority list. I adhere to the message from Kaitlyn McAvoy of Spend Matters Network in her November 2015 article, Omnichannel Retailers Risk Survival Without Replacing Obsolete Planning Systems.

While virtually every system in a retail organization can be viewed as the top priority, I advocate for planning systems at the top for two reasons:

1. Size of return on investment: Product inventory is a retailer’s largest investment and, as a result, minor gains in quality of merchandise and inventory planning deliver significant gains in sales, gross margin and profits. No other area in the business can deliver a bigger or more reliable financial return.
2. Immediacy of ROI realization: While other competing IT projects introduce new technologies, requiring significant deployment time frames and learning curves, planning systems are less complex and therefore easier and faster to implement. A common implementation calendar for planning tools is six months, allowing the retailer to achieve a 12-month ROI.

The combination of the two makes a compelling case for putting planning systems at the top of your priority list — taking the first bite out of the elephant — and gaining sizeable, near-term ROI as you take on the next IT project.