3 Things to Consider for Omnichannel Success
IT doesn’t always speak the same language as the omnichannel team. As the two departments continue to work more closely together, there are three critical areas any retail executive must understand for more seamless, efficient and productive project management with IT.
Historically, enabling a consistent customer experience across channels, enabling customers to buy and return what they want, when they want with the processes completely streamlined and error free, has proven difficult. While it's difficult to say when we will realize the “omnichannel dream,” brands are under no less pressure to push the strategy forward — i.e., building the back-end infrastructure in preparation to deliver on the omnichannel promise. Here’s a look at three critical pieces and coinciding IT basics to help guide you in your quest to work hand-in-hand with IT to get the job done.
1. Plan for the peak. For most retailers, the first step on the journey to omnichannel retailing was invested significantly in e-commerce sites and advanced search technology to ensure consumers find the products they want within their online stores. Additionally, companies developed mobile sites and apps to keep pace with consumer demands.
However, opening these multiple storefronts has caused issue with website response times. In turn, this has led to high rates of cart abandonment and even bigger problems during high traffic periods like Thanksgiving and Christmas. Volumes on these days caused well-documented issues, resulting in websites being unavailable for significant amounts of time. Strategies have emerged to assist here — e.g., adding additional e-commerce hardware to deal with peak traffic, implementing customer access queuing systems, taking the radical step of upgrading the entire e-commerce platform. However, there's often a high cost and risk associated with each of these.
A low-risk and low-cost approach is to consider the application of in-memory technology. This can be implemented retrospectively in order to upscale the platform to deal with the largest demand peaks. With this, frequently required information (e.g., product catalog, current inventory) can be loaded into memory in order move the data closer to where it's being used. The use of in-memory technology is a low-risk, cost-effective way to reduce basket abandonment while ensuring preparedness for peak trading days.
2. Maximize inventory productivity. After their employees and physical and electronic stores, inventory is arguably the most valuable asset a retailer has. Previously, in a store-only retail world, if a product wasn't on the store shelf, the retailer missed the opportunity to sell the product. Now, in the new world of omnichannel, companies must focus on the product being available at the fulfillment location most convenient to the customer, be that store or omnichannel fulfillment center.
Retailers must get maximum return from every asset, and inventory is no exception. To do this, retailers need to understand what inventory they have — every product in every location, right now. In addition, they need to give online customers the ability to understand in-store inventory. This level of visibility enables ad hoc redeployment of inventory between channels to take advantage of sales opportunities as they arise.
Inventory data exists in multiple systems across the enterprise — warehouse management, store inventory management, ERP and legacy systems. In addition, there are forms of virtual inventory owned by suppliers to consider. Tackling the challenge of inventory productivity requires technology investment. This involves connecting these multiple sources of inventory data in real time and creating a real-time inventory picture considering incoming inventory, movement and sales across the enterprise.
3. Transition to the omnichannel world. In order to compete, retailers are increasingly looking to omnichannel initiatives. Pure-play online retailers have highly streamlined processes which place additional sales and margin pressure on existing retailers.
To successfully implement an e-commerce program, retailers’ supply chain networks, store networks and individual systems must be joined together form an "orchestra" with which the retailer can play an omnichannel tune. If the retailer fails to harmoniously bring these systems together, it can result in margin erosion due to the high level of human interaction needed to fulfill omnichannel orders.
The key to streamlining this process is automating as much as possible. Doing this seamlessly requires key elements (e.g., clear process design, omnichannel processes) are codified in such a way that they can be applied systematically and adapted in the future. It also requires process orchestration — i.e., the ability to execute omnichannel processes automatically and control the interactions between the different systems involved.
While we may not be able to define exactly how far away the "omnichannel dream" is, there are certain key points on the journey that all retailers must consider. These points, or milestones, are essential in order to enable profitable growth of an omnichannel business.
Ensuring you can deal with peak online demand minimizes the impact of cart abandonment while ensuring continued sales during peak trading periods. Inventory visibility across the business and between channels is essential to enable dynamic redeployment and give consumers the visibility they need. Finally, orchestrating all the assets of a company to ensure delivery of the omnichannel promise is a significant undertaking. This requires connectivity and alignment across the host of systems and business functions needed to deliver against that promise.
Oliver Guy is the retail industry director at Software AG, a provider of enterprise management software.
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Oliver Guy is the global industry director, retail at Software AG, specializing in retail digital transformation and omnichannel technology strategy.
Oliver advises retailers across the globe on their technology strategy and decisions. With more than 20 years focused in technology, Oliver has worked with major names in global retail helping them improve their business through the use of innovative technology. Prior to joining Software AG, Oliver was part of the European Management team at Oracle Retail, his team being responsible for Retail focused Solution Consulting across Europe. Oliver started his career in technology implementing Supply Chain Planning and Optimisation solutions for customers across multiple industries in both Europe and Asia Pacific with Manugistics (JDA).