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:
- 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.
- 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.
Joe is Vice President of Product Solutions at Software Paradigms International (SPI), an award-winning provider of technology solutions, including merchandise planning applications, mobile applications, eCommerce development and hosting and integration services, to retailers for more than 20 years.
Joe is a 34-year veteran of the retail industry with hands-on experience in marketing, merchandising, inventory management and business development at multichannel retail companies including Lands’ End, LifeSketch.com, Nordstrom.com and Duluth Trading Company. At SPI, Joe uses his experience to help customers and prospects understand how to improve sales and profits through applying industry best practices in merchandise planning and inventory management systems and processes.