The manufacturer and retailer is upgrading its inventory management and supply chain systems to prepare for a global network of e-commerce sites.
Putting all the pieces together in chainwide store plans
In theory, it should be simple. In an effort to differentiate its stores from the ever-more intense competition, a retail chain`s headquarters draws up plans for unique store promotions, then distributes bundles of displays and instructions in guidebooks and loose-leaf binders to stores with details on displays, pricing and schedules. The goal: consistent promotions across the chain carried out fast enough to push sales up but efficiently enough to keep costs down.
But the reality can be far different. Display materials and promotional instructions get delayed or lost, store employees and headquarters exchange messages that go unrecorded and may get misconstrued, promotions wind up being late for or inconsistent with marketing campaigns. So chances are a store`s promotions don`t coincide with corporate marketing campaigns, putting a crimp in the expected sales-to-costs ratio, as sales opportunities are missed and extra costs are incurred through poorly planned staffing.
Managing tasks directed from headquarters can require executing 20 or 30 interrelated tasks to carry out a single planned promotion, such as taking down old displays, moving products to different shelves, deploying new display materials and reading a training manual. "A store might have to have a whole new product re-set based on a single promotion," says Rob Garf, retail industry analyst with AMR Research Inc. "But headquarters has no visibility into what`s actually happening in the store."
It doesn`t help that stores may have directions coming from multiple corporate departments, leaving store and district managers struggling to keep up with the individual parts of a broad corporate strategy, experts say. "Stores are overwhelmed and confused," Garf says, adding that the average shopper will abandon a retailer for a competitor after an average of 2.5 negative shopping experiences, such as out-of-stock products or unhelpful store associates.
Moreover, without a central view of store activity, senior management at headquarters is unable to step in and regulate the flow of tasks required of stores and match them to adequate staffing levels. "Headquarters not only has no visibility into what is happening in stores, but doesn`t know all the tasks each corporate department is asking stores to do," Garf says.
But a growing number of retailers is better controlling store operations through a new breed of web-based task management systems that provide several benefits: the systems provide a central and single means of distributing instructions to stores, they provide a single source of information for store personnel, and they give headquarters the visibility it needs to monitor and confirm how assigned tasks are being carried out.
Borders Group Inc., one of the early users of the technology, is boosting sales from in-store customers greeted by employees who, thanks to a web-based task management system, have more time to serve shoppers, says William M. Edwards, director of store operations.
The technology is still in its early stages of deployment among retailers, but recent developments are making it more appealing, experts say. Over the past year, for example, headquarters-to-store management technology has started to offer a wider range of integrated services that tie task management to workforce management. "It`s a hot market," says Paula Rosenblum, director of retail research for Aberdeen Group Inc.
Adding labor management
The leading providers of integrated task management systems are Reflexis Systems Inc. and Store Perform Technologies Inc., each of which has several retailers using the technology. Reflexis counts among its retail clients Allied Domecq PLC, the parent company of Dunkin` Donuts and Baskin-Robbins; The Pep Boys - Manny, Moe & Jack; Target Corp.; and the U.K.`s Marks & Spencer. StorePerform`s retail clients include Sears, Roebuck and Co., Menard Inc., Albertson`s Inc., and Best Buy Co. Inc.
Other vendors, notably BlueCube Software Inc. and Workbrain Inc., are also entering the market, though with less ambitious offerings, analysts say. BlueCube introduced its Workforce Management application suite in January. "Our task management integrates with labor scheduling, offering the ability to forecast labor scheduling appropriate for a task," says Tom List, vice president of marketing. He says the system also provides task confirmation reports for senior management.
The combination is a step forward for the technology, Garf says. "The most significant evolution of task management initiatives over the past eight months has been the convergence with workforce management," he says. "Retailers are using the granular task information, combined with understanding how long it takes to accomplish certain tasks based on labor standards, to fuel labor forecasting systems. This enables more accurate forecasting of demand by balancing both customer service priorities and home-office driven mandates."
The ability to deploy these systems over the web is also helping to make them financially appealing, because that makes it possible to coordinate a chainwide task and workforce management system without expensive infrastructure costs, experts say.
In a study conducted in September 2004 of how retailers are working to improve in-store operations and customer shopping experiences, "The Empowered Store Benchmark Report," Aberdeen found that a large majority of retailers, or 81%, cited their biggest challenge as creating differentiated service offerings cost-effectively, and nearly the same percentage, 78%, said the best response to that challenge was through new web-based task management systems that supported employee training and monitoring. "They felt this was critical to creating differentiated service offerings, consistency in execution across broad geographic areas and doing it all in a cost-effective way," Rosenblum says. "The key is zero deployment of new infrastructure at the store level; that`s a big deal."
The technology is still in early stages of deployment and success, however. The Aberdeen study, based on a survey of 100 retailers in July and August 2004, found that 61% of respondents had been focused on improving in-store operations for more than a year. It found that 51% had yet to improve in-store operations, but it noted that 71% of best-in-class retailers found that these efforts had contributed to their improved financial performance.
Aberdeen warns in the study that retailers who delay implementing improvements to in-store operations will fall behind competitively. "The 9% of respondents who will wait at least a year to work in this area will find themselves at a distinct disadvantage going forward," Aberdeen says.