ASK THE EXPERTS
ORDER MANAGEMENT: THE RETURN OF ERP?
Retail IT expert Brian Hume examines the disruptive forces shaping retail and more specifically, the complex factors driving retailers back towards enterprise resource planning
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At a recent conference a keynote speaker said that the drive to simplification is one of the disruptive
forces shaping retail at the present time,” said Hume, who is managing director of retail technology analyst, consulting and training firm Martec International. “I don’t know about you, but in my world everything is becoming more complicated, albeit for good reasons.” Hume takes order management as an example. “Until the advent of the online channel, retailers never needed order management systems, now they can’t operate without them unless they are destined to remain a brick-and-mortar only business,” he explained. Hume noted that today consumers can generate
orders directly online, through an agent via a call centre, from a mobile device on the move or from a kiosk in a store or web café. “Once it was easy to know how your orders came
in,” he said. “Now it is difficult to distinguish between orders placed on a mobile device from a consumer sat in their lounge at home verses orders placed while mobile. This is becoming more important to understand as the growth in use of mobiles continues.” Fulfilment of those orders used to be simple too,
according to Hume. “They were delivered to your home. Now there is a wide variety of options. The goods can be despatched straight to the customer’s home or delivered to a store for collection by the consumer. If it’s a large or difficult to handle product like furniture or major electricals, the order may be routed to the supplier to deliver directly.” He highlighted that, if the store has inventory,
‘click & collect’ orders may be serviced by the store’s own stock; though today many retailers ship the order from the warehouse to the store in case the inventory records aren’t accurate. “Lack of accurate inventory records is a major
challenge for ‘click & collect’ or ‘reserve & collect’ processes. In some cases, retailers add complexity by having rules that say if the store has three in stock, say, service it from store inventory. If the store has
16 Autumn 2014
The “trick” is to hide the complexity from the consumer and keep it under the hood
less than three, pick and ship it to be safe and request a count on an item that’s too low and on hand to be safe. As you can see, the range of options is now vastly more complex and most providers of order management software have a challenge to enhance their products to cater for all this at the speed that retailers are adopting some of these options.” Hume warns this could be mind boggling for
the consumer too and says the ‘trick’ is to hide the complexity from the consumer and keep it under the hood. “And the complexity keeps growing. Store returns are increasing as online grows and some orders are being returned to stores for products that store doesn’t carry. “If you operate a dedicated fleet, the store can
return orders to its parent warehouse for re-stocking. If not, the store often puts the goods in its stockroom and waits until a sale to receive a markdown and put the goods on a clearance fixture. “Now we have a potentially better option. When
the company takes a consumer order for an item that is in the store awaiting a markdown, instead of fulfilling the order from warehouse inventory that particular one can be fulfilled by the store that has the item in the back.” Hume said the store has to incur some cost to
wrap the package and get it to the post office, but that this is often a lot cheaper than the 40% markdown the item would get in the next sale. “So profitability improves. Hence supporting the
complexity is a good thing. Providing it in a way that hides it from the consumer is the primary challenge and easing the burden for the systems integrator that has to seamlessly join the order management application with the merchandise management and accounting modules is another.” “In the run up to Y2K the trend was to adopt
enterprise resource planning (ERP). Then after Y2K it went back to best-of-breed in many instances. Now the drive is to simplification and keeping the complexity under the hood is one, though not the only factor pushing retailers back to ERP again.”
www.retailtechnology.co.uk
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