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Insiders Insight: Streamlined Ordering
By Louis Columbus — July 27, 2006
There is no shortage of distractions for retailers, from the initiatives and pilots around CPFR and RFID to integrating with suppliers distributed order management systems. Most retailers have the quickening pace of Wal-Mart and other mass merchandisers in the back of their minds as they manage their businesses and selectively bring technologies into their companies. The bottom line is that there has never been a more critical time for retailers to get their supply chain management systems synchronized with order capture, order management and fulfillment systems, and this s streamlining order capture across all sales channels. Retailers will achieve their biggest gains by focusing on streamlining collaboration around the transactions with suppliers.
Companies dont have to go for the big bang IT projects to get the highest returns on their customer-facing strategies in order to provide suppliers with a clear demand signal. The most forward-thinking retailers will tackle the small steps that will increase order capture accuracy, order management and fulfillment first, then selectively layer in technology as needed.
Retailers and manufacturers need to have demand visibility across all sales channels, both electronic and manual, to be able to sense and respond to demand quickly and accurately. This doesnt mean investing in a major software installation. In fact, the highest payoffs on this topic involve automating fax-based orders and eliminating re-keying of orders that come in over the Web site. For example, taking just these two channels of order capture and automating them quickly can save significant amounts of time during the rush to fulfill orders on new products.
Automate Pricing Requests
In study after study, one of the highest areas of ROI for manufacturers and retailers is the automating of how special pricing requests and pricing exceptions are handled. Again, this also is an area where even small steps can pay off. Taking away special pricing requests as just one of the many tasks assigned to a team of administrators, and making it a full-time task can increase performance by 30 percent or more, according to a study done on best practices in channel management by AMR Research.
While RFID is delivering solid gains, keep it in perspective. Its better to have all order capture strategies working well and pricing exceptions covered for fast turnaround versus experimenting with RFID pilots now. For retailers, there is the added challenge of paying for RFID initiatives with profit margins already squeezed thin. This is exacerbated by the fact that retailers are often short on IT experts. All of this adds up to the conclusion that while RFID could very well be considered a distraction to any retailers business, it is yet a critical long-term strategy for managing demand and the supply chain in the future.
Tackle Ordering Problems
These are the problems that continue to intermittently slow down deliveries and cause confusion. Now is the time to tackle these issues and get resolution, even consider getting demand signals from your channel management systems directly to suppliers so you can manage forecasting more efficiently.
Collaborate with Key Suppliers
For even the largest and most sophisticated retailers, there is a dual challenge of making collaboration and forecasting work. Throw in the fact that the majority of retailers today do not capture and regularly share POS data with suppliers and partners, and the full challenge of synchronizing with suppliers becomes apparent.
The more extensive and intelligent the strategies are around integrating data with suppliers, the higher the ROI. Integration projects however are never quick or one-and-done strategies; they take on average over 90 days to become fully functional, especially where integrations to distributed order management systems are d.
In summary, retailers steps toward isolating and tracking demand signal visibility across all channels, even the most manually based to the most automated, pays off quickly. Retailers supply chains are in definite need of demand signals as well and these signals are being delivered from RFID initiatives, POS data and the result of CPFR programs. Yet the baby steps that companies are taking to sync up their forecasts collaboratively also are generating solid ROI.
The bottom line is that retailers dont necessarily have to spend prodigiously on software where modifying existing processes first also can deliver solid ROI and results from better collaboration with supply chains.
Louis Columbus is a former senior analyst with AMR Research.
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