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Guest Comment: Why connected retailers are making the switch to ERP

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It’s true to say that today’s mobile and digitally empowered consumers are increasingly calling the retail shots. With more information, more options, and greater expectations than ever before, they want a highly personalised and value-driven retail experience that delivers consistency of service, ease of interaction and real-time information – regardless of which or how many channels they engage with.

Alongside being open for business whenever and wherever customers want to shop, earning a customer’s business and loyalty increasingly depends on knowing your customer’s individual preferences – when they want to buy, what they want to buy, and what price they are willing to pay.

But that’s just the start. Maximising retail performance is also dependent on the ability to fine tune the balance between choice, product availability, and inventory cost – especially in fast-moving arenas like fashion retailing. And when it comes to delivering seamless cross-channel customer order management – order online and collect in-store or arrange for delivery, order in-store for home delivery, and so forth – or maximising inventory management across multiple channels, then information and timing is all.

Achieving success in today’shighly connected multi-channel retail world requires tremendous agility, enabled by a dynamic operating environment. But to ‘join up the operational dots’and become truly integrated is a serious technical challenge formany retailers in terms of process and data flows– especially when it comes to integrating the ‘spaghetti soup’ of systems controlling individual channel and operational functions.

The integration challenge

It’s a challenge that’s endemic across the retail industry. In one recent analyst report as many as 84% of respondents acknowledged they still do not have good integration or connectivity in place between their stores, HQ, and supply chain – while Martec International’s 2010 retail study reveals 55% of retailers still do not have an integrated multichannel operation.

To resolve the integration challenge retailers are taking a fresh look at enterprise resource planning (ERP) as a means to gaining that all important ‘single version of the truth’ that comes with the achievement of gaining central control of critical operations and seamless connectivity with consumers and suppliers.

Until now, however, ERP has had a mixed reception in the retail sector. When the first commercial ERP software packages exploded onto the market in the 1990s - promising to integrate all data and related organisational processes into a unified single information system - ERP acquired a reputation as an unwieldy monolith that was unsuitable for retail, being inflexible, costly to implement and complex to operate.

A new generation of ERP solutions

But retailers have been missing out on a critical IT opportunity because ERP has changed. Today’s next generation ‘out of the box’ retail-specific ERP solutions have evolved to become impressively scalable end-to-end retail platforms that deliverall the dynamic operational agility retailers need when it comes to generating competitive advantage.

Scalable, easy to deploy, and highly responsive – giving retailers the ability to adapt processes on the fly in response to fast-changing business drivers – today’s ERP solutions, such as our own Microsoft Dynamics AX for Retail now feature easy-to-use and intuitive tools that can be accessed across the retail operation from the shop floor upwards. What’s more, Microsoft Dynamics AX for Retail has added retail functionality and deliversthat all important data unity – by integrating POS, store management, merchandising and financials – thatis essential for making informed decisions around pricing, merchandising, forecasting, and inventory optimisation. This type of solution provides what retailers have been looking for, out of the box and no more spaghetti!

In this ERP connected data world, retailers are able to put the spotlight on key initiatives designed to lower costs, improve operational efficiency or drive customer frequency, value and loyalty. What’s more, they can create connections with ease - across the supply chain or directly with customers across multiple channels - without having to worry about the IT infrastructure.

And with the ability to tap into the huge reserves of sales data generated across all channels – such as customer demographics, sales by season, colour preferences – retailers can better align products and services and even loyalty schemes to customer preferences while respondingfaster to changing demands. What’s more, ERP makes it easy to review issues around service, price and availability and can be frequently and easily targeted to customer preferences.

Ultimately, however, ERP delivers the deep integration of the online or on-premise retail shop front to merchandising, supply chain and financial processes across the retail organisation. Making it possible for retailers to gain a 360 degree visibility of the consumer across every channel and take customer centricity to a new level.

Dilip Popat is global industry director, retail and distribution, for Microsoft Business Solutions
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