Globally retailers are facing a wide range of business challenges, dealing with a tough economic climate impacted by falling stock market, the credit crisis and industrial slow down. Whereas in India retailers are also struggling with some internal factors such as cost of scaling up, creating a flexible and efficient management bandwidth and converting trading profits into overall business profits. Since top line revenue growth was driven largely by opening new stores real estate prices have challenged this avenue severely and some of the large retailers are looking at acquisition strategy whereas smaller ones are shifting the focus towards bottom line to make themselves more attractive for acquisition.
A Technopak report on Indian Retail in 2005 forecasted that the period of 2006-2010 will be the period of back end consolidation and 2011 onwards Indian retail will get into business consolidation mode. I can see that the circumstances mentioned above have forced the beginning of consolidation process around six months ago. I see this as a great opportunity for the Indian retail industry to course correct its operational culture and build consumer centric strategies at this early stage of evolution. Since the overall growth opportunity offered by modern retail in India is huge I believe bringing Corporate Governance through Operational Compliance can strongly put Indian retail at a very stable and achievable growth path:
A key component for cutting operational costs is to have operational consistency across all store locations and gain efficiencies by streamlining processes. Since the time organized retailing started retailers have struggled to ensure that all stores operate the same way, using the same processes and getting the same results. This operational consistency ultimately rubs on to many aspects of business execution – operations, merchandising, finance, human resources, loss prevention, customer satisfaction, information technology, etc.
Over the last eight-to-ten years, most Indian retailers have invested in a wide range of new technologies such as POS, MMS, inventory management, space management, workforce management and other automated solutions to help improve operational productivity and efficiencies. On top of this retailers use other numerous manual methods to keep stores informed of corporate initiatives and operational strategy – telephone, email, faxes, mail bags, postal mail, paper forms, daily checklists and store visits. None of these methods have effectively solved the communications problem just because the people managing these modes are different and every one has their won style of doing it. In most cases retailers still do not know when the stores received the information and then if they actually acted upon them as directed. The result is typically more phone calls and more emails to determine if the original communications was completed. These methods just aren’t working. The reality is that retailers have an environment where multiple corporate departments are using various communications methods to gather information from the stores, without any type of governance. In many instances, one department’s request might conflict with that from another department, resulting in confusion at the store on what needs to be done at the right time.
Consistent operational compliance across all stores is now essential for retailers to streamline operational cost. Retailers must be able to monitor process compliance on a store and individual basis to identify areas of improvement for better results. I don’t think there is any possible methodology used by retailers to have an insight into the daily operations of each store to know which stores are complying with corporate operational practices. This scenario leads to the following issues:
- Mixed communications methods result in slow adoption of corporate initiatives.
- Scattered communications provide less than desired results of task completion and compliance.
- Lot of time and money is wasted following up to see if the original tasks are completed – more phone calls, more emails and lot of time wasted.
- Lot of time is wasted by store personnel chasing requests from various departments.
- There is no way to identify or track problems that stores are having with compliance.
- No way to measure compliance on which stores are completing tasks on time.
- High expenses related to compliance monitoring – travel, phone calls, faxes, etc.
- Inability to broadcast messages / alerts across all stores for issue resolution.
- Ability to identify recurring pain points across the enterprise and have the ability to fix the pain rather than provide a short term fix.
Most retailers in India have required components in the form of technology, processes and systems to deal with the above scenario but lack of execution and compliance has lead to the above situation. The challenge today is to build a culture of discipline in execution and compliance of the available resources. It will be useful to review the roles and authorities at various levels and reduce manual intervention in the system as much as possible since manual intervention is directly linked to the compliance factor.
Most of these systems and technology pieces are working in silos and most often the business data is put together manually and delivered to the decision makers. This can once raises data integrity issues and very often decisions are not based on clean data. Next step will be build a trust worthy integrated data layer across the enterprise which is stitching together the collated data on all activities across the business and not just the sales data from the POS tills at the stores. This data has to be very tightly integrated with no scope of leakage and this can be big technological challenge and success in this can provide you single view of the enterprise in most ways. This data layer will not only be the reporting source for all decision makers across the enterprise but also be used to build portal based common platform across the enterprise for all communication needs to handle messages, tasks & activities, issues tracker, compliance reporting and store dash boards. This will be more like a cockpit control for all users from a gatekeeper in the DC to CEO for all enterprise actions. This shall replace all manual communications across the enterprise over the phone, fax or paper forms.
Execution and prioritization of all business activities through platform will bring seamless execution discipline and ability to measure the compliance level. The ability to monitor store compliance increases accountability at the store level and provides a measurement tool for monitoring which stores are compliant with their tasks.
This will help retailers drive out costs by replacing multiple manual communications methods with a single online point of reference for centralized store communications. Additional costs may also be saved by reducing the number of store visits made by state and regional management. Efficiency in execution will enhance the productivity across the enterprise and reduce the operational cost dramatically. This will also allow the management at all levels to deliver a high quality work experience to store associates that is compelling, effective and more productive. This will allow store management and associates to be available and spend more of their time on the sales floor and this increased level of compliance around corporate strategy, retailers will be able to deliver a better shopping experience for the customers.
-------------------------------------------------------------
Published in Images Retail November 2008 issue
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment