11 August 2008

Far-flung multinational enterprises must communicate with each other to bridge communication and execution divides

Paula Rosenblum, Analyst Analyst Paula Rosenblum explains why multinational retailers must communicate with each other to bridge communication and execution divides.

Until the late 1980s, retailing was a very holistic business. Corporate goals and objectives were well known across the enterprise, and each department would marshal its resources to help meet those goals. Support organisations from logistics to store operations understood the essentially reactive nature of the business. The merchants, masters of product selection, were mindful of limitations in both manpower and budget constraints across those other departments. Fire drills did occur, with all departments scrambling to catch a product craze or wave. The bottom line though, was that a core and broad understanding of retail was necessary to work in the industry.

All this changed in the late 1980s and early 1990s, when the big retailers began to dominate the landscape. This new generation of mass merchandising created some unintended consequences. Internal departments within these Goliath-like entities became more and more isolated.

Today’s retailers have awakened to the realisation that the left hand quite frequently does not know what the right hand is doing. Even mid-sized retailers find themselves trapped in similar kinds of silos.

Inter-departmental communication has not been helped by the explosion of communication methods now available. It’s hard to identify core and critical messages within the morass of e-mails, mail and disparate directions received by each department.

Customers may not understand the internal dynamics of retailing, but they do know several things: the state of customer service is abysmal, out of stocks remain a common irritant, and probably most importantly, they know they have many other choices if they are dissatisfied with their retailers.

The simple reality is that retailers must find a way to service their customers more efficiently. They can only attain this when the left and right hands are aware of what the other is doing.

A new generation software technology that began as store execution management (SEM) and closed-loop task management has now been expanded to retail execution management (REM) and emerged to help bridge the divide between home offices and their far-flung store locations. The goal was to create a better and more consistent in-store experience. Results have been compelling and well documented, but the use of these applications has uncovered the need to drive similar consistency and knowledge across the rest of the retail enterprise and to vendors and other suppliers as well.

Far-flung multinational enterprises must communicate with each other to bridge communication and execution divides. Just as the mélange of e-mails, intranets, mailings and voice mails are inadequate to insure stores execute on corporate vision, they are equally inadequate to insure that the entire value chain executes on the customer’s vision, which remains finding the right product, at the right place, at the right time, and at the right price.

The subject of the extended retail industry or ERI has been floating around retail for some time. The core premise is that it takes a global village to satisfy today’s consumer. Customer-centric execution management is one step in a line of many required to keep the customer happy at a reasonable cost.

About the author
Paula Rosenblum is widely recognised as one of the top analysts in the retail industry. She is a member of the American Apparel and Footwear Association’s Supply Chain Leadership Council, and a member of the advisory board for its semi-annual Material World trade show. Paula received her MBA in 1991 from Northeastern University, with a major in management of high technology firms.

Taken from Reflexis’ whitepaper, Retail Execution Management Drives the Customer Centric Store, and originally appearing in the autumn 2008 issue of Retailspeak magazine.

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