Cross-Functional Collaboration: How Retailers Can Uncover Hidden Profit

By Tim Lynch

Mid-sized and large retailers can add millions of dollars to their bottom line by improving communication and collaboration among functional areas such as merchandising, marketing, loss prevention, supply chain, and regional and store operations. Although retailers have implemented numerous applications that enable improved efficiency in one functional area, these "siloed" applications don't do as well at improving efficiencies and collaboration among two or more functional areas.

A billion dollar retailer could drive a positive impact of millions of dollars by:

• Improving planogram compliance by 20 percent - it could generate $10M in additional sales
• Ensuring consistent in-store execution of marketing strategy - it could generate $50M in incremental sales
• Reducing employee turnover through better labor scheduling - it could save up to $3M
• Reducing shrink through improved loss prevention - it could save up to $5M
• Improving efficiency of managers in the field - it could save up to $0.6M, either through head count reduction or improved morale and reduced employee turnover/training costs
• Automating labor scheduling and time and attendance processes - it could save $6.5M in lost employee productivity due to inefficient processes
• Improving performance of vendor operations - it could save $900,000 in overpayments to third parties
• Improving supply chain effectiveness and reducing out of stocks - it could increase sales by $37M

The lack of a robust collaboration process across the retail enterprise has a negative impact on each functional area and ultimately ripples down to the customer. By implementing systems that break down the walls between previously isolated departments and improve visibility, streamline communication, and align work with strategy, retailers can improve profitability by increasing inventory turns, reducing employee turnover, controlling costs, and increasing sales.