Magazine Article | January 1, 2000

Wed E-Business To Your Existing Operations

Source: Innovative Retail Technologies

Retailers are evaluating e-business solutions, but not all solutions are created equal. There are key components that you should look for in any possible solution.

Integrated Solutions For Retailers, January 2000
As the inimitable Yogi Berra used to say, "When you come to the fork in the road — take it!"

Berra's malapropism applies perfectly to many retailers facing the prospect of selling on the Web. Most retailers know they have to go online or lose market share and, possibly, their businesses. Berra's hypothetical traveler may not know if he's taken the correct fork until he's several miles down the road. Likewise, a retailer faces the prospect of rushing online, only to find it's made major miscalculations about what it's doing on the Web and how that relates to the rest of its business. Anyone — well, almost anyone — can put up an alurring Web site to attract customers and orders. But, will your Web site support the broader sales and profit goals of your company, or instead, create a logistical nightmare of unfilled orders, untracked shipments and, ultimately, unhappy customers?

A key to avoiding e-business disasters is integrating your customer Web site into a comprehensive back office solution. Rather than being an independent or isolated entity, your Web site should be part of a solution that establishes a seamless, global network of information. This allows you to make informed, far-reaching decisions with confidence. Such a system should help you to control costs, increase profits, and streamline operations. It should link your complex array of strategic business processes into a logical flow, allowing you to be extremely efficient while satisfying customer expectations.

Here are some of the aspects to look for in a solution that weds e-business to your existing retail operations:

Customer relationship management – Does the e-business solution improve your customer service levels? Does it increase sales force productivity? Does it provide reliable, consumer-focused performance measures? Land's End, for example, is using the Web to great advantage with a site that shows customers how they'll look in clothes before they buy them.

Category management – Does the e-business solution help you to develop a competitive assortment strategy and focus on core competencies? Can you carry out cross-category analyses that include the consumer, distributor, supplier, and marketplace? Does pricing analysis allow you to identify strategic pricing opportunities and test the effects of different strategies?

Buying – Does the e-business solution let you improve purchase order accuracy and optimize cash flow? Can you accurately forecast merchandise needs and monitor purchasing budgets? These are especially important given the Web's ability to create immediate demand and generate orders quickly.

Supply chain management – Does your e-business solution speed cycle times and distribution center throughput? Does it reduce costs by enabling you to partner with vendors on continuous replenishment programs – while avoiding out-of-stock occurrences? Tying supply chain data to customer order data allows customers to check the status of their orders online at any time or, better yet, allows you to send e-mails automatically to inform customers when purchases are fulfilled and shipped. Can your e-business fulfillment be integrated with existing, brick-and-mortar operations if desired? Home Depot, for example, is planning to prepackage customers' Web purchases and have them available for pickup at its existing stores. This saves the major expense of a separate distribution channel.

Channel execution – Does your e-business solution let you confirm the accuracy of sales data and improve inventory and delivery measures? Can you optimize workload-based shift planning and empower employees through powerful tools and information? That is, does the e-business solution support the continuous enhancement of basic business operations that must take place online or offline in any successful business?

E-business presents most retailers with a momentous new opportunity. But, it's an opportunity that must be embraced in the context of a retailer's overall operations and business needs. Treating the Web as an isolated phenomenon will ultimately isolate you — from your customers and profits. Integrating your Web operations into a comprehensive back office solution, on the other hand, is the best way to ensure that the fork you take on the information superhighway will indeed be the right one. [Editor's note: Tom Crawford is the senior vice president and general manager of the Consumer Sector of SAP America, Inc.]

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