Digital transformation in retail

Last month, Target announced its latest figures that showed a remarkable turnaround from the same time the year before. The company said that its digital…

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Robin Gellerman

April 23, 20189 minute read

Last month, Target announced its latest figures that showed a remarkable turnaround from the same time the year before. The company said that its digital investment was a big part of this success. Digital transformation can deliver incredible results but some organizations can be blinded by the potential of digital technologies and miss the important point – the transformation of their business. I’d thought I’d use a few real-world examples to show how focusing on the business process and customer need can lead to real business impact – even if it isn’t based on the latest shiny new digital technology.

We live in a digital world and we all love it. We might complain that we’re a slave to our phone but we still look at it every few minutes. Even Amazon has been taken aback by how much people love Alexa, its voice-enabled personal assistant. We can’t get enough of our Apple Watches and FitBits. Happily recording our daily steps and feeling much better about ourselves even if no one can find any real health benefit from doing it!

New technology is sexy. It’s seductive. If it’s not properly applied, for business, it’s dangerous.

The danger of digital window-dressing

As retailers strive for better and better customer experience, they are faced with a growing toolkit of new digital technologies. From personal assistant apps and online marketplaces to virtual showrooms and smart changing rooms, you can create dynamic, omni-channel experiences that were not possible even three years ago.

That’s great, but only when it’s tied to a business strategy that sets out exactly what you want to achieve from your digital investments. Adding digital capabilities doesn’t naturally lead to business process improvement, increased productivity, or enhanced customer experience. A recent panel discussion at NRF 2018 emphasized that, if you want to get the most from digital transformation, you should concentrate on the business transformation and then figure out where digital capabilities fit in.

A recent report from Accenture entitled ‘Retailers, digital window-dressing is killing your business’ goes one step further. The consultancy has found that many retailers have invested in the latest digital technologies as a short-term measure rather than a long-term strategic move for their business. This has resulted in something worse than just wasted investment.

According to Accenture, buying into digital window-dressing has a negative impact on business: “Accenture analysis of several large retailers shows those focused on digital window dressing saw a 36 percent decrease in share price over the past five years, driven by a 17 percent decrease in sales and a 31 percent decrease in Earnings Before Interest & Taxes (EBIT)”.

The most telling point in Accenture’s report was that most of these new digital capabilities are focused on customer experience and front office functions. However, it’s in the back office and supply chain where digital investments can have real transformative impact. I’d like to illustrate this with a few real-world examples.

Effective Digital Asset Management enhances customer experience

For every retailer, delivering an omni-channel customer experience means ensuring that the right digital assets for every product are available of the right channel when a customer engages with the brand. Marks and Spencer (M&S) is international, multi-channel retailer sells clothing, home products, and quality foods. Customers connect with M&S through web, mobile, in store and apps. Its website alone receives 8.3 million visits each week.

M& lists about 20,000 products, which each have an average of six or seven digital assets, consisting of a product video and multiple photographs. For example, an item of clothing may have full-length images and detail shots of pockets, cuffs, or collars. Working with multiple external agencies and internal departments, M&S sources, reviews, approves, and manages up to 2,500 assets every day. Any issues or delays in the effective creation and publishing assets is potentially expensive in both lost sales and reduced customer satisfaction.

The company has grown over the years to have a series of Digital Asset Management (DAM) repositories in different departments. This led to an asset creation process that was slow inefficient and often meant assets were unnecessarily recreated. As part of a wider, multichannel digital transformation program, M&S looked for a single, enterprise-class DAM.

M&S selected an enterprise DAM from OpenText. The OpenText system provides a fast, efficient means for submission, review, and approval of digital assets, and ultimately publication and ongoing management. It streamlines and accelerates operations by reducing the amount of manual processing needed as well as facilitating the secure and efficient sharing and collaborating on assets between the company and its suppliers, agencies and partners.

M&S has been able to save time and money while improving their asset management process through the enterprise DAM. However, it also delivered other transformational benefits through enabling integration into other systems and business processes. The company now uses its DAM to provide images for customer service, helping them deal with customer inquiries or warranty claims. In addition, the system integrates with M&S’s product lifecycle management (PLM) system to help plan new ranges and products.

Closer supplier relationships drive supply chain performance

While new digital capabilities can enhance the customer experience, the foundation will always be having the product available for your customers. That requires a smooth and efficient supply chain. Stage Stores is one of the US’s largest small town and neighborhood retailers. It has hundreds of suppliers servicing its network of over 800 stores. As its business and supply chain grew, managing its suppliers was an increasing challenge.

To keep their supply chain running smoothly, Stage Stores needed real-time transaction visibility, automated deduction management, reporting and analysis for monitoring partner performance and improving the accuracy, completeness and timeliness of its order process. Like many retailers, the company had to expend a great deal of time and effort showing suppliers how to ticket, pack and comply with its requirements and guidelines.

For a long time, this process was heavily manual. As their supply chain expanded, this situation became unsustainable. Suppliers that didn’t comply with the company’s guidelines were charged violation fees. However, the process was taking so long and was so complex that suppliers were being fined without sometimes knowing what they needed to do to comply. As all retailers rely on the relationship they have with their suppliers, Stage Stores knew they needed a better way to engage and communicate with their suppliers.

Stage Stores had a simple goal: to improve supplier collaboration through better communication in order to reduce non-compliance. It chose OpenText Active Intelligence to deliver real-time transaction visibility, automated deduction management, reporting and analysis for monitoring partner performance. Being able to identify problems associated with orders, packaging, shipments, invoices and payments in real time – allowing the company to quickly take corrective action.

Using the system, Stage Stores has been able to improve response times with suppliers from three months to 72 hours. Suppliers have a system that lets them get their compliance issues addressed quickly. It allows for much closer collaboration that leads to a more efficient supply chain. With better performing suppliers and fewer violations, the company is able to improve on the foundation of customer experience – having the products customers want, when they want them.

Centralized output management saves time and money

Meeting customer demand is crucial for all bricks and mortar stores. The more time that individual stores have to ensure their order books are up-to-date and accurate, the better. Jumbo Supermarkets in the Netherlands found the growing volumes of documentation was placing extra strain on its supply chain.

Weekly order books, consisting of more than 100 pages, were generated for each of its 550 stores, in addition to various reports and shipping, order, and invoicing documents. Document volumes were significant, with more than 89,000 documents per week representing in excess of 360,000 pages. Over 15 years, the company had developed a number of discrete and unconnected output systems. Producing the required output was increasingly slow and inefficient with a significant knock-on effect to the performance of the supply chain.

The company realized that it had to consolidate on a single, centralized output management system. It also understood that this was an opportunity to improve their supply chain processes as well as making it easy to archive documents for legal compliance. As Jumbo operated within an SAP environment, OpenText Document Presentment for SAP was the ideal solution.

Documents are produced in the correct order, on a true first-in, first-out basis. Due to the nature of the data that has to be assembled for some documents, the output order may not be the order in which the print jobs are ready. The system takes care of the actual output order, thus avoiding confusion with operations such as the logistics of loading.

The system has made Jumbo’s supply operations more effective. In addition to the regular batch production runs it does on a daily and weekly basis, it can now produce real-time on-demand output to accelerate supply chain activities. One result of this has been to enable all stores to produce their order books a full day earlier than before.

Focus on results, not what’s sexy and new

When you think of digital transformation, it’s easy to think simply of sexy new digital capabilities, but you mustn’t ignore the real gains through small changes to your back-end processes. These are only three examples of where, by focusing on the business pain point, you can target your digital investments to operations and supply chain activities that will really impact your business performance.

Digital transformation is our major theme at this year’s Enterprise World. Come along and hear from some of the world’s largest retailers about how they have maximized their digital investments. In the meantime, if you’d like to discuss your requirements, please complete the short contact form on this page.

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Robin Gellerman

Robin Gellerman is the Product Marketing Manager for Life Sciences Enterprise Content Management solutions at OpenText. With over 20 years in the enterprise content management industry, Robin has held a variety of product and industry marketing positions supporting document management, capture and customer communications technologies at OpenText, the Enterprise Content Division of EMC, Captiva and Document Sciences. Most recently, Robin was the Industry Strategist for retail, and has previously worked with energy & engineering and healthcare solutions.

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