Retail automation: how to survive the COVIDocalypse
- Filed under
- Automation Benefits
- Last updated
- May 13th, 2020
In this article
This blog highlights SMA Technologies’ retail automation solutions, including order management systems and self service automation to modernize IT infrastructure.
Solve logistics, IT, and HR issues by solving process automation issues
One could say that it's a tough time to be a retailer, but if you're reading this, you probably already know that it's always a tough time to be a retailer. In an industry where the average profit margin is between 0.5%-3.5%, successful companies know how to roll with the punches. More importantly, they know that innovating and modernizing their business is the key to survival.
The ongoing economic fallout has accentuated the need to accelerate these initiatives. SMA Technologies reached out to several of our large retail clients in an informal survey to find out what their top priorities are moving forward. The consensus we've found is that the COVID-19 pandemic has pushed technology leaders to expand the capabilities and speed up the rollout of IT solutions to meet the demands of end-users and customers.
Retail automation starts with app integration
Retail IT environments are highly complex and must endure a great deal of stress. There are four primary pillars that different solutions address:
- Business Intelligence from on-demand reporting
- Logistics to deliver what you sell
- Ecommerce to roll out rapid changes in multiple languages
- Finance to consolidate and disseminate data to/from thousands of locations in near real-time
In a typical setup, there are multiple software solutions chosen to handle each of these functions. Oracle Retail, SAP BOXI, Infor M3, Reflex, and Manhattan are examples of solutions providers. These are proven, robust solutions. But they don't always talk to each other as well as you'd like them to. They might even have built-in automation capabilities, but they will be siloed within that application. At the same time, IT Ops require visibility for all the processes happening within their environment, regardless of app. This calls for a dedicated System Orchestration Automation Platform (SOAP).
SOAP is a brand new category, defined by Gartner, to describe what is essentially a modernized Workload Automation (WLA) platform. Imagine what happens when batch processing & scheduling software evolves to become a flexible, event-driven automation platform with an API that can incorporate almost any script to run multi-dependency, cross-environment workflows. The core capabilities are that it can run all the automated scripts and workflows in an enterprise from a central point of control, provide real-time visibility and notifications, provide a self service portal, and handle change management. The SOAP must include integrations with legacy systems and be able to flow between on-prem, container, and cloud-based applications seamlessly. In short, it's a comprehensive automation platform that orchestrates workflows and system integrations across all the environments in an enterprise.
How a System Orchestration Automation Platform handles app integrations
In this section, we will take a brief look at some examples of how a SOAP provides value to the four pillars mentioned earlier in this piece.
Integrating Business Intelligence to inform retail decisions
In business, intelligence needs to be timely, accurate, and actionable. With the thin margins that retail companies operate on, this is emphasized even more heavily than in most industries. To facilitate good intel, analysts develop the individual processes needed to acquire that information. This includes identifying the dependencies of each process, and which actions or alerts are necessary if a step in the process fails. Programmers write the scripts and API calls that turn each step of the process into an executable task. Operators then combine those tasks into workflows.
Here's where the integration comes in. Let's say that a retailer rolls out a new product line in four countries. An operator sets up an event trigger to alert the inventory management team of how stock is moving at both the retail location and on the e-commerce portal. If an item isn't moving as fast as they would like it to through the online store, for example, a manager could trigger a workflow to announce a flash sale and publish price changes in all languages to drive sales volume. At the country, city, or even store level, reports can trigger notifications to individual stores or groups of stores to offer or remove a discount on items, and automatically update the price at each store. If a product sells better or worse than expected, event triggers can be set up through the inventory and logistics management system to either order more of this product from the manufacturer or to reduce future orders to match demand.
Many programs can provide reports, but an automation orchestration platform allows a business to act on that information with a speed that isn't achievable otherwise. The efficiency gained through this creates cost advantages that result in more significant profit margins. That's the real value delivered via integrated automation.
Integrating logistics management automation to drive cost-efficiency
Retail has a short cycle to get from inception to the storefront. Fashion retailer Zara, for example, is famous for going from the design phase to having items in store in 4 weeks. Their business intelligence informs their logistics pipeline, allowing them to move quickly and react to market demand. They're able to aggregate market research, surveys, customer feedback, and sales data to inform their decisions on what to make next. As a result, they sell over 85% of their products for full price in an industry where the average is closer to 60%. In the current COVID-19 environment, having up to date intelligence means a retailer can launch additional promotions for the goods they know for sure that they can deliver right now, as well as change their website to accurately reflect delivery delays or if a product is out of stock.
While their fashion design may not apply to every business, their integration of business intelligence and logistics do—any retailer benefits from having a highly refined and integrated order management system. Being able to react to data can save companies enormous amounts of money on production, transportation, and warehousing. With proper integration, a company can automatically decrease, increase, or even stop production orders depending on how well a product is doing. If an item is selling better in Germany, but performing poorly in the U.K., the system can automatically reroute inventory to make sure adequate stock is available.
Just-in-time manufacturing is not a new concept, but companies can reap significant dividends by revisiting the processes and automation they're currently using. Setting up highly granular event-triggers and having the agility to modify them quickly based on new data is an essential part of this automation assessment. In some respects, an advanced order management system will resemble the HFT (High Frequency Trading) platforms made famous by Wall Street firms. It's a complex system with well-defined conditions that trigger specific actions based on data about the current market.
Want to know more? Read our article about four ways to gain efficiency by automating inventory management.
Integrating e-commerce automation to compete with Amazon
Rule number one in e-commerce: you must deliver what you sell as fast as possible. If a company's systems are not efficient, they will be slow. Slow companies die quickly in the retail industry. Let's talk about how to make a business faster and more agile with its e-commerce unit.
Ecommerce is extremely data-driven. If a company doesn't have its business intelligence software and database integrated with its e-commerce team, they are handicapping themselves needlessly. The data informs every decision, and automation speeds up the process of taking action on the data.
If an item is selling well or receiving a lot of web traffic, a company does not need a human to come to the conclusion their website should be featuring that item and possibly even advertising it. Here's an example of an automated e-commerce workflow that every company should have:
- Sales or traffic threshold triggers an alert
- Script pushes that item into "featured product" on the front page
- Marketing manager gets alert to create an advertisement for the item
- Warehouse database performs inventory check
- Manufacturing unit receives production order to meet increased demand
- Transportation unit receives alert to have delivery assets available
- Business intelligence unit receives a report detailing buyer demographics
This workflow can be much more complex, and the triggering events can be as detailed as a business needs them to be. Multiple dependencies are the norm, and the complexity doesn't bother the automation platform. This is what a SOAP is built to do: orchestrate sophisticated automation across a system to help a company execute its business goals.
Integrating finance automation to speed up your operations
Finance automation is all about ensuring that the accountants are operating at the same speed as the other divisions. For large retailers, this means being able to consolidate all the financial data from a wide range of sources:
- Potentially thousands of retail locations
- Ecommerce site
- Manufacturing operations
- Transportation operations
- Real estate costs
- Accounts payable
- Employee payroll
The workflows for financial departments need to optimize pulling, processing and pushing data from and to all the business units. Physical store locations and the e-commerce site, for example, must process thousands, or hundreds of thousands, of transactions per day promptly. This is where the SOAP goes old school and uses its batch processing power, typically with an IBM mainframe sitting in a server room somewhere, or potentially outsourcing the processing to a third-party company that's using those tools to achieve the same goal.
We've got a great article on how mainframe automation will save your business if you are interested in learning more about leveraging your mainframe to automate more than just batch processing.
In addition to transaction and payroll processing, data from other sections of the business must be timely and actionable. Finance automation focuses on making sure alerts and reports deliver the right information to the right people so that company leaders can make better forecasts and more informed short-term decisions. Accurate financial data determines how much can be spent on marketing, R&D, and where the highest ROI is. It informs leaders about the profit potential of different items based on data from every business unit responsible for making that product successful.
Tying it all together
Integration through automation is what will allow retail businesses to adapt to shifting market conditions swiftly. Implementing event-based workflows that can pull data from multiple business units and take action on it without human intervention creates speed. Creating the capacity to make changes quickly and mistake-free creates agility. Speed and agility plus well-informed business intelligence is the platform that businesses need to leap forward to new heights.
SMA Technologies is ready to help you build your platform.
Hey, want to know something else that’s helpful? Reducing your onboarding costs. We’ve got a blog for that. Retail onboarding sucks – automation is the cure.