Building a Business Case for Order Management Transformation
Supply chain and order management transformation in the retail space is a must, but how many organizations actually know what the results of their investments will be, from day one? It’s time to re-evaluate the business case for this strategic overhaul.
It sounds like an obvious piece of knowledge to have, to be sure that an investment into new technology would yield not just a positive outcome, but specific expected returns. However, with the rapid pace of change and the urgency to overhaul often-monolithic and unfit-for-purpose solutions, many retailers have failed to attain this clear view of future possibilities from the outset.
This is something of a loaded oversight as it also highlights how little retailers know of their current processes – where they’re more proficient than they might think, where they’re losing value, and where the quick wins could be found.
Amid the rush to digitally transform, and with so much focus on those innovations that will smarten forecasting, aid replenishment, perfect assortment, or master pricing, businesses are forgetting about their business.
At this juncture, it’s time for these players to take a step back and to evaluate – thoroughly and analytically – their entire supply chain landscape. In doing so, stage one of their strategic transformation will no longer be geared towards rushed investments to upscale certain target areas as siloed efforts.
Rather, they will gain access to a data-driven, bird’s eye view of their entire operations, to see where value is actually being lost, where investment is actually needed, and where the journey should actually begin.
A Better Understanding of Pain Points
By beginning the journey with a KPI and value-driven discussion, rather than a tech-based conversation, there are two overarching benefits. First, the business will make investments according to what they need (and how urgently), in a more pragmatic, phased and feasible way; and second, they will be doing so with a greater understanding of their organization as a whole.
With so much narrative surrounding supply chain transformation and relative pain points, this clearer, data-driven analysis of the status quo is vital to forming a priority-based roadmap for the future.
Simply, retailers will gain insight into where revenue is being lost, and how this lost revenue is manifesting. This might relate to poor inventory management, inflexible order processing across stores and distribution centers, a lack of real-time visibility on inventory, or insufficient inventory alignment and replenishment. Additionally, retailers may face challenges in multi-channel order fulfillment, such as buy online, pick up in store (BOPIS), or send-from-store options, as well as from last-mile deliveries. By addressing these challenges, retailers can improve their bottom line and better serve their customers.
The end-to-end chain is complex in an omni-channel era where foresight and AI-driven outcomes are so vital. But this doesn’t mean that all aspects are failing simultaneously, or to the same extent. Investing in the situation as a whole is likely to be time- and money-consuming, without specifically targeting any one of these possible individual pain points.
A Deep-Dive into Value Buckets
So, what should retailers be doing instead? What should their opening gambit be?
There is often a consultation phase to help gauge where investment is required, but this rarely taps into the exact state of the business at that moment in time, including what the precise losses in value amount to and what the specific outcomes of a consequent investment would be, relative to that current loss. Significantly, this data-driven comparison between “now and then” has to be attributed to each individual facet. Or, as we label them, “buckets.”
Across Blue Yonder’s Order Management (OMS) portfolio, each strand is made up of their respective key value indicators… these buckets. And each bucket corresponds to a microservice that can augment and enhance that specialized area of operations.
From an OMS perspective, these value buckets refer to:
- Revenue Lift
- Margin improvement
- Expense reduction
- Automation Benefits
These value buckets align to a business’s requirements that can be achieved through our microservices approach to OMS.
- Planning (Inventory Placement) – Align inventory placement and replenishment with customer engagement strategies & profitability goals.
- Availability (How Much & Where) – Increase inventory exposure and revenue with accurate and reliable inventory visibility.
- Promise (Search and Commit) – Increase conversion and click through rates by delivering the right product, across the right channel, at the right time.
- Orchestration (Process & Track) – Predictable and flexible order processing across your DC’s, stores and proximity locations with exception management.
- Fulfillment (Efficient Execution) – Enabling efficient execution of omni-channel orders within the store and last-mile.
Each value bucket is influenced by different drivers. For example, the size of an associated productivity improvement bucket is based on the extent of automation, better order tracking system capabilities, and efficient pick/pack/ship processes. Only by drilling down into, and quantifying, the current efficacy and capabilities of these micro-areas can a retailer know whether it is a priority, or what impact a certain investment would be in that area.
A Roadmap of What Your Business Needs Most
However, this isn’t to say that each strand should be treated individually. Despite the potential of microservices being able to address small gaps and shortfalls in omni-channel, what this proposed business evaluation should kickstart, is a more pragmatic end-to-end journey of transformation – a connected vision of how these microservices would ultimately marry together.
To this end, the initial evaluation doesn’t just signpost individual investment opportunities as standalone priorities. It presents a flexible roadmap for each organization to work towards, and a level of interconnectivity they believe is most suitable and lucrative for their specific operations and objectives. Ultimately, step by step, microservice by microservice, this could include realizing a smart store vision, and a connected, AI-driven order management process.
However, this vision will be realized in a way that promotes quick wins where they’re most needed; that generates value in places they’re being lost most dramatically right now; and that guarantees returns from each phase can then be reinvested into the next critical strand of improvement.
And, vitally, at every juncture, this evaluation will earmark and quantify the extent of business improvement that can be expected.
As retailers struggle to juggle the pace of change, hardening expectations and tighter resources, this insight into future income can pave the way for more general business improvements and upscaling strategies.
New locations, new warehouses to aid more localized distribution, or rethought labor strategies could all be triggered with this clearer vision of future returns assured. And it can all be achieved before an investment has even been made.
By connecting processes, technologies and governance through a more thorough and business-driven evaluation, at the first step of the journey, your OMS transformation from that point on can be based on what your business really needs most.
Read the “Microservices: Your Next Big Move Just Got Smaller” e-book to learn how a composable approach that uses microservices is the agile way businesses can use to adapt to evolving conditions and safeguard against ongoing challenges; or review our guide Three Steps to Guaranteed OMS Value.