THE TOTAL WAREHOUSE: OPPORUNITIES FOR TIER-2, TIER-3 AND SMB’S TO USE A WAREHOUSE SOLUTION TO IMPROVE CUSTOMER SERVICES LEVELS

Your company is probably looking at every possible way to leverage your front and back office resources in order to trim costs and shore up your bottom line. You have also likely looked at how you can improve results and operating efficiencies so as to be especially responsive and remain ahead of your competitors in an ever more demanding and often fickle marketplace.

In today’s recessionary climate, the key to ensuring retail survival will be whether or not you can keep your customers happy. One of the best ways to do this is by ensuring consistently high customer service levels on an ongoing basis. And the best way to make customers come to your store again and again is to have the right goods in the right place at the right time.

Designed for Retailers

Only a superior warehouse solution that was designed by and for retailers will give you the type of optimization features and capabilities that will give you the kind of accuracy needed to notably improve your customer service levels. That superior warehouse solution will also need to be highly cost effective in order to give you the type of ROI and bottom-line results that are needed these days. That warehouse solution can be a stand alone offering. Or, to truly leverage savings company-wide, you can install a warehouse solution that is integrated with a superior, robust, yet highly cost-effective ERP retail solution.

An ongoing issue for retailers has been whether the benefits of best-of-breed warehouse solutions outweigh the benefits of a fully-integrated ERP solution. There’s one problem: most of the big ERP vendors built their solutions for other businesses and, specifically, for tier-1 firms with highly complex and often insanely diverse product mixes. Most big ERP vendors also did not start off as retail solutions’ providers. Thus, for tier-1 firms, considering a best-of-breed warehouse solution may be a logical choice because their warehousing needs are so unique. Yet, for tier-2, tier-3 and most SMB retailers, other more cost-effective solution options would do well to be considered.

Most retailers are best served by a solution architecture that was designed especially to meet or exceed their core needs. Most ERP solutions to tier-1 firms argue that they provide solutions ideally suited for SMB’s. But these LE versions are often still, or end up in the long run being, far more expensive: from base cost, consulting, licensing, maintenance, and many other costs -- than solutions that have been developed specifically for SMB’s, tier-2- and tier-3-sized operations.

Flexibility

One key problem is flexibility: the big ERP solutions, even when stripped down and seemingly configured for tier-2 and -3 firms are still code behemoths and people- and resource-eating monsters when compared to solutions created especially for SMB’s and non-big-box firms. The solutions developed specifically for tier-2 and tier-3 retailers are not only leaner in structure and more refined, they can also be incredibly robust, and are configured to ensure your company’s short- and long-term success, while remaining versatile, flexible and scalable. These solutions also happen to be more cost-effective in every way: base cost, licensing, maintenance consulting and other associated costs.

The mid-market ERP retail solutions are also actually far more easy, cost effective and efficient to plan, install, train, and keep up. You can more quickly and effectively install and thus leverage your firm’s resources sooner and place those savings right onto your firm’s bottom line. Thus, starting with the right ERP retail solution – one that has been designed originally from the ground up for exactly your size of company - has the potential to save costs across every single area of the company, in all channels, and can offer visibility into any and all areas of the operation at any given moment. This is especially true when that solution also happens to be fully-integrated, synchronized and can operate in real-time.

SMB ERP or Best-of-breed

One of the battlegrounds between best-of-breed and big ERP solutions has been in the warehouse solutions area. When considered in-depth, neither approach may be optimal for tier-2, tier 3 or SMB firms when it comes to quickly optimizing customer service levels. Installing a big ERP solution now, even if it is scaled down to tier-2 and tier-3 retailers, will usually take a few years and the window of time to be able to achieve your desired ROI will be missed. Plus, cash flow will need to be very carefully managed in order to successfully emerge on the far side of the recession, and the cost of the seeming security given by choosing a name-brand big ERP solution may be too high to ensure the long-term viability of your organization.

The big best-of-breed warehouse solution providers have offerings that may seem to be a good way to shore up warehouse productivity quickly to meet your customer services levels. But then the amount of integration required and the resources required – both consulting and internal – are still far greater than may be ideal. To ensure this type of big best-of-breed warehouse solution integration is a success can also be daunting. Data will still not be guaranteed to flow unimpeded anywhere throughout your organization because the architecture of these solutions is still very large and weighty. And the more code fields you have to populate, the more problems you can have in testing and then running your business.

With either the big ERP or the big best-of-breed you may find after you are well into your install that you still have major functional gaps between your front and back office systems. And at worse, you will end up still operating off spreadsheets or wondering which department’s data is actually correct. You will still be unable to gain the true productivity that was needed because the best-of-breed solution also happened to be much larger a project or could be prone to more problems associated with it than was originally anticipated.

The Ideal: The Well-designed Middle Ground

What is best is to use a middle ground enterprise retail solution that can solve all the integration problems while giving you a superior warehouse solution module: one that was designed for SMB’s and Tier-2 and Tier-3 retailers from the start. That way, you will achieve superior results and be able to optimize your warehouse and distribution costs and other efficiencies, and at the same time have an ROI that is desirable, realistic and has been proven to be as stated with other clients. More importantly, you will be able to meet your customers’ needs, wants, expectations, and engender exactly the type of loyalty that will be as good for them as it will for you.

Or, if you are not ready to put in a full enterprise solution at this time, you can install a warehouse and distribution solution that was made specifically for SMB’s and Tier-2 and Tier-3 retailers. In a few years, you can then install the enterprise-wide solution. You get the benefit of having a cost effective warehouse solution, while being forward-looking and knowing that you can also far more easily update your entire enterprise retail solution in a few years’ time.

If you consider putting in place an enterprise retail solution that was specifically designed for the size of retail operation that you run today, look for one of the most technologically advanced best-of-breed solutions that will be ideal for your operating environment. This multi-channel solution can be scaled quite easily as stores or various channels are added or removed. Make sure it was designed for fast ROI and yet will ensure that your central data repository can move data anywhere and everywhere when and as it is needed – on demand and in viewing modes that are fast and easy to interpret. That way, your customers’ needs will be met on an ongoing basis. And you will have the ability to anticipate not only customers’ needs but to manage your bottom-line resources enterprise-wide. Your stores will receive the support they need, and your back office can trim and manage their costs at the same time.

Find a Technology Business Partner

You will also want to look for one other key component that is required for business success: a partner who understands retail and your business needs in particular, and who will make sure their clients are as happy as your stores’ customers. The big ERP solutions are in the business of making their shareholders and stakeholders happy. Many best-of-breed solutions have the same quarterly challenges and mandates. One key complaint many purchasers of big ERP and best-of-breed solutions have is that the person selling them the solution is not directly involved, nor are they held responsible for, the end result of their client’s implementation. Thus, it is even more important to consider a solution provider whose sales staff have a vested interest in your firm’s ongoing successes.

Consider the following: has your retail solutions’ provider proven to you that they have successfully helped other customers get through challenging retail recessionary periods? If your solutions’ provider has a revolving door of staff and resources without adequate depth and genuine interest in your success, you may be taking a chance on success and on your company’s ability to survive. You need to have relationships with people who can provide you with the objectivity, depth of experience and have the resources to ensure your success. Your relationships with key solutions’ providers’ representatives must be such that they are not only far more knowledgeable, empathetic and understanding of your business’ core needs, but that they will know exactly how to be responsive in both timely and effective ways to your requirements on an ongoing, day-to-day and year-to-year basis. Consider if the big ERP vendors are practicing this type of partnership culture.

When you align yourself with a company who happens to be in the business of creating successful retail partnerships based on superior use of technology, you will find individuals who have proven they can be truly helpful to a business during a recession and beyond. That way, you know they will be able to be helpful to your firm too.

About Magstar Total Retail

As a fully-integrated enterprise solution that includes merchandising, analytics and financial management systems, Magstar Total Retail provides the superior tools needed to successfully manage multiple locations with multiple channels of distribution: stores, online, warehouse/distribution centers, and catalog call centers.

In Total Retail, Finance, Buyers, Stores and Operations all access one application and database to achieve consistent, real-time and dynamically-updated information. Centralized information on demand allows Magstar Total Retail’s clients to more effectively manage details, make fully informed decisions, and react more quickly to opportunities or changes in the marketplace.

Accurate one time data entry allows Magstar Total Retail to integrate business processes company-wide across all operating areas with a complete approach to inventory visibility, customer intelligence, point-of-sale, multi-channel fulfillment, and planning and merchandising.

Magstar Total Retail includes: warehouse/distribution, inventory, customer relationship management, financials (AR/AP/GL), purchasing/receiving, call center order entry, sales analysis and reporting, business intelligence (BI), stock ledger, and point-of-sale (POS) with integrated, high-speed payment systems.

About JEM Consulting

JEM Consulting has been responsible for or managed over $3.5 billion in projects since 1990. A boutique consulting and multimedia communications firm, JEM Consulting has led large or strategically key projects for and with North America’s leading entrepreneurs and C.E.O.s - for companies ranging from SMB’s through to Fortune 100 companies. Clients and expertise is in areas such as retail, retail technology solutions, supply chain technology, document processors, environmental commercial products, venture capital, merchant banking and the financial services’ sectors.

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