How Retail Execution Management Solutions Solve the “Last Mile”

Problem

Task management combined with other workforce optimization solutions enables retailers to improve productivity and provide a

consistently positive consumer experience that drives increased sales.

By Peter Duchessi, Associate Professor, Information Technology Management,University at Albany

Most retailers know that they must create a consistently positive customer experience in their stores by providing the right products and services, the first time and every time, across all stores simultaneously. This is a major challenge for Tier 1 retailers, as well as mid-sized and growing retail companies who need to manage an ever expanding base of store managers and associates. Many retailers are plagued by the “last mile” problem. Although “the last mile” is a term often associated with networking connectivity, the phrase is also used in business to describe the process of getting a deliverable to the final customer. In retailing, the “last mile” problem refers to the inability to successfully execute corporate strategies consistently in all stores. Too often – and to the detriment of the retailer stakeholders – there is a conspicuous disparity between what senior managers want to happen in retail stores and what actually happens. The result: important initiatives such as new product launches and promotions are not completed successfully at the store level, resulting in lost sales and diluted brand power.

Corporate departments, including marketing, merchandising, and store operations, request store, assistant, and department managers to perform a variety of tasks to execute their strategies. The requests arrive on a daily basis, via multiple uncoordinated channels, namely paper mail, email, faxes, company portals, and phone. In most companies, there is little coordination or prioritization of requests. Additionally, field and store managers are overloaded by numerous duplicate requests they receive from corporate.

Does this sound like hyperbole? Hardly! The store managers at one prominent Northeast grocery chain get about 160 e-mails per day. Many of these e-mails are about executing specific tasks. The store managers discard many of the e-mails without reading them due to time constraints. Moreover, few companies track requests, evaluate workload implications, verify task compliance, and ensure successful task completion in a timely manner – to attempt to do so across hundreds or thousands of stores using traditional methods such as email and phone would be require more hours than exist in the day. According to a report from analyst firm AMR Research1, 80 percent of retailers have never effectively measured their store operations to determine where the biggest problems are.

Companies that lack an effective and efficient way of executing strategy are troubled by the “last mile” problem and, as a result, jeopardize the consistent delivery of customer value and the realization of strong profitability.

The Need for a Stable and Predictable EnvironmentTo push strategy downward into stores and departments (i.e., the front lines, where strategy execution takes place), companies need to create a stable and predictable environment for communicating, executing, monitoring, and measuring both major and minor corporate tasks.

______________________________1 “Retailers Reduce Store Execution Missteps With Task Management Technology.” AMR Research, March 11, 2005.

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Such an environment would have the following characteristics:No duplicate requests• Clear task priorities• Defined, and where appropriate, automated task workflow based on best practices • embedded in the systemExplicit, detailed, and properly sequenced activities• Continuous tracking and monitoring of tasks and ensuing workload requirements• Real-time visibility of task execution and compliance levels• Real-time alerts when successful task completion is in jeopardy, with the ability to • automatically launch corrective actionTargeted store walks that address underperforming activities and areas• Real-time feedback and performance measurement• Ability to manage by exception and respond pro-actively when sales and operations • metrics fall out of defined tolerance levels

Yet, how does a company create such an environment? The keys are centralized planning, prioritization, and communication; real-time monitoring of completion levels for all active tasks; and performance measurement and feedback mechanisms that support learning. Centralized planning, prioritization, and communication facilitate workforce optimization and get corporate, field and store managers, and all associates on the same page. Real-time monitoring of task completion status provides increased visibility of store operations. Performance measurement compares actual performance with expected results. Feedback mechanisms help companies learn about what works and what doesn’t work, allowing them to improve the design and execution of future tasks.

A Brief History of Prior Attempts to Drive Store Operations ExcellenceThrough the years, retailers have used a variety of methods in their attempts to drive consistency in their store-level operations. Many retailers today rely on email to send work to their stores, but email is not up to the task. With email, practically anyone in corporate can send a message to anyone in the store. This results in store managers becoming overloaded with messages – many of which are duplicates – without having a clear indication of which tasks have the highest priority. Store managers are left to prioritize tasks on their own, resulting in wide variation in how individual stores execute the retail strategy. Additionally, email is not suitable for the collection and organization of two-way feedback for continuous improvement. Often, replies sent from the stores requesting additional information or suggestions to improve processes go unanswered by headquarters. Standard email does not facilitate coordinated planning and workload optimization at the corporate level, nor can it analyze Key Performance Indicators and trigger an alert when a metric falls out of tolerance levels.

In addition to email, some retailers have tried to use spreadsheet add-ons to plan and manage tasks, but these applications cannot handle the needs of the fast-paced retail environment and a dynamic workforce. Such tools lack support for closed loop, two-way feedback, cannot accommodate multiple store formats, and are unable to dynamically assign tasks to the most appropriate employees based on their role in the organization if the first choice of employee is out sick or has left the company. Spreadsheet based tools simply cannot address the needs of the retail workplace, where high employee turnover remains the rule.

Other solutions called Store Execution Management provide simple “To Do Checklists” for completing tasks in the store, but do not address the need for coordinated planning and integrated scheduling at the corporate level. These programs also lack support for two-way feedback to support continuous operational improvement as employees

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complete tasks. Nor can they automatically trigger tasks when key sales and operations metrics fall out of defined tolerance levels. Fortunately, a new generation of Web-based software called Retail Execution Management (REM) addresses the shortcomings of previous solutions and enables retailers to optimize the planning and store-level execution of their retail operations.

Retail Execution Management Drives Store Operations ExcellenceREM solutions address the entire process of planning, scheduling, prioritizing, assigning, KPI and compliance monitoring, and collecting feedback for continuous improvement, all of which are required to drive store-level operations excellence. With these solutions, retailers can ensure the consistent execution of their strategy in their stores and pro-actively respond to problems and opportunities, resulting in the following benefits:

Corporate can coordinate planning, balance schedules, and optimize workload sent to the • stores so that employees are not overloaded or underutilized.Stores receive tasks that are already prioritized in alignment with the company’s goals, • ensuring the most important work is assigned and completed.Streamlined communication allows store managers to get all the information they need in • one place, instead of having to rely on uncoordinated email, voice mails, fax, and other channels.Store managers are freed from reading and replying to hundreds of emails, freeing them • to spend more time on the sales floor providing the leadership and customer service that drives increased sales.Corporate is automatically updated as employees complete tasks in the stores, enabling • instant visibility into completion status.Two-way feedback provided by employees as they complete tasks supports continuous • improvement initiatives.The ability to manage by exception expands the field of control for field managers and • enables them to focus their attention where most needed.The retailer can monitor KPIs in an easy to use dashboard screen. When defined metrics • fall out of tolerance, the system can automatically issue an alert that triggers corrective task assignments based on best retail practices.Web-based solutions enable centralized management and minimal computing resources • at the point of use in the store.

The result: a system that brings together previously independent processes and delivers streamlined operations, automated workflows, and real-time visibility into completion levels across the enterprise.

Reflexis’ suite is an REM system that ensures the consistent execution of retail strategy by providing a closed-loop system for task planning, execution, monitoring, and response. The company’s flagship retail task management application, Reflexis Task Manager™, enables retailers to coordinate planning at the corporate level, optimize workloads sent to the stores, and streamline communication from headquarters to the field while tracking task completion and compliance levels in all stores. The highly configurable solution is able to support a retailer’s unique business processes without requiring additional hard-to-maintain custom programming.

Additional modules enable a retailer to automate store walkthroughs and audits and collection of feedback and results (Reflexis StoreWalk™), optimize labor schedules (Reflexis Workforce Manager™), and monitor key sales and operations trends with the ability to respond automatically using best retail practices (Reflexis KPI Activator™).

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With Reflexis’ system, after a company plans and launches a task, store managers and staff are able to view task workflow details, have access to supporting information, and provide feedback during task execution, while corporate managers and field supervisors can monitor the completion of task activities and measure task performance at each store. Reflexis is transforming the way corporate and stores communicate with each other and the way stores execute and report on tasks.

Three Case Studies: Retail Execution in the Retail WorldCompanies that have deployed Reflexis’ suite have received a number of important business benefits, including increased sales, enhanced planning and control, efficient inter-departmental communication, redistribution of hours to selling activities, and reduced waste and associated costs. The following examples demonstrate these benefits.

Using Reflexis’ system, Home Depot the DIY (do-it-yourself) giant has improved its • deployment of nearly 250 projects a month across its 1,700 stores and is eliminating overload of front-line employees in those stores, allowing associates to focus on delivering real customer value.2 Additionally, because the system alerts managers to potential and existing execution problems, store and field managers can perform structured store walks, focusing on solving problems and ensuring successful task completion. Field managers need now visit only the stores that require their attention and corrective guidance, allowing them to spend more time on building successful businesses.3 In the first six months of deployment, the company conducted over 13,000 successful store walk audits.4 Finally, because planning and execution are more rational and predictable, the company is performing fewer setups, holding less anticipation and safety stock, and experiencing fewer markdowns to move merchandise. The increased efficiency enables store associates to increase the amount of time on the sales floor helping customers by 20 percent, leading to increased sales. All of these benefits contribute to greater profitability.Employing Reflexis’ system, B&Q, the UK’s leading DIY and garden center retailer, • eliminated the need to distribute more than 2,000 printed pages of information per week to store mangers. The flood of corporate communication, which took store managers an average of about 65 hours per week to peruse, necessitated at most stores the use of a fulltime assistant to disseminate the information, follow through on task assignments, and gather feedback. The saving in excess of £2 million is due to significantly reduced miscommunication, streamlined workflow, improved workload planning, and improved feedback.5

Staples, a $13 billion retailer of office and home products, implemented Reflexis, • resulting in streamlined communication, more effective store walks and audits, and timely feedback that supports continuous improvement. With better communication, streamlined workflows, workload balancing, and improved performance measurement, the company has achieved an estimated $1.5 million in soft savings and almost $500,000 in hard savings.6 Moreover, the system increased the efficiency of store walks, saving store managers 7-12 hours per week, on average.

_____________________________2 “Demand-driven Workforce,” by A. Okun, Retail Information Systems News, December 2004.3 “The Home Depot Improves Employee Productivity with Web-based Store Planner,” Internet Retailer, http://www.internetretailer.com/internet/

marketing-conference/88036-home-depot-improves-employee-productivity-web-based-store-planner.html, June 19, 2007. (Original date of

publication, January 2004.)4 “Precision Task Management Drives Store Sales & Productivity,” by L.V. Prasad, http://www.reflexisinc.com/REFLEXIS/images/RISNews-

Aug2004.pdf, June 19, 2007. (Originally published August 2004.) 5 “B&Q Boosts Efficiency and Cuts Costs by Replacing E-mail with Workflow Software,” by C. Saran, CompuerWeekly.com, June 14, 2005.6 “Demand-driven Workforce,” by A. Okun, Retail Information Systems News, December 2004.

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The Bottom Line: Increased Sales and Improved Productivity for RetailersREM software is a vital piece of the store operations platform for any retailer that wants to use the customer store experience as a way to distinguish itself from its competition. Companies can solve the “last-mile” problem and realize successful execution of corporate strategies by using REM systems, resulting in increased sales, improved productivity, and higher employee morale. REM systems enable improved corporate-store communication, complete strategy execution, the elimination of workload imbalances, and improved performance measurement. REM systems create a stable and predictable environment that gives companies their best chance of satisfying customers and increasing sales and profitability. As demonstrated above, some very notable U.S. and European companies are moving forward with REM. Companies that wait to commit to REM will eventually pay the price in lower customer retention rates and profitability.

About Reflexis SystemsTo learn more about the Reflexis Retail Execution solutions, visit www.reflexisinc.com, email sales@reflexisinc.com, or call 781.493.3400. To view additional case studies, visit www.reflexisinc.com/REFLEXIS/casestudies.html.To view additional white papers, visit www.reflexisinc.com/REFLEXIS/whitepapers.html.

Peter Duchessi is a consultant to Reflexis Systems, Inc., the industry leader in Retail Execution Management Solutions.Copyright © 2008 Peter Duchessi and Reflexis Systems, Inc. 3 Allied Drive, Suite 400, Dedham, Ma 02026, USA · (781) 493-3400.

All rights reserved. No part of the contents of this document may be reproduced or transmitted in any form or by any means without the permission of Reflexis Systems.

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