achieving greater decision management in retail | ibm
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8/3/2019 Achieving Greater Decision Management in Retail | IBM
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IBM Software
Retail
Thought Leadership White Paper
From touch points to turn ratesCharting a road map for retail success with BPM and decision management
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2 From touch points to turn rates
Contents
2 The complex, dynamic business environment facing
retailers
3 Prescribing a road map for scalable solutions to drive
business agility
4 Taking the first step with business process optimization
6 Taking the next step with decision management
8 Taking it to the next level—delivering insight when and
where it matters
13 Driving business agility to address core business pains
14 Future-proofing for success in a dynamic retail network
15 Getting started on a sure path to business agility
Retailers operate in a complex business environment marked
by dynamic change and compounded by better-informed cus-tomers demanding ever-increasing levels of personalization and
customer service. If an organization can’t meet their needs,
customers will quickly take their business to one of the many
increasingly sophisticated global competitors. Meanwhile, the
embrace of new technology helps them broadcast their dissatis-
faction far and wide with a few mouse clicks.
The complex, dynamic business
environment facing retailers The retailer’s expanding business network involves complex rela-
tionships between customers, suppliers, partners and vendors.
Today’s retailer is increasingly challenged to adapt and respond
as these business networks become broader and increasingly
dynamic. In addition to this complex dynamic, a greater number
of critical functions are taking place outside of the business,
requiring improved collaboration within and outside of the
retailer’s organization.
In a recent IBM study, 87 percent of CIOs interviewed declared
that their organization will be more collaborative in the next five
years. As more functions move outside the walls of the business,
the distinction between external and internal members of one’s
business network is disappearing. Hence, companies must look to maximize the value of the interactions throughout their entire
network—viewing each interaction between, for example, sup-
plier and vendor or marketing and customer as an opportunity
to improve a process or relationship and capture greater value.
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Adding a layer of additional complexity is the fact that today’s
consumers are more discerning, informed and demanding than
ever before. In addition to the impact that technology has on
their buying behaviors, consumers today are more strongly
influenced by the opinions of friends, family and product
experts through new social media channels. They no longer
rely almost entirely on “trusted” product experts, retailers and
manufacturers that broadcast to the consuming public through
the traditional channels of TV, radio and print advertising.
These increasingly informed consumers are short on time and
want to be served, not sold to. They want retailers to listen to
them, know them and empower them to shop, browse and check
out products when and where they want them.
This shift in dynamic between the consumer and the provider
means that retailers must enhance customer insight and
segmentation—to know, for example, that a particular customer
enjoys “preferred customer” status, has been shopping for new
cookware online and will want to take advantage of current price
incentives and coupons, including a birthday discount. This kind
of customer insight can be used to ensure a level of customer
satisfaction that increases the likelihood the customer will rec-
ommend products and services, purchase more and remain loyalto the retailer—in spite of the competition.
Prescribing a road map for scalable
solutions to drive business agilityIn this paper we will discuss the issues retailers face in today’s
complex business environment, and we will prescribe a road
map to success that, first, prescribes retailers to optimize busi-
ness processes and, second, guides retailers to tackle the way
their organization enables business users to make decisions.
We’ll also explore several customer examples of proven results
achieved by retailers on the road to success with BPM anddecision management.
Many retail processes, such as the planning of a promotion,
include a high degree of end-user involvement and frequent
change. Many separate activities and events need to be orches-
trated involving numerous people and information residing in
disparate locations.
Franchisee
Vendors
StoresRetailers
Retailers
Logistics
Consumers
Marketing
Merchants
Stores
Suppliers
Figure 1: The expanding retail network—a complex and dynamic web of rela-
tionships, interdependencies and transactions that increasingly drives the
retail business model.
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4 From touch points to turn rates
To succeed in this complex, dynamic business environment,
retailers must move faster, become more flexible and optimize
costs while putting greater focus on the processes that drive
business execution. Today’s retailers demand fast and accurate
business-level decision making—the ability to capture and work
with knowledge about customers’ needs, preferences, buying
patterns and propensities, and the relationships and interdepen-
dencies within the business network, in real time, is crucial to
becoming an agile organization. And, to adapt to the complexity and growing body of information encompassed in and flowing
through the ever-broadening network, retailers need flexible
solutions that can scale to meet those growing demands.
Taking the first step with business process
optimizationIBM’s Smarter Commerce approach recognizes that the sale is
just one aspect of the experience. As with traditional commerce,
the customer is at the center of all operations. Smarter com-
merce turns customer insight into action, enabling new business
processes that help companies buy, market, sell and servicetheir products and services.
Indeed, processes are everywhere. There are people-centric
processes required to reconcile a vendor trade fund agreement;
back-end processes that drive integration of data and inventory
among supply chain systems and customer-facing processes, such
as promotion and loyalty campaigns. Business processes under-
pin most activities spanning a retailer’s business, so let’s take a
closer look at the value of process optimization.
Optimizing performance with process automation and
strategic rules policies
The automation of manual steps involved in a process typically
leads to increased productivity, reduction in errors, lower costs
and less need for manual intervention for exception handling,content management and other common tasks. Many retail
processes can benefit from automation—from simple workflows,
such as a vendor onboarding process, to complex multientity,
multisystem processes, such as order fulfillment. Process
automation spans across any number of disjointed IT systems,
information and human tasks, and orchestrates them into an
optimized process flow.
As retailers strive to build agile organizations, they are seeking
ways to optimize the countless dynamic processes involved in
running the business and delivering products to customers where
and when they need them. A driving force behind an agileorganization is often represented in the alignment of the busi-
ness and IT teams. Retailers with flexible IT infrastructures
tightly aligned to the needs of the business are better equipped
to address the changing needs of the market and the customer.
Agile retailers are able to refine and continually improve
processes over time, and to tap into the information needed to
drive intelligent, effective decision making.
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To help us further explore how retailers can achieve success and
growth in a dynamic business environment, let’s look at the
unique values that two technologies bring to enable agility—
specifically, business process management (BPM) and business
rules management systems (BRMS).
BPM and BRMS—a two-pronged approach to process
improvement
BPM can help retailers to orchestrate various tasks and servicesthat comprise the end-to-end business of their organization. A
business rules management system (BRMS) helps manage auto-
mated decisions at specific points in a business process. BPM and
BRMS can be thought of as two prongs in a business-process
improvement effort. In most cases, a BRMS is exposed to BPM
through web services that are invoked by the business process to
make a decision that directly influences how the business oper-
ates. BRMS is a technology that enables retailers to define,
implement and manage simple routing rules inside a business
process. It can also be used to automate complex, highly variable
decisions that take place at different points in a process and in
other systems that may not be involved in orchestratedprocesses.
The IBM Business Process Manager solution provides a unified
BPM environment for collaborative process improvement,
designed to make it easy for process owners, business users
and IT to collaborate and engage directly in improving the
organization’s business processes. With the single, comprehen-
sive environment for process design, execution, monitoring and
optimization that the IBM Business Process Manager solution
provides, a retailer can gain significant efficiencies, avoid costly
errors and increase customer satisfaction.
For example, the documentation and automation of the process
required for the planning of a promotion can provide the busi-
ness user with an environment for improved collaboration and
continuous change, where the user can monitor the various tasks
in the workflow through a user experience that helps them
engage more fully in the steps of the process. Has the ad been
sent to the printer? Has the price been approved by financing?
Are approved suppliers able to fulfill inventory requirements on
time? These and other questions are quickly answered throughthe end-to-end process visibility and improved collaboration that
IBM Business Process Manager can provide.
By adding a BRMS to the process with IBM ® WebSphere®
ILOG® JRules , retailers can drive powerful rule-based applica-
tions that automate the fine-grained, variable decisions used
in business processes. As a result, business users are equipped
with streamlined processes that include the capability to drive
powerful decision making, based on predefined rules and busi-
ness policies. To expand on the previous example, if the business
user determines that the supplier is unable to deliver enough
inventory to meet the needs of the promotion, the business
user can draw on the predefined rules to determine alternative
vendors that are approved in good standing, have the required
inventory and can deliver in the appropriate time frame. With
this information in hand, a well-informed, effective decision can
be made to improve the business outcome and ensure customer
satisfaction. The value of rule-based decision making can be
realized both during the execution of the business process and in
subsequent processes as the business user is empowered to refine
the rule sets based on the user’s learnings—providing future
opportunities to achieve further optimized business outcomes
and improved decision making.
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6 From touch points to turn rates
Figure 2: Driving better-informed decision making by delivering in-context
insight to business users.
The implementation of IBM Business Process Manager and
WebSphere ILOG JRules together provides retailers with a
scalable solution for more efficient, simpler, faster process
improvement that can yield the organizational agility required to
succeed and grow in the dynamic, complex business environ-
ment of today.
Taking the next step with decision
management We’ve talked about the problems that invariably arise when
business processes are not optimized. In the previous section we
outlined the value to retailers of bringing together process
automation and rules management technologies to enable the
flexible creation of solutions for process improvement. That’s
step one of the road map to retail success. Now let’s explore step
two of the road map—how your organization can attain the next
level of business agility with decision management technology.
The value proposition of BPM for decision management goes
beyond process automation, which helps to ensure process com-
pliance and the integration of people, processes and information.
By adding replicable best practices and the use of imbedded logicto optimized processes that span multiple roles and functions,
retailers can drive business agility to another level.
Over the past few years, a lot of attention has been given to
optimizing the planning and management of merchandise
promotions, from coordinating numerous people, tasks and
related information to selecting the right offer to present to
customers. Yet, it is common knowledge that nearly 50 percent
of all promotions fail to reach their volume and profit targets,
because some part of the promotion was not executed as
planned. Implementing a successful and well planned promotion
involves many people within and outside the retail organization
that oversee the development and creation of the advertising
message, the buying of media spots, the sourcing of inventory
and the distribution and display of the promotion in stores and
on the web. In addition, the promotion planning and implemen-
tation process may be started up to 26 weeks prior to circulation
of the advertisements. Many details need to be tracked at the
stock-keeping unit (SKU) and day level throughout multiple
parts of the business to ensure a successful promotion, and
numerous decisions need to be made along the way. Any varia-
tion and change of plan in this complex set of processes will
likely have a negative impact on the promotion performance.
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Therein lies the value of combining BPM with decision manage-
ment to ensure that all activities of the process are tracked in
an efficient manner, along with the many decision points that
intersect the process. As a result, when an issue arises it can be
addressed in an effective and timely manner, based on context-
specific information—helping to avoid problems later. When
BPM is combined with decision management, the functionality
available in business event processing, business rule management
and process orchestration can be leveraged to streamline theprocess and embed decision logic.
To address the increasingly complex demands of today’s
informed consumer, retailers need capabilities to allow them to
design, implement and monitor business processes, manage busi-
ness strategy and automate decisions. They need capabilities to
enable them to deliver insights at the point of impact (or, touch
point) to empower the employee with the tools and information
to make the right decision within a given context.
Let’s revisit the promotions planning process referred to earlier.
Once the process is automated and business events have been
established to enable effective, more informed and timely deci-
sion making, imagine the value of being able to more effectively
differentiate and personalize offers for customers, based on
improved intelligence provided in context. By delivering insights
to the right place at the right time, retailers can offer a consis-
tent experience through all interactions with the customer,
making pricing and promotions more responsive to competitors
and market conditions, and improve the ability to respond to
unforeseen events in the supply chain—before they impact the
business.
Decisions are required to be made throughout all layers of the
organization, and retailers face innumerable opportunities to
improve business agility and customer satisfaction through
optimized decision-management capabilities. Typically, there
are four key areas where retailers can drive business agility through optimized business processes and improved decision
management:
1. Observe and detect. Retailers want to know what is happen-
ing through the tracking of all activities and data that com-
prise a process or event.
2. Investigate. Retailers require the ability to quickly investigate
exceptions once detected, based on the rules defined in
the event.
3. Analyze and decide. Retailers need to understand the mean-
ing of what has been observed and make informed, timely
decisions, based on the insight gained.
4. Act. Retailers succeed when they are equipped to execute on
the appropriate decisions in accordance with defined next
steps, while they continue to observe and detect and make
further refinements to the process and defined events, as
required.
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8 From touch points to turn rates
By combining software capabilities and expertise to automatecore business processes and improve operational decision mak-
ing, retailers can achieve greater business agility and fully use
organizational insight and know-how at the point of impact—
when and where it matters.
Taking it to the next level—delivering
insight when and where it matters When it comes to delivering on the promise of improved busi-
ness agility, we at IBM are certain of this: there are no shortcuts.
Retailers must improve the efficiency and integration of people
and information within their business processes through automa-
tion, and decision management—to efficiently and effectively
manage the vast amounts of data flowing in and out of the
business. Add to this the number of decisions that must be made
throughout all areas of the business and we see the need for
retailers to be responsive to the increasingly complex and
dynamic marketplace. Business process management combined
with decision management can empower retailers to further
increase their organization’s agility in addressing three priority business objectives:
1. Improved business agility and responsiveness
2. Enhanced business alignment, compliance and transparency
3. Delivering a customer-centric approach
Let’s explore each of these in greater detail.
Objective 1: Improved business agility and responsiveness
Because customers are more informed and demanding, loyalty isa key challenge for retailers. As a result, retailers are seeking
ways to improve business agility and responsiveness to customer
and market demands. By providing their employees with clearly
defined processes, rules and intelligence necessary to manage
and improve decision making, retailers can shorten response
times and bring the right product to the right customer at the
right time—with speed and increased consistency.
Key Components of Business Process Agility
Decision Management leverages and aligns BPM components to
maximize operating agility and efficiency
Detect Investigate Update
The business
situation is defined
as a single process
event made of
several activities
If an exception is
detected, it is quickly
INVESTIGATED
based on the
business Rules
defined around
the event
The Process engine
executes the Rules
directing the
ANALYSIS of the
situation and the
resulting DECISIONSare passed on to
another process or
to an individual for
follow up
Based on the event
outcome, Rules can
be modified and
UPDATED to
improve on the
tracking, analysisand decision path
to drive improved
outcomes in future
All activities are
tracked to DETECT
any issues that my
impact the process
Analyze/ Decide
Figure 3: Key areas where retailers can drive business process agility—
observe and detect, investigate, analyze and decide, act.
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But many retailers are spinning their wheels and losing sales,
merchandise and customers in the process. Fifty percent of retail
promotions are not executed effectively, resulting in a huge loss
in potential sales because the needed information could not get
into the right hands at the right time. USD93 billion in sales are
missed globally each year because retailers don’t have the right
products in stock to meet customer demand. USD1.2 trillion in
excess merchandise is stockpiled in supply chains, resulting in
long lead times at a great cost to retailers, because of informa-tion gaps or bottlenecks in the end-to-end business process. The
impact to a retailer’s business of not pursuing improvements in
business agility and responsiveness is very serious—and can be
very costly.
Empowering the front-line staff to deliver better service and
improving the systems and technology with which customers
interact enables retailers to create a highly productive customer
experience at the touch points, where it makes the greatest dif-
ference. To make that happen, both systems and staff need to
have the right information to make the right, informed decision
at the right time, effectively answering questions such as: Is this
one of our best customers? Should she receive a special rate or
discount—right now? What should I offer next? Where should I
send her next?
The application of business rules-based decision making pro-
vides the mechanism to help make informed decisions quickly
about what to offer to whom—while the customer is at a retail
touch point. The right decision can be automated using business
rules, helping enable front-line staff to make the right offer with
confidence and providing a high level of service in a predictable
fashion spanning all customer touch points. It is this improved
ability to provide the most-relevant information about a product,
service or customer to the right place at the right time in the
right manner that can greatly boost a retailer’s agility and
responsiveness.
Customer spotlight 1:
Major grocer builds agility and respon-siveness with automated HR process
A major grocer needed a better way of
empowering local managers with the flexi-
bility to adapt their core business processes,
while still adhering to corporate standards and policies. They
turned to IBM’s business process management offering to help
them more efficiently manage human resource (HR) processes
to keep pace with their rapidly increasing hiring needs. Through
process optimization the grocer ensured consistent and timely
response to employees and the business by delivering a guided
self-service option to streamline HR requests and integrate data
with existing HR management systems.
The solution automated manual, error-prone processes, helping
to reduce bottlenecks and enable the organization to leverage
existing data and corporate policies. Results included significant
efficiency improvements, along with a 90 percent reduction in
time spent managing the process and a 400 percent increase
in their HR requests completion rate.
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10 From touch points to turn rates
Customer spotlight 2:
Large specialty retailer empowers store
owners with rules-driven merchandising
assortment
An award-winning specialty retailer needed
to manage the assortment and display place-
ment of thousands of units throughout thousands of stores. This
IBM client required flexible assortment-planning capabilities to
meet the needs of the growing business and to guide space plan-ning for store- and shelf-layout strategies, while empowering
store owners to improve execution quality and efficiency. The
retailer implemented a solution based on WebSphere ILOG
JRules and took full advantage of business rules to redefine
assortment planning and help them identify strategies to increase
sales, improve relationships and boost efficiencies.
The specialty retailer now provides more flexibility to store
managers to change parameters and rules as applied to product
mix and optimal placement, based on the specific needs of their
location, customers, seasons and local buying factors—while
complying with corporate requirements. The resulting benefits
include more effective and efficient dispatching of personnel for
the monitoring, restocking and arrangement of merchandise,
along with the intelligence to drive mark-down optimization,
production planning and scheduling. The retailer has realized
improved revenues from optimal product placement and a
reduction in time needed to determine product mix recommen-
dations for all stores—from 70 hours down to 70 minutes, once
the process was optimized and the business rules were defined.
Objective 2: Enhanced business alignment, compliance and
transparency
Retailers need to achieve alignment among people, information
and processes throughout the organization. Many retailers are
spending money and time on manual processes—for example, in
the way they manage and reconcile the agreements with and
allowances owed to them from vendors.
The cost of handling exceptions, tracking and reprocessingdenied claims and conducting post-audit services can cost a
retailer 20 to 25 percent of the recovered dollars, in addition to
the legal costs incurred for noncompliance. By optimizing the
vendor trade fund management process, retailers can increase
efficiencies and cash flow with timely receipt of hard cash from
vendors that would otherwise be lost or delayed.
Retailers need to automate processes to achieve high pass-
through rates of information to help employees and users in
their business network make informed, in-context decisions
about resources, next steps and required actions to ensure cus-
tomer satisfaction and drive business success. By following theprescribed road map, retailers can improve business alignment,
compliance and transparency through optimized business
processes and business rules management to externalize decisions
and automate the more complex ones.
By maximizing the effectiveness of their decisions, retailers
can achieve optimum allocation of inventory and resources and
reduce risk in many processes. The vendor trade fund manage-
ment process is one example in which retailers can gain signifi-
cant benefit when transparency and alignment of information is
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improved, because in many cases managing trade funds and
administering allowances are still largely manual processes.
Employees are required to locate information from disparate,
nonintegrated sources and systems for manual entry into
unwieldy spreadsheets. This process is not only time consuming
and error prone, it can lead to unnecessary risks for the retailer,
in the form of unused and unclaimed funds, unrecoverable
invoice write-offs and limited tracking and trade fund reconcilia-
tion capabilities.
Customer spotlight 3:
Outdoor gear retailer improves revenues
through automation of vendor trade fund
process
An outdoor gear retailer opted to automate
the vendor trade fund management process
from vendor contract management and in-season rebates to rec-
onciliation and invoicing. The automated solution positively
impacted many roles in multiple areas of the business, including
the merchant/category manager, financial analyst, finance direc-
tor, CFO and legal contact—and all needed to access key vendor
contract information, maintained in spreadsheets, to perform
their individual roles.
The disparate processes and systems resulted in unused and
unclaimed trade funds; the retailer was leaving cash on the table
by missing rebates and paybacks it was owed from vendors. The
organization knew it needed to integrate processes and improve
documentation control in order to facilitate the recovery of
dollars otherwise written off. In addition, the company needed
improved visibility into usage and return on investment (ROI)
of trade funds in order to effectively conduct annual cost
negotiations with vendors. Moreover, the company knew its
spotty tracking and lack of accountability impacted its ability to
comply with government standards and regulations.
The retailer implemented a process automation solution that
included business rules to ensure compliance of vendor policies,
on-time collection of invoices, tracking and reconciliation of
out-of-cycle negotiated rebates that would otherwise be lost, and
timely generation of invoices, using accurate data from different
sources throughout the enterprise. Anticipated results include
improved cash flows resulting from increased data accuracy and
visibility, lower staffing costs and increased compliance. These
positive results will be compounded by future gains yielded fromimprovements based on better-informed future negotiations.
Customer spotlight 4:
Leading outdoor equipment and apparel
company applies business rules to reduce
fraud
A leading US-based company selling
apparel, outdoor equipment and advisory
services faced several challenges. They were saddled with dis-
parate information residing in silos throughout the organization
and an obsolete front-end order-entry system with limited func-
tionality that was built on home-grown technologies. This
client’s inability to efficiently make accurate decisions resulted in
revenue losses and wasted time that heightened the business risk
and impacted customer loyalty. In fact the inefficient order-entry
system resulted in three of every 100 orders received proving
fraudulent. The organization implemented a solution founded in
IBM software, including WebSphere ILOG JRules, with support
from IBM Global Business Services®.
The rules-based solution helped enable the retailer to transform
operations and processes and ensure effective fraud detection
and case management. IBM’s flexible, scalable solution helped
business users access the information they needed to make
informed decisions and take appropriate action when they
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12 From touch points to turn rates
Let’s look for a moment at another key part of the promotion
area—the opportunity to cross-sell and up-sell a customer by
delivering targeted offers to them based on their interests and
buying habits. Consider what might happen if a retailer could
take their customer segmentation to another level by injecting
additional intelligence into empowering employees and users in
the business network to uncover new correlations between buy-
ing patterns, customer profiles and shopping history, thereby
delivering on-the-spot tailored promotions to the customer.
When retailers follow our prescribed road map, moving
decision-making capabilities closer to the customer touch points
and empowering business users with intelligence to effectively
and efficiently deliver targeted promotions and offers, they are
better able to meet the needs of the customer, increase satisfac-
tion and boost sales. With a combination of process automation,
business rules and in-context intelligence, retailers can deliver
finer-grained promotions, pricing and strategic offers that
increase the precision of operational decisions and improve
the consistency of customer interactions to ensure a customer-
centric approach.
Customer spotlight 5:
Beauty retailer boosts customer loyalty
with rules-based promotion process
A French cosmetics and beauty company
had in place a manual and highly inefficient
process for its loyalty cards that slowed
down employees and the organization’s ability to respond to
market needs. Cashiers and the promotions infrastructure
could not keep up with the fast-changing, potentially conflicting
promotional offers that had to be tracked in real time. This
IBM client implemented a solution based on WebSphere ILOG
JRules to manage rules that define marketing promotions and
dependencies on the loyalty program.
received alerts about an inappropriate transaction occurrence.
Benefits included significant reduction in the amount of time
spent on loss-prevention activities, including manual auditing
of potentially bad transactions. Today, a potential invalid transac-
tion is diagnosed and acted on within hours instead of weeks.
As a result, customer service is improved, staff efficiencies are
increased and profits are up, while risk to the supply chain
is down.
Objective 3: Delivering a customer-centric retail experience
In response to better-informed consumers with higher expecta-
tions, retailers need to put the customer first throughout every
area of the business. Customers have more choice and more
knowledge than ever before, so customer service really is job-one
today. We’ve discussed the need for retailers to drive business
agility as they also align information and processes throughout
the business for compliance and transparency. Woven through
all of this is the need for retailers to ensure a customer-centric
approach in everything they do. The customer needs to have
efficient, timely access to the products and services they need,
when and where they need them. All this needs to be backedby knowledgeable staff who are informed and able to present a
top-notch customer experience to shoppers.
Earlier, we looked into the promotions planning process and
explored the gains to be yielded by automating a once-manual
process. We discussed the value that predefined business rules
can provide by enabling the business user to make informed
decisions about next steps to take. This represented the first step
of the road map to retail success. Improved process models for
managing promotional campaigns can help retailers reach more
customers, give greater control and improve overall effectiveness
by 20 to 25 percent.
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Now, the organization can turn customer loyalty cards into a
powerful differentiator that takes into account point of sale
transactions, in addition to customer profile and sales history.
Shoppers now receive loyalty cards with embedded magnetic
strips that track their personal information, spending habits
and earned rewards. The solution automates points management
and rewards, while offering the business real-time visibility into
customer buying patterns. The new rules-based solution resulted
in dramatically reduced time to market for hundreds of promo-tional offers every month, improving the personalization and
accuracy of promotions to five million customers through
45 million transactions annually. Customers realized increased
savings and extended their loyalty; meanwhile, the organization
is able, using highly accurate customer data, to quickly adapt to
marketplace conditions.
Customer spotlight 6:
Large home improvement store
improves efficiencies by automating
supply chain
A large home improvement store faced a
prevalent retail issue: the need to ensure
that the right product is on the right shelf at the right time to
meet the customer needs. Reliance on error-prone manual
processes conducted by entry-level workers put the organization
at risk. More than 100,000 SKUs needed to be tracked manually
in systems based on spreadsheets and manual counts, rendering
the data unreliable and difficult to analyze. The organization
sought to automate this mission-critical business process to
ensure supply chain replenishment would happen in a timely,
efficient manner.
This client implemented a solution based on IBM’s business
process management offering that enabled them to automate
the once-manual process with an application that integrated
smoothly and completely with several existing back-end systems
to drive efficiencies and register exceptions. The solution helped
enable the retailer to obtain clear views of their inventory
so they could forecast seasonal and regional variants and
replenish shelves with the right product at the right time.
Staff efficiencies are improved, which in turn provides improvedlevels of customer service and, of top importance, customer
satisfaction—from having the right products available when
and where needed.
Driving business agility to address core
business pains We’ve outlined our prescription for success and how retailers
following a roadmap based on process optimization and decision
management can realize a wide range of benefits throughout
numerous areas of the organization. We’ve shared real-world
stories of retailers who’ve optimized their business processesto reduce bottlenecks, boost efficiencies and realize tangible
benefits. We’ve observed their ability to make better, more
effective and timely business decisions based on predefined rules
and intelligence that helps business users to make informed deci-
sions that can be further refined in the future for continuous
improvement.
We’ve also discussed how critical it is for retailers to increase
their business agility in order to successfully address the key
challenges they are facing today as they operate in dynamic
business environments laden with increasing complexity, while
striving to meet the needs of better-informed customers with
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14 From touch points to turn rates
higher expectations than ever. You’ll recall that USD1.2 trillion
in excess merchandise is stockpiled in supply chains, instead of
on store shelves where they can be seen and purchased. By fol-
lowing the road map outlined here for optimized business
processes and rules-based decision making, retailers can improve
business agility and solve key challenges in several core business
processes that span their organization, including:
● Promotions planning and management. Streamline coordi-nation of tasks and information from disparate areas of the
organization for potential boost of promotion success rates by
50 percent.● Vendor trade fund management. Recoup potentially lost
funds and improve future agreements and increase cash flows
by a much as 20 to 25 percent.● Pricing management. Simplify pricing of simple to complex
products and bundles to ensure profitability while enabling
dynamic pricing to meet customer needs.● Multichannel inventory location. Make available the right
product when and where customers need it for potential rev-
enue increases of up to 30 percent or more.● Vendor onboarding. Get products to market quickly and
boost time to value by up to 80 percent.● Inventory replenishment. Ensure availability of the right
products the customer needs and increase customer spend by
up to 25 percent.
● Customer loyalty, cross-sell and up-sell. Provide targeted
offers to enhance customer satisfaction and boost sales—
improving effectiveness of promotions by 25 percent.
Future-proofing for success in a dynamic
retail network The complex, dynamic and broadly networked environment in
which retailers are operating requires that they find new oppor-
tunities to improve their business. Simple cost-cutting measures
are no longer sufficient. Instead, retailers need to optimize busi-
ness processes to gain efficiencies, while leveraging the insights
gained from customer and organizational data that will provide
the competitive differentiation needed to achieve success and
sustained growth. End-to-end process visibility and dynamic,
real-time insight are needed to enable retailers to effectively
respond to customer demand, and this need is evolving faster
than retailers’ ability to meet those demands, hence the need to
increase business agility with BPM and decision management—
and to get started as soon as possible.
This is the evolution that many organizations are making
today—moving from inefficient access to information, lack of
insight and an inability to predict customer wants or how to
respond to them, to predictability and responsiveness based on
informed decision making that leads to effective action. Retailers
are realizing the value of automating the manual processes per-
formed by back-office employees, while providing employees
with in-depth, context-rich information about changing markets
and customer habits. Those that deliver the information employ-
ees need to make the right decisions for the business position
themselves for increased customer satisfaction and sustained
business success.
Looking ahead, information is only going to gain importance
and power, and retailers who implement techniques for mining,
analyzing and acting on statistics and historical data will be
better positioned to predict and plan for future events, customer
behaviors and buying patterns. To future-proof their organiza-
tions, retailers ought not only to be optimizing processes and
identifying business rules to guide actions; they also must inject
intelligence into the business processes to enable better, more
timely decision making today, while considering historical infor-
mation to help them plan and position for future success and
growth. By embracing predictive analytics, retailers can detect
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15IBM Software
useful patterns and discover new insights to help them make
better decisions, deliver suggested next-best offers and empower
their employees to provide an improved customer experience.
Successful companies today are recognizing the increasing need
for business agility, driven by process optimization and decision
management. To help you take your efforts to the next level and
keep up with the pace of change, we’ve defined a road map that
takes retailers to two important stops on the road to businessagility: business process automation and decision management.
The question that remains is which stop does your organization
need to make first? Many organizations find value in starting
with process optimization before they determine the extent of
decision management required. Some start with the decision
points in their process and work from there to achieve agility.
We want to hear your perspective on which stop you’re making
first on your road map to business agility. Join us in conversation
on Twitter: #bizagility—we want to hear from you.
Getting started on a sure path to
business agilityGet your organization started now on the road to business
agility. Depending on your needs, IBM can work with you to
determine the most appropriate starting place—whether you are
ready to start with a specific project, or are wanting to build your
success out into a broader program or a complete organizational
transformation to achieve higher value. To learn more about
how your organization can take part in a complimentary
IBM Process Improvement Discovery Workshop to help
you estimate value and appropriate entry points recommended
to get you started on your process automation and rules
management efforts, visit the following website:ibm.com /process-improvement-workshop
Assess YourBusiness
Objectives
Complete aninitial project in90 days or less
Advance toHigher Value
Accelerate change
Control costs and add flexibility
Define and automate abusiness process
Integrate a core systemwith a partnerapplication
Virtualize anapplication
Extend and enhanceprocess improvements
Deliver new services
12
3
Project Scope
B u s i n e s s O u t c o m e s
Manage and scaleworkloads in the cloud
Integrate withcustomers, suppliersand partners
Figure 4: Three phases of building a road map to business agility.
IBM is a business and technology leader offering hardware,
software and services to help clients effectively integrate business
strategy, business process management, service-oriented archi-tecture (SOA) connectivity and integration and dynamic applica-
tion infrastructure—to drive greater agility and better business
outcomes.
IBM offers a variety of solutions that can be deployed individu-
ally or together. Those referenced in this paper include:
● IBM Business Process Manager, a powerfully simple solu-
tion providing centralized visibility and control along with
industrial-grade scalability ● IBM WebSphere ILOG JRules for the creation and deploy-
ment of powerful rule-based applications
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Please Recycle
Additional WebSphere offerings are also available, including
software for SOA environments to enable dynamic, intercon-
nected business processes and delivery of highly effective applica-
tion infrastructures for all business situations. In addition,
IBM offers the IBM Retail Industry Framework, which provides
a software platform for deploying retail solutions in addition to
specific IBM industry accelerators to speed implementation of
BPM projects and realize ROI more quickly.
IBM has the tools, knowledge and industry-specific experience
to help you optimize your retail organization and drive business
agility on the road to smarter commerce, including enhanced
customer satisfaction and increased sales.
For more information To learn more about BPM solutions from IBM that can drive
business agility in retail and join in the conversation on how
IBM can help you shape your road map to business agility,
please contact your IBM marketing representative or
IBM Business Partner, or visit the following website:
ibm.com /websphere/retail
Additionally, financing solutions from IBM Global Financing
can enable effective cash management, protection from technol-
ogy obsolescence, improved total cost of ownership and return
on investment. Also, our Global Asset Recovery Services help
address environmental concerns with new, more energy-efficientsolutions. For more information on IBM Global Financing, visit:
ibm.com /financing
© Copyright IBM Corporation 2011IBM CorporationRoute 100Somers, NY 10589U.S.A.
Produced in the United States of America May 2011 All Rights Reserved
IBM, the IBM logo, ibm.com, Global Business Services, ILOG,and WebSphere are trademarks of International Business MachinesCorporation in the United States, other countries or both. If these and
other IBM trademarked terms are marked on their first occurrence inthis information with a trademark symbol (® or ™), these symbols indicateU.S. registered or common law trademarks owned by IBM at the time thisinformation was published. Such trademarks may also be registered orcommon law trademarks in other countries. A current list of IBM trademarksis available on the web at “Copyright and trademark information” atibm.com /legal/copytrade.shtml
Other company, product or service names may be trademarks or servicemarks of others.
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