IBM SoftwareRetail

Thought Leadership White Paper

From touch points to turn ratesCharting a road map for retail success with BPM anddecision management

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 andcustomer 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, theembrace of new technology helps them broadcast their dissatis-faction far and wide with a few mouse clicks.

The complex, dynamic businessenvironment facing retailersThe retailer’s expanding business network involves complex rela-tionships between customers, suppliers, partners and vendors.Today’s retailer is increasingly challenged to adapt and respondas these business networks become broader and increasinglydynamic. In addition to this complex dynamic, a greater numberof critical functions are taking place outside of the business,requiring improved collaboration within and outside of theretailer’s organization.

In a recent IBM study, 87 percent of CIOs interviewed declaredthat their organization will be more collaborative in the next fiveyears. As more functions move outside the walls of the business,the distinction between external and internal members of one’sbusiness network is disappearing. Hence, companies must lookto maximize the value of the interactions throughout their entirenetwork—viewing each interaction between, for example, sup-plier and vendor or marketing and customer as an opportunityto improve a process or relationship and capture greater value.

IBM Software 3

Adding a layer of additional complexity is the fact that today’sconsumers are more discerning, informed and demanding thanever before. In addition to the impact that technology has ontheir 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 andmanufacturers that broadcast to the consuming public throughthe traditional channels of TV, radio and print advertising.These increasingly informed consumers are short on time andwant to be served, not sold to. They want retailers to listen tothem, know them and empower them to shop, browse and checkout products when and where they want them.

This shift in dynamic between the consumer and the providermeans that retailers must enhance customer insight and segmentation—to know, for example, that a particular customerenjoys “preferred customer” status, has been shopping for newcookware online and will want to take advantage of current priceincentives and coupons, including a birthday discount. This kindof customer insight can be used to ensure a level of customersatisfaction 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 scalablesolutions to drive business agilityIn this paper we will discuss the issues retailers face in today’scomplex 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 waytheir organization enables business users to make decisions.We’ll also explore several customer examples of proven resultsachieved by retailers on the road to success with BPM and decision management.

Many retail processes, such as the planning of a promotion,include a high degree of end-user involvement and frequentchange. Many separate activities and events need to be orches-trated involving numerous people and information residing indisparate 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.

4 From touch points to turn rates

To succeed in this complex, dynamic business environment,retailers must move faster, become more flexible and optimizecosts while putting greater focus on the processes that drivebusiness execution. Today’s retailers demand fast and accuratebusiness-level decision making—the ability to capture and workwith knowledge about customers’ needs, preferences, buyingpatterns and propensities, and the relationships and interdepen-dencies within the business network, in real time, is crucial tobecoming an agile organization. And, to adapt to the complexityand growing body of information encompassed in and flowingthrough the ever-broadening network, retailers need flexiblesolutions that can scale to meet those growing demands.

Taking the first step with business processoptimizationIBM’s Smarter Commerce approach recognizes that the sale isjust 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 businessprocesses that help companies buy, market, sell and service their products and services.

Indeed, processes are everywhere. There are people-centricprocesses required to reconcile a vendor trade fund agreement;back-end processes that drive integration of data and inventoryamong 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 acloser look at the value of process optimization.

Optimizing performance with process automation andstrategic rules policiesThe automation of manual steps involved in a process typicallyleads to increased productivity, reduction in errors, lower costsand less need for manual intervention for exception handling,content management and other common tasks. Many retailprocesses can benefit from automation—from simple workflows,such as a vendor onboarding process, to complex multientity,multisystem processes, such as order fulfillment. Processautomation spans across any number of disjointed IT systems,information and human tasks, and orchestrates them into anoptimized process flow.

As retailers strive to build agile organizations, they are seekingways to optimize the countless dynamic processes involved inrunning the business and delivering products to customers whereand 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 infrastructurestightly aligned to the needs of the business are better equippedto address the changing needs of the market and the customer.Agile retailers are able to refine and continually improveprocesses over time, and to tap into the information needed todrive intelligent, effective decision making.

5IBM Software

To help us further explore how retailers can achieve success andgrowth in a dynamic business environment, let’s look at theunique values that two technologies bring to enable agility—specifically, business process management (BPM) and businessrules management systems (BRMS).

BPM and BRMS—a two-pronged approach to processimprovementBPM can help retailers to orchestrate various tasks and servicesthat comprise the end-to-end business of their organization. Abusiness rules management system (BRMS) helps manage auto-mated decisions at specific points in a business process. BPM andBRMS can be thought of as two prongs in a business-processimprovement effort. In most cases, a BRMS is exposed to BPMthrough web services that are invoked by the business process tomake 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 businessprocess. It can also be used to automate complex, highly variabledecisions that take place at different points in a process and inother systems that may not be involved in orchestratedprocesses.

The IBM Business Process Manager solution provides a unifiedBPM 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 andoptimization that the IBM Business Process Manager solutionprovides, a retailer can gain significant efficiencies, avoid costlyerrors and increase customer satisfaction.

For example, the documentation and automation of the processrequired for the planning of a promotion can provide the busi-ness user with an environment for improved collaboration andcontinuous change, where the user can monitor the various tasksin the workflow through a user experience that helps themengage more fully in the steps of the process. Has the ad beensent to the printer? Has the price been approved by financing?Are approved suppliers able to fulfill inventory requirements ontime? These and other questions are quickly answered throughthe end-to-end process visibility and improved collaboration thatIBM 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 equippedwith streamlined processes that include the capability to drivepowerful decision making, based on predefined rules and busi-ness policies. To expand on the previous example, if the businessuser determines that the supplier is unable to deliver enoughinventory to meet the needs of the promotion, the business user can draw on the predefined rules to determine alternativevendors that are approved in good standing, have the requiredinventory and can deliver in the appropriate time frame. Withthis information in hand, a well-informed, effective decision canbe made to improve the business outcome and ensure customersatisfaction. The value of rule-based decision making can berealized both during the execution of the business process and insubsequent processes as the business user is empowered to refinethe rule sets based on the user’s learnings—providing futureopportunities to achieve further optimized business outcomesand improved decision making.

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 andWebSphere ILOG JRules together provides retailers with a scalable solution for more efficient, simpler, faster processimprovement that can yield the organizational agility required tosucceed and grow in the dynamic, complex business environ-ment of today.

Taking the next step with decisionmanagementWe’ve talked about the problems that invariably arise when business processes are not optimized. In the previous section weoutlined the value to retailers of bringing together processautomation and rules management technologies to enable the

flexible creation of solutions for process improvement. That’sstep one of the road map to retail success. Now let’s explore steptwo of the road map—how your organization can attain the nextlevel of business agility with decision management technology.

The value proposition of BPM for decision management goesbeyond 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 andrelated information to selecting the right offer to present to customers. Yet, it is common knowledge that nearly 50 percentof all promotions fail to reach their volume and profit targets,because some part of the promotion was not executed asplanned. Implementing a successful and well planned promotioninvolves many people within and outside the retail organizationthat oversee the development and creation of the advertisingmessage, the buying of media spots, the sourcing of inventoryand the distribution and display of the promotion in stores andon the web. In addition, the promotion planning and implemen-tation process may be started up to 26 weeks prior to circulationof the advertisements. Many details need to be tracked at thestock-keeping unit (SKU) and day level throughout multipleparts of the business to ensure a successful promotion, andnumerous decisions need to be made along the way. Any varia-tion and change of plan in this complex set of processes willlikely have a negative impact on the promotion performance.

7IBM Software

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 thatintersect the process. As a result, when an issue arises it can beaddressed in an effective and timely manner, based on context-specific information—helping to avoid problems later. WhenBPM is combined with decision management, the functionalityavailable in business event processing, business rule managementand process orchestration can be leveraged to streamline theprocess and embed decision logic.

To address the increasingly complex demands of today’sinformed consumer, retailers need capabilities to allow them todesign, implement and monitor business processes, manage busi-ness strategy and automate decisions. They need capabilities toenable them to deliver insights at the point of impact (or, touchpoint) to empower the employee with the tools and informationto 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 beenestablished to enable effective, more informed and timely deci-sion making, imagine the value of being able to more effectivelydifferentiate and personalize offers for customers, based onimproved intelligence provided in context. By delivering insightsto 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 tounforeseen events in the supply chain—before they impact thebusiness.

Decisions are required to be made throughout all layers of theorganization, and retailers face innumerable opportunities toimprove business agility and customer satisfaction through optimized decision-management capabilities. Typically, there are four key areas where retailers can drive business agilitythrough optimized business processes and improved decisionmanagement:

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 investigateexceptions 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, timelydecisions, based on the insight gained.

4. Act. Retailers succeed when they are equipped to execute onthe appropriate decisions in accordance with defined nextsteps, while they continue to observe and detect and make further refinements to the process and defined events, asrequired.

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 useorganizational insight and know-how at the point of impact—when and where it matters.

Taking it to the next level—deliveringinsight when and where it mattersWhen 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 effectivelymanage the vast amounts of data flowing in and out of the business. Add to this the number of decisions that must be madethroughout all areas of the business and we see the need forretailers to be responsive to the increasingly complex anddynamic marketplace. Business process management combinedwith decision management can empower retailers to furtherincrease their organization’s agility in addressing three prioritybusiness 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 responsivenessBecause customers are more informed and demanding, loyalty isa key challenge for retailers. As a result, retailers are seekingways to improve business agility and responsiveness to customerand market demands. By providing their employees with clearlydefined processes, rules and intelligence necessary to manageand improve decision making, retailers can shorten responsetimes and bring the right product to the right customer at theright time—with speed and increased consistency.

Key Components of Business Process Agility

Decision Management leverages and aligns BPM components tomaximize 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 DECISIONS

are 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, analysis

and 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.

9IBM Software

But many retailers are spinning their wheels and losing sales,merchandise and customers in the process. Fifty percent of retailpromotions are not executed effectively, resulting in a huge lossin potential sales because the needed information could not getinto the right hands at the right time. USD93 billion in sales aremissed globally each year because retailers don’t have the rightproducts in stock to meet customer demand. USD1.2 trillion inexcess merchandise is stockpiled in supply chains, resulting inlong lead times at a great cost to retailers, because of informa-tion gaps or bottlenecks in the end-to-end business process. Theimpact to a retailer’s business of not pursuing improvements inbusiness agility and responsiveness is very serious—and can bevery costly.

Empowering the front-line staff to deliver better service andimproving the systems and technology with which customersinteract enables retailers to create a highly productive customerexperience at the touch points, where it makes the greatest dif-ference. To make that happen, both systems and staff need tohave the right information to make the right, informed decisionat the right time, effectively answering questions such as: Is thisone of our best customers? Should she receive a special rate ordiscount—right now? What should I offer next? Where should Isend her next?

The application of business rules-based decision making pro-vides the mechanism to help make informed decisions quicklyabout what to offer to whom—while the customer is at a retailtouch point. The right decision can be automated using businessrules, helping enable front-line staff to make the right offer with

confidence and providing a high level of service in a predictablefashion spanning all customer touch points. It is this improvedability to provide the most-relevant information about a product,service or customer to the right place at the right time in theright manner that can greatly boost a retailer’s agility andresponsiveness.

Customer spotlight 1:Major grocer builds agility and respon-siveness with automated HR processA major grocer needed a better way ofempowering local managers with the flexi-bility to adapt their core business processes,

while still adhering to corporate standards and policies. Theyturned to IBM’s business process management offering to helpthem more efficiently manage human resource (HR) processesto keep pace with their rapidly increasing hiring needs. Throughprocess optimization the grocer ensured consistent and timelyresponse to employees and the business by delivering a guidedself-service option to streamline HR requests and integrate datawith existing HR management systems.

The solution automated manual, error-prone processes, helpingto reduce bottlenecks and enable the organization to leverageexisting data and corporate policies. Results included significantefficiency improvements, along with a 90 percent reduction intime spent managing the process and a 400 percent increase in their HR requests completion rate.

10 From touch points to turn rates

Customer spotlight 2:Large specialty retailer empowers storeowners with rules-driven merchandisingassortmentAn award-winning specialty retailer neededto manage the assortment and display place-

ment of thousands of units throughout thousands of stores. ThisIBM client required flexible assortment-planning capabilities tomeet the needs of the growing business and to guide space plan-ning for store- and shelf-layout strategies, while empoweringstore owners to improve execution quality and efficiency. Theretailer implemented a solution based on WebSphere ILOGJRules and took full advantage of business rules to redefineassortment planning and help them identify strategies to increasesales, improve relationships and boost efficiencies.

The specialty retailer now provides more flexibility to storemanagers to change parameters and rules as applied to productmix and optimal placement, based on the specific needs of theirlocation, customers, seasons and local buying factors—whilecomplying with corporate requirements. The resulting benefitsinclude more effective and efficient dispatching of personnel forthe monitoring, restocking and arrangement of merchandise,along with the intelligence to drive mark-down optimization,production planning and scheduling. The retailer has realizedimproved revenues from optimal product placement and areduction in time needed to determine product mix recommen-dations for all stores—from 70 hours down to 70 minutes, oncethe process was optimized and the business rules were defined.

Objective 2: Enhanced business alignment, compliance andtransparency Retailers need to achieve alignment among people, informationand processes throughout the organization. Many retailers arespending money and time on manual processes—for example, inthe way they manage and reconcile the agreements with andallowances owed to them from vendors.

The cost of handling exceptions, tracking and reprocessingdenied claims and conducting post-audit services can cost aretailer 20 to 25 percent of the recovered dollars, in addition tothe legal costs incurred for noncompliance. By optimizing thevendor trade fund management process, retailers can increaseefficiencies and cash flow with timely receipt of hard cash fromvendors 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 intheir business network make informed, in-context decisionsabout 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 businessprocesses and business rules management to externalize decisionsand automate the more complex ones.

By maximizing the effectiveness of their decisions, retailers can achieve optimum allocation of inventory and resources andreduce 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

11IBM Software

improved, because in many cases managing trade funds andadministering allowances are still largely manual processes.Employees are required to locate information from disparate,nonintegrated sources and systems for manual entry intounwieldy spreadsheets. This process is not only time consumingand error prone, it can lead to unnecessary risks for the retailer,in the form of unused and unclaimed funds, unrecoverableinvoice write-offs and limited tracking and trade fund reconcilia-tion capabilities.

Customer spotlight 3:Outdoor gear retailer improves revenuesthrough automation of vendor trade fundprocessAn outdoor gear retailer opted to automatethe vendor trade fund management process

from vendor contract management and in-season rebates to rec-onciliation and invoicing. The automated solution positivelyimpacted many roles in multiple areas of the business, includingthe merchant/category manager, financial analyst, finance direc-tor, CFO and legal contact—and all needed to access key vendorcontract information, maintained in spreadsheets, to performtheir individual roles.

The disparate processes and systems resulted in unused andunclaimed trade funds; the retailer was leaving cash on the tableby missing rebates and paybacks it was owed from vendors. Theorganization knew it needed to integrate processes and improvedocumentation control in order to facilitate the recovery of dollars otherwise written off. In addition, the company neededimproved 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 itsspotty tracking and lack of accountability impacted its ability tocomply with government standards and regulations.

The retailer implemented a process automation solution thatincluded business rules to ensure compliance of vendor policies,on-time collection of invoices, tracking and reconciliation ofout-of-cycle negotiated rebates that would otherwise be lost, andtimely generation of invoices, using accurate data from differentsources throughout the enterprise. Anticipated results includeimproved cash flows resulting from increased data accuracy andvisibility, lower staffing costs and increased compliance. Thesepositive results will be compounded by future gains yielded fromimprovements based on better-informed future negotiations.

Customer spotlight 4:Leading outdoor equipment and apparelcompany applies business rules to reducefraudA leading US-based company sellingapparel, outdoor equipment and advisory

services faced several challenges. They were saddled with dis-parate information residing in silos throughout the organizationand an obsolete front-end order-entry system with limited func-tionality that was built on home-grown technologies. Thisclient’s inability to efficiently make accurate decisions resulted inrevenue losses and wasted time that heightened the business riskand impacted customer loyalty. In fact the inefficient order-entrysystem resulted in three of every 100 orders received provingfraudulent. The organization implemented a solution founded inIBM software, including WebSphere ILOG JRules, with supportfrom IBM Global Business Services®.

The rules-based solution helped enable the retailer to transformoperations and processes and ensure effective fraud detectionand case management. IBM’s flexible, scalable solution helpedbusiness users access the information they needed to makeinformed decisions and take appropriate action when they

12 From touch points to turn rates

Let’s look for a moment at another key part of the promotionarea—the opportunity to cross-sell and up-sell a customer bydelivering targeted offers to them based on their interests andbuying habits. Consider what might happen if a retailer couldtake their customer segmentation to another level by injectingadditional intelligence into empowering employees and users inthe business network to uncover new correlations between buy-ing patterns, customer profiles and shopping history, therebydelivering on-the-spot tailored promotions to the customer.

When retailers follow our prescribed road map, moving decision-making capabilities closer to the customer touch pointsand empowering business users with intelligence to effectivelyand efficiently deliver targeted promotions and offers, they arebetter 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 deliverfiner-grained promotions, pricing and strategic offers thatincrease 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 loyaltywith rules-based promotion processA French cosmetics and beauty companyhad in place a manual and highly inefficientprocess for its loyalty cards that slowed

down employees and the organization’s ability to respond tomarket needs. Cashiers and the promotions infrastructure could not keep up with the fast-changing, potentially conflictingpromotional offers that had to be tracked in real time. ThisIBM client implemented a solution based on WebSphere ILOGJRules to manage rules that define marketing promotions anddependencies on the loyalty program.

received alerts about an inappropriate transaction occurrence.Benefits included significant reduction in the amount of timespent 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 areincreased and profits are up, while risk to the supply chain is down.

Objective 3: Delivering a customer-centric retail experienceIn response to better-informed consumers with higher expecta-tions, retailers need to put the customer first throughout everyarea of the business. Customers have more choice and moreknowledge than ever before, so customer service really is job-onetoday. We’ve discussed the need for retailers to drive businessagility as they also align information and processes throughoutthe business for compliance and transparency. Woven throughall of this is the need for retailers to ensure a customer-centricapproach in everything they do. The customer needs to haveefficient, timely access to the products and services they need,when and where they need them. All this needs to be backed by knowledgeable staff who are informed and able to present atop-notch customer experience to shoppers.

Earlier, we looked into the promotions planning process andexplored the gains to be yielded by automating a once-manualprocess. We discussed the value that predefined business rulescan provide by enabling the business user to make informeddecisions about next steps to take. This represented the first stepof the road map to retail success. Improved process models formanaging promotional campaigns can help retailers reach morecustomers, give greater control and improve overall effectivenessby 20 to 25 percent.

13IBM Software

Now, the organization can turn customer loyalty cards into apowerful differentiator that takes into account point of saletransactions, in addition to customer profile and sales history.Shoppers now receive loyalty cards with embedded magneticstrips that track their personal information, spending habits and earned rewards. The solution automates points managementand rewards, while offering the business real-time visibility intocustomer buying patterns. The new rules-based solution resultedin dramatically reduced time to market for hundreds of promo-tional offers every month, improving the personalization andaccuracy of promotions to five million customers through 45 million transactions annually. Customers realized increasedsavings and extended their loyalty; meanwhile, the organizationis able, using highly accurate customer data, to quickly adapt tomarketplace conditions.

Customer spotlight 6:Large home improvement storeimproves efficiencies by automating supply chainA large home improvement store faced aprevalent retail issue: the need to ensure

that the right product is on the right shelf at the right time tomeet the customer needs. Reliance on error-prone manualprocesses conducted by entry-level workers put the organizationat risk. More than 100,000 SKUs needed to be tracked manuallyin systems based on spreadsheets and manual counts, renderingthe data unreliable and difficult to analyze. The organizationsought to automate this mission-critical business process toensure supply chain replenishment would happen in a timely,efficient manner.

This client implemented a solution based on IBM’s businessprocess management offering that enabled them to automate the once-manual process with an application that integratedsmoothly and completely with several existing back-end systemsto drive efficiencies and register exceptions. The solution helpedenable 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 corebusiness painsWe’ve outlined our prescription for success and how retailersfollowing a roadmap based on process optimization and decisionmanagement can realize a wide range of benefits throughoutnumerous areas of the organization. We’ve shared real-worldstories of retailers who’ve optimized their business processes to 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 rulesand intelligence that helps business users to make informed deci-sions that can be further refined in the future for continuousimprovement.

We’ve also discussed how critical it is for retailers to increasetheir business agility in order to successfully address the keychallenges they are facing today as they operate in dynamic business environments laden with increasing complexity, whilestriving to meet the needs of better-informed customers with

14 From touch points to turn rates

higher expectations than ever. You’ll recall that USD1.2 trillionin excess merchandise is stockpiled in supply chains, instead ofon store shelves where they can be seen and purchased. By fol-lowing the road map outlined here for optimized businessprocesses and rules-based decision making, retailers can improvebusiness agility and solve key challenges in several core businessprocesses that span their organization, including:

● Promotions planning and management. Streamline coordi-nation of tasks and information from disparate areas of theorganization for potential boost of promotion success rates by50 percent.

● Vendor trade fund management. Recoup potentially lostfunds and improve future agreements and increase cash flowsby a much as 20 to 25 percent.

● Pricing management. Simplify pricing of simple to complexproducts and bundles to ensure profitability while enablingdynamic pricing to meet customer needs.

● Multichannel inventory location. Make available the rightproduct 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 andboost time to value by up to 80 percent.

● Inventory replenishment. Ensure availability of the rightproducts the customer needs and increase customer spend byup to 25 percent.

● Customer loyalty, cross-sell and up-sell. Provide targetedoffers to enhance customer satisfaction and boost sales—improving effectiveness of promotions by 25 percent.

Future-proofing for success in a dynamicretail networkThe complex, dynamic and broadly networked environment inwhich retailers are operating requires that they find new oppor-tunities to improve their business. Simple cost-cutting measuresare 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 providethe competitive differentiation needed to achieve success andsustained growth. End-to-end process visibility and dynamic,real-time insight are needed to enable retailers to effectivelyrespond to customer demand, and this need is evolving fasterthan retailers’ ability to meet those demands, hence the need toincrease business agility with BPM and decision management—and to get started as soon as possible.

This is the evolution that many organizations are makingtoday—moving from inefficient access to information, lack ofinsight and an inability to predict customer wants or how torespond to them, to predictability and responsiveness based oninformed decision making that leads to effective action. Retailersare realizing the value of automating the manual processes per-formed by back-office employees, while providing employeeswith in-depth, context-rich information about changing marketsand customer habits. Those that deliver the information employ-ees need to make the right decisions for the business positionthemselves for increased customer satisfaction and sustainedbusiness success.

Looking ahead, information is only going to gain importanceand 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, customerbehaviors and buying patterns. To future-proof their organiza-tions, retailers ought not only to be optimizing processes andidentifying business rules to guide actions; they also must injectintelligence into the business processes to enable better, moretimely decision making today, while considering historical infor-mation to help them plan and position for future success andgrowth. By embracing predictive analytics, retailers can detect

15IBM Software

useful patterns and discover new insights to help them make better decisions, deliver suggested next-best offers and empowertheir employees to provide an improved customer experience.

Successful companies today are recognizing the increasing needfor business agility, driven by process optimization and decisionmanagement. To help you take your efforts to the next level andkeep up with the pace of change, we’ve defined a road map thattakes 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 organizationneed to make first? Many organizations find value in startingwith process optimization before they determine the extent ofdecision management required. Some start with the decisionpoints in their process and work from there to achieve agility.We want to hear your perspective on which stop you’re makingfirst on your road map to business agility. Join us in conversationon 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 businessagility. Depending on your needs, IBM can work with you todetermine the most appropriate starting place—whether you areready to start with a specific project, or are wanting to build yoursuccess out into a broader program or a complete organizationaltransformation to achieve higher value. To learn more abouthow your organization can take part in a complimentaryIBM Process Improvement Discovery Workshop to help you estimate value and appropriate entry points recommendedto 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 addflexibility

Define and automate abusiness process

Integrate a core systemwith a partnerapplication

Virtualize anapplication

Extend and enhanceprocess improvements

Deliver new services

12

3

Project Scope

Bu

sin

es

s O

utc

om

es

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 businessstrategy, business process management, service-oriented archi-tecture (SOA) connectivity and integration and dynamic applica-tion infrastructure—to drive greater agility and better businessoutcomes.

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 withindustrial-grade scalability

● IBM WebSphere ILOG JRules for the creation and deploy-ment of powerful rule-based applications

Please Recycle

Additional WebSphere offerings are also available, includingsoftware 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 providesa software platform for deploying retail solutions in addition tospecific IBM industry accelerators to speed implementation ofBPM projects and realize ROI more quickly.

IBM has the tools, knowledge and industry-specific experienceto help you optimize your retail organization and drive businessagility on the road to smarter commerce, including enhancedcustomer satisfaction and increased sales.

For more informationTo learn more about BPM solutions from IBM that can drivebusiness agility in retail and join in the conversation on howIBM can help you shape your road map to business agility, please contact your IBM marketing representative orIBM Business Partner, or visit the following website:ibm.com/websphere/retail

Additionally, financing solutions from IBM Global Financingcan enable effective cash management, protection from technol-ogy obsolescence, improved total cost of ownership and returnon investment. Also, our Global Asset Recovery Services helpaddress 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 AmericaMay 2011All 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 in this 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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