Off the Shelf: The Retail & CPG Blog

In my earlier post (available here), I had raised a few points regarding how we can obtain traceability across the supply chain using RFID (Radio Frequency Identification). I would like to thank everyone for the overwhelming response received in that post. In continuum with the same, I have published a white-paper on the topic "Supply Chain Traceability with RFID and SAP" (available here), in which I have elaborately discussed a viable solution for realizing track & trace in the supply chain by the use of an EPCIS (EPC Information Service)-certified repository.

Based on the EPCIS standards, there are several compliant products available in the market which can be used as central repositories to store and maintain RFID information. Through these repositories, existing applications such as WMS systems can obtain relevant EPC (Electronic Product Code) information whenever it is required, e.g., while commissioning or creating ASN (Advanced Shipment Notification).

Most of these products provide standard interfaces for posting data to them, for querying them for information and for managing EPC serial-numbers (e.g., HTTP, HTTPS, web-services) via standard integrators and EAI (Enterprise Application Integration) tools. Through these interfaces, it becomes very easy for all trading partners in the supply chain to post or retrieve RFID events on a real-time basis, thus allowing every RFID-tagged object (like a pallet or a case or a cart) to be tracked with a greater amount of granularity and accuracy, and providing information pertaining to its complete life-cycle.

A lot of organizations have got acquainted with RFID by using proprietary technology provided by vendors, and in many of these cases, the third-parties (vendors) also host the information for them. In certain cases, the dependency on vendor-hosted applications and repositories is to the extent that critical business functions like commissioning and creating ASN (advanced shipment notification) are done by them. While such solutions have helped jump-start the adoption of RFID, they are not scalable in the long run because they impose a lot of dependency on the vendor and they lack standards, thereby implying lesser integration with a large number of existing systems or with trading-partners. Deploying a central repository which is compliant with EPCIS standards goes a long way in eliminating the dependency on vendors, ensures that critical information related to the business processes of an enterprise remain within its systems, and also allows for seamless data-exchange with trading partners using industry-standard mechanisms.

For more information on this, please refer to my white paper whose link I've provided above. I'd like to hear your thoughts and opinions too - please feel free to post your comments about the same here.

Posted by Mayank Shridhar at 10:31 AM | Permalink | Comments (3) | TrackBacks (0)

Much has been written about the need for customer understanding and indeed, customer intimacy.  We hear from all quarters about how we need to know who is buying our products, in what combinations and why.  We can then target our marketing at them with a laser-like focus providing them with offers and information that will be interesting to them.  This benefits the customer by reducing the amount of marketing that we are sending them and saves money for the organization by reducing the total number of marketing items.

As consumers, we look forward to the day when we go to our favorite Web sites and see only content and marketing that is interesting to us, not to John Q. Public.  Religious people should see ads for trips to the Holy Land, not to Club Med.  Football fans will be presented with football tickets, apparel and souvenirs not golf clubs.  Soccer fans will see soccer stuff not cookware.  Home decorating will see window treatments, but their spouses will see table saws instead.  Some of this is happening now on the Web, as everyone who shops Amazon.com can attest.  This is not generally true on other eCommerce sites, and even less in stores.  A few luxury stores keep records of what their store customers are buying and looking for, but by and large the retail store visit is still an anonymous shopping experience.

There are two primary reasons for this lack of information, one historical and the other systems-related.  The historical reason is that retail started as a transactional business.  Customers walk in, pick up merchandise and go to the checkout line.  This has worked well as evidenced by the amount of merchandise sold this way, but it is far from the best way to interact with customer.  The second, the systems reason is that it is difficult to know who is shopping with you at all times.  You can know that someone is browsing you Web store, but you don’t always know who it is.    She can order goods by phone based on your catalog, but is this the same person who was on your site.  You can see people in your brick and mortar store, but you probably don’t know who they are.  You can check someone out and capture the order but who is the buyer?  What you need for customer intimacy is to know every time your organization touches the customer.  A customer can call you on the phone with an customer service request.

Today, a customer walks into your store and buys a skirt.  She goes home and buys shoes on you Web Store.  Later she calls the catalog order center and orders a blouse. After they arrive, she calls customer service about a black mark on the shoe.  In the ideal world, every one of these touch points would be recorded and linked to the customer profile.  In the real world, each transaction is recorded separately with little or no accompanying info about who the customer was.

The key to obtaining this total view is customer identification at the transaction.  How can you get a store customer to provide you with her identity without annoying them? How can you know when someone is on your Web store prior to logging in?  When a phone order is placed, how do you record the identity of the buyer in a useful way.

One way to do this is by matching credit card numbers.  If two transactions are paid using the same credit card, it is likely, but far from certain that they were created for the same customer.  Husbands and wives often share a card, and older children often use the parents’ card, especially for online purchases.  A better way is by using a loyalty program.

Loyalty programs are often thought of as marketing tools.  That is true, but only part of the value.  A well-designed loyalty program will incentivize a customer to provide their loyalty card or number for every transaction. Airlines, rental car companies and some grocery stores are very successful at getting me to provide this data.  Free flights, free car rentals, and meaningful discounts on groceries and gasoline are all the incentive that I need to identify myself.  Without the free stuff, my compliance is sparse.  Online stores and catalog sales could also use a loyalty card for checkout.

Another online tool for discovering identity is the Web cookie.  A cookie is a small data file that browsers store between visits to your site.  Initially, users were afraid of cookies and would disable or delete them as a habit.  Over time, this fear has subsided and they are now left enabled and rarely deleted.  When an online customer arrives at the site, your code can examine the contents of the cookie to determine their identity and record any interesting or important behavior for later use.

Once all this data is gathered, it needs to be collated.  In the ideal world, a customer management system would be at the center of your system architecture. This system would contain every single contact between your customer and your organization would be recorded here.  The marketing analysis would be straightforward and the target customers for any campaign easy to identify.

 If that is not in place, then a data warehouse can be designed to aggregate this data from transactional feeds. This is less convenient but can accomplish the same thing; segmenting customers based on their buying behavior.  This insight might be the differential that causes your firm to slowly gain a clear advantage over the competition.  Alternatively, it may allow you to survive if the competition for your customers becomes fierce.

Posted by Stephen Alan Potts at 4:51 PM | Permalink | Comments (2) | TrackBacks (0)

Most of the large retail enterprises start multi channel commerce transformation initiatives with a strategizing and package evaluation phase - the idea being that the selected ecommerce package would act as the center pin of their multichannel strategy. But is it really about the package or is it about what is done over and above to what the package provides that really matters?

As predicted by market research organizations last year, we see that a lot of the retail enterprises have actively started transforming their ecommerce businesses. They all see the online platform as a basic building block to build differentiating multichannel capabilities. Almost all organizations go through a package evaluation phase where they try to weigh capabilities of commercial off the shelf (COTS) ecommerce platforms. After having seen through some of the strategizing, evaluation, implementation and maintenance phases of our customers, there is a very interesting aspect that I want to bring out – about the relevance of the package evaluation and the package itself, in the medium to long term. Before proceeding further, let me make it clear that this is applicable only for enterprises that are large – large as in more than 250 M USD in revenue annually, or more than 250 K Items, or may be with more than 2 M active users and so on.

Tying this back to where I started  - If the COTS platform ends literally being the platform on and around which one would build differentiating features, how can package selection be more important than the ability to plan and implement additional and differentiating features on top of it ? This is precisely my point as well. I am not trying to say that package selection is irrelevant for large enterprises. They are important and should be done after due diligence. However, package selection is only a necessary but not a sufficient ingredient for success in business. The process of designing customer centric business capabilities which would differentiate one business from another is the key for large retailers. This requires a clear business vision, backed by strong architecting and design capabilities.

Posted by Mohan Kumar Krishnan at 9:40 AM | Permalink | Comments (1) | TrackBacks (0)

Late last year, New York Times reported that labels listing carbon emission associated with certain produce products have started appearing in the grocery stores and restaurants in Sweden.  This is a direct result of the study done by the Nutrition Department at the Swedish National Food Administration which established new food guidelines with equal weight for climate and health. The study has brought out many surprising facts about the greenhouse gas released by the different produce items during the growth.

For example, the study recommends Swedes to eat chicken over red meat because of larger greenhouse emission associated with raising cattle. Report says combined with the guidelines and new labeling, Sweden expects to cut the emission by 20 to 50 percent.

While I principally agree to this noble idea, the results will depend on the adoption by the mass. There is a widespread awareness about the global warming in the developed and developing countries. There could be thousands of reasons for carbon emission and many thousands of avenues to reduce it. However we have seen very little practical efforts towards reducing carbon emissions. It looks like everyone waiting for somebody else to do something. It has not reached to an individual responsibility level. In order to leverage carbon labeling people may have to change their dietary habits, which may take a long time.

Another challenge will be the effort and cost that is required to create a comprehensive database of the carbon emission equivalent for every possible food item in a country (Sweden). Database may have to be revised periodically to account for changes in dynamics that leads to the emission rating.

Leave the challenges aside, grocery retailers can grab the opportunity here. Early movers (by adopting carbon emission labeling) can capitalize by marketing stories. Parallel can be drawn from the nutritional labeling effort by some of the grocery retailers, which got them shopper’s attention and increased their sales. It all depends on the appetite for the investment.

Posted by Mahabaleshwar Bhat at 9:04 AM | Permalink | Comments (1) | TrackBacks (0)

One of my Infosys colleagues, Madhu Janardan, blogged right before the Holidays last November about how consumers are suffering from “item variety overload” when confronted with 24 varieties of mustard, Heartburn pills that are either fast-acting or long-lasting (wouldn’t you want both?) and the like.  Now besides being an expert in Grocery Retail, my friend Madhu is an excellent cook, so he knows his way around a Grocery aisle and knows the pain of which he writes.  But Madhu and consumers aren’t the only ones that may suffer from “item variety overload.”  Grocery category managers and IT executives are straining under the weight of all the data that this “variety” is causing. 

All 24 varieties of Madhu’s mustard quandary represent different item data categories, which can then vary further by packaging sizes (24 varieties in 12 oz, 18oz and 32oz packages).  Then when you consider locations that carry all these varieties and then trying to track which ones are more popular among your Loyalty Card holders… whew!  Grocers will need to take one of those “fast-acting” pills for the Master Data heartburn they’re generating.

While Grocers may suffer from self-inflicted Master Data Management (MDM) wounds trying to offer more spice to one’s life, (especially in the Post-Holiday season…) we all know that the issue of rapidly growing Master Data (item, location, customer, even vendor) is not going away anytime soon.  In fact Grocers were on the leading edge in developing custom MDM solutions 3-5 years ago; only recently have other Retail segments begun to catch up in the quest for the “single version of truth” over one’s Master Data.  At the same time, the package software MDM solutions have also begun to catch up and just like the inner aisles, are springing up multiple varieties of solutions.

Grocers looking to work with Systems Integrators and Consultants for guidance in solving their MDM problems or updating custom solutions that can’t scale their enterprise should consider those SI’s that have strong Alliance relationships with the growing number of MDM technology players emerging in the market.  MDM solutions come in many “varieties” as well:  some offer “toolkits” for a Grocer’s own modification desires; others offer a complete application with best-of-breed functionality that may offer lower TCO over the long run.  Still others operate out of middleware platform that emphasizes the need to integrate data from multiple legacy and ERP transactional systems. 

SI’s that foster strong partnerships with the major MDM software companies can offer Grocers a collaborative MDM solution that provides a better marriage of MDM process improvement with leading-edge technology; rather than picking a product and an implementation partner separately.  SI’s develop these Alliance Partner relationships to stay current on latest versions, offer specific software recommendations based on initial assessments, build client-ready demo’s to test-run the solution, and to put together a solution delivery team that can also include specific product expertise from the MDM software company.  The SI and MDM software firm can then operate as one team enabling faster time to delivery at less risk with a lower TCO.

Posted by Don Vangeloff at 7:09 AM | Permalink | Comments (0) | TrackBacks (0)