Put yourself in the position of a Regional Manager of a retail chain faced with the following, all-too-common, dilemma:
Sales at the retail store level are not growing at the pace you have experienced in recent years based on this year versus last year quarterly comparisons. You have received constant feedback and complaints from the local store managers of problems with out of stock inventory.
What do you do?
You go and observe your warehouse conditions and confirm visually that your warehouse is packed with inventory with no room to spare, but clearly there are consistently too many out of stocks to ensure that profits are maximized.
With some preliminary joint planning among internal management, you propose to upper management that a new warehouse is needed at a cost of $5MM with completion time estimated in 24 months. The new warehouse will ensure you have the space needed for inventory to keep the shelves full.
The decision is ultimately approved and all that is needed now is to cope with out of stocks and lost sales for the next two years while the proposed solution is implemented.
Of course this story is oversimplified, but what would the decision look like if monthly and quarterly data were integrated and fully accessible to the local store manager as well as the Regional manager?
Jumping to $5MM conclusions solely on the basis of visual consideration of warehouse problems associated with lost sales is unacceptable in today’s operating environment; but sadly this decision experience still exists in far too many retail chains.
Too many retail supply chains are operating with traditional IT platforms. This means that the data needed to make intelligent business decisions is not available to the local manager who has frontline responsibility for the out of stock problem.
While many items may be out of stock, how many items in the warehouse are overstocked and being allocated too much space? How many slow moving items in the overflowing warehouse sit and collect dust while waiting to be ordered so they can move?
Waiting to receive a quarterly report that shows slowing or declining sales is not enough.
All traditional silos of data need to be accessible in seconds by management to remain competitive. Local managers must be able to rapidly drill down and discover the core problem and then make real time trackable decisions.
What might have happened if the Regional manager and the local store manager each had this capability in their daily operations?