When it comes to retail (and eCommerce), it is no secret that this industry is experiencing some pretty exciting (but challenging) times. We all know the questions any retailer asks themselves, as these are, actually, not that particularly unique to the retail business:
- How do I optimize customer satisfaction and increase customer retention?
- How do I lower my operating costs so that IT can focus on strategic initiatives that really impact my business?
- How do I find that one competitive advantage that will help me strengthen my market position and generate more revenue?
These challenges have been talked through over and over again, and there is no need for me to put my two cents worth in, too.
Instead, I would rather address this article with the challenges that retail companies face due to inefficient application integration. There are, in fact, four major issues common to many retail businesses that I would like to highlight. In addition to that, I will suggest some possible integration scenarios that can help solve these issues and show how exactly these solutions will likely help retailers deal with other challenges, which seemingly have little to do with application integration per se.
1. High Dependency on Manual Processes
Manual processes are time-consuming, error-prone, require many resources, and are a bad fit when a retail business is growing and needs to scale. Yet, astonishingly, many retailers still handle a good amount of business-critical operations manually.
The range of cases is endless. Some use manual processes for taking orders, verifying deliveries, payment processing, making the necessary order changes like canceling items that should no longer be fulfilled, and updating orders as soon as they have been fulfilled.
Others are basically forced to handle certain processes, i.e., fulfillment, because their supply chain partners or 3PL warehouse have different EDI file standards that cannot be dynamically mapped and automated.
Another common scenario is when a retailer is using multiple components to manage various customer and business-related processes, which sometimes happens when a company manages more than one business models. An example would be a company that on the one side, sells dietary supplements for weight loss and on the other side, features a team of medical specialists who provide healthcare services to individuals with weight issues. In this case, when it comes to streamlining data, the staff is forced to re-key data between different components manually. Plus multiple databases have to be checked in case a complete overview of a customer’s interaction history is needed.
Integration Scenarios for Reducing Manual Work
When speaking about automation of order processing, a good solution would be to create automatic data mapping between orders to suppliers and distributors in order to increase the capacity to process those orders. In addition to that, one could automate invoice generation and delivery to all internal as well as external suppliers, partners, and customers.
In order for fast-growing companies to be able to effectively manage inventory of products, a good solution would be connecting their order fulfillment management systems like the ones from NetSuite or Sage with the warehouse, especially if they use 3PL warehouse. This will ensure that a product won’t be out of stock when least expected.
In general, connecting customer, warehouse, order and logistics management solutions (just to name a few), eliminates the need to re-key data over and over again, thus considerably decreasing manual work and freeing both IT and non-IT to actually focus on the business development rather than on pure business maintenance.
An important thing to consider at this point is different data formats to juggle with. EDI interface is still pretty much common solution for data exchange in retail, even though it is also very tedious, expensive in terms of resources consumption and very error-prone.
More lightweight modern solutions for retail will offer API for integration, but retailers will very likely have to deal with both when connecting order management systems with warehouse, fulfillment management, and databases.
In order to decrease or completely eliminate excessive manual work, it makes sense to automate a number of business-critical processes through a standardized integration middleware like iPaaS, as opposed to doing this with point-to-point integrations. In addition to its (default) integration capability, such a standardized integration middleware also provides an easy way to translate various data formats between applications, systems, and databases.
2. Too Many Efforts to Gain a for 360-Degree Customer View
It is hardly debatable that customer data is crucial to retail business success. The more of it that you have, the better you can optimize new product recommendations, marketing campaigns, buying incentives – this is to name just a few opportunities.
Just having customer data and having it all in one place makes a huge difference in timely reactions, operations efficiency and eventually, in customer retention.
Integration Scenario for Gaining 360-Degree Customer View
In order to effectively manage customer relationships, one of the most crucial integrations is the one between your ERP solution, such as Dynamics NAV or SAP Business ByDesign, and CRM solution, such as Dynamics CRM, SugarCRM, or Salesforce.
This enables retailers to get access to all business activity including the most recent one, improving customer care and making it easy to adjust interaction with customers based on their past shopping history.
Additionally, it makes sense to integrate solutions like MailChimp or Mailjet for better and more streamlined marketing efforts.
Gaining a 360° customer view is a very complex matter. As already indicated above, connecting ERP and CRM is already a good start, but only a start. Eventually, you will need to add more and more systems and platforms, like social media platforms and website analytics.
The complexity of such integration monstrosity will be huge and extremely challenging for effective maintenance. Let alone the fact that adding more and more “points” will result in high costs and long project implementation cycles.
The benefit of a standardized integration middleware is that it comes with pre-configured integration connectors to multiple applications, databases, platforms, and systems. Additionally, quite a number of such integration middleware offerings give developers self-service tools to build their own connectors to homegrown or yet missing systems. Plus it provides a dashboard for consistent monitoring of integration flows.
All this makes adding as well as maintaining new “integration points” considerably easier, as well as less resource- and time-consuming.
3. Difficulties to Scale in Case of Increase in Delivery Volume
It is a common scenario for many retail businesses: They start small and don’t need many systems to handle order processing, fulfillment, and delivery. But with the increase in delivery volume or in the case of rapid expansion, they are suddenly faced with the problem of managing multiple delivery locations.
We have already mentioned that excessive manual work seriously impedes retail companies’ ability to scale their business. But with the scenario described above, the reason why scaling can become difficult lies in the sudden surge of locations that need to be monitored and maintained all at the same time, which requires many resources and often leads to increase in errors.
Integration Scenario for Scaling Business
In this case, one of the likely integration scenarios will be connecting warehouse management system, delivery locations, be that own stores or other point-of-sale, and order management system. This way, orders will go from warehouse straight to POS, and from there to order management, allowing to handle delivery more efficiently and within short time frame.
Here, in order to connect all three “dots,” you will most likely need a uniform integration platform more than in any of the other cases because quite a large amount of retail solutions cannot scale to support massive transaction volume, so point-to-point integration will be pointless (no pun intended). Of course, just replacing one system with another can be a way out, but realistically, completely migrating to another platform can be considerably more difficult and expensive than putting an integration middleware in between.
By the way, when it comes to scaling, it is also important to pay attention that such an integration middleware is not only scalable but also delivers high performance with low latency to enable fast data transaction.
4. Unsatisfactory Speed of Delivery and Order Management
There are several ways to become a retailer of the year and smash the competition, and ensuring fast delivery is one the most desirable, and yet difficult to fulfill. The keyword here is real-time.
Either due to excessive manual processes (which has already been discussed earlier) or inefficient data transfer between web stores and other systems involved, orders can be delayed by an hour in the best case scenario, and by a day in the worst one.
Integration Scenario for Faster Delivery and Better Order Management
In order to ensure faster delivery, first thing that needs to be tackled is real-time integration between your own web store (for example, built on Magento, Shopware, or eCommerce tools), third-party web store like Amazon, Etsy or eBay if it’s your case, and an ERP system (NetSuite, Sage, SAP ByDesign, and Co). This will help optimize the order management and order fulfillment in such a way, that you as a retailer can safely promise your customers that their order will be shipped on the same day if the order is made, say, by 5PM.
However, to indeed deliver on this promise, it’s not enough to have a new order in your ERP system one second later after it was placed on your web store. You will also need to take care of real-time integration from the ERP (or directly from the web store) to a warehouse and logistics partner systems, no matter whether you ship by UPS, DHL, or FedEx.
This is one part concerning faster delivery. In order to have also effective order management in place, you will need to additionally integrate your inventory system, and possibly your supply chain partners. This will help you automate and streamline inventory adjustments, shipment status notifications, even manage fulfillment across multiple locations if that’s your case.
This is bound to be a very complex integration bundle that will be tricky to efficiently maintain with in-house point-to-point integrations. The major benefit of a standardized application integration middleware in this scenario is not even the easiness with which systems can be “plugged in” and “plugged out,” but the complete overview of the status of your integrations, when they run, how many items have been processed, and what exactly went wrong in case an order hasn’t been processed properly.
The ultimate benefit of standardized application integration and integration middleware is not only automated retail-related processes. In the end, with less manual work, faster delivery, better customer and order management, you as a retailer can help your IT considerably streamline many operating processes, eventually reducing their costs. In addition, you’ll be able to deliver extraordinary customer experience, which is ultimately what any retail business lives on.