Departmental integration: the key to meeting consumer demand
Merchandisers form a vital link between the supply chain and the consumer, with Marketing and Sales activities helping to make that final connection to the merchandise itself.
However, merchandisers find themselves in an endless cycle of merchandise planning, year after year. Without much control over the broader supply process, their role has become more about finding ways to ‘sell what you’ve got’ instead of selling what the customer actually wants.
Information about what and when to sell particular items – and to whom – is at the very heart of being able to meet real consumer demand, and merchandisers are the key to unlocking this information.
Of course, we need more than just information to transform supply processes.
To abandon traditional and convenient processes and methods, in exchange for systems that serve a customer-centric model, requires integration across departments and active change management.
A fluid integration of activities across all departments (and supply-chain partners) is necessary to meet the demands of the consumer. This means you will require a new role to coordinate the new consumer-centric organisation.
Abandoning the legacy systems
While many retailers have already made incremental steps towards becoming consumer-centric, the reality is that most are falling short. Legacy systems and engrained tribalism in departments impede this change. This is crucial to continue serving customer needs.
This ‘legacy thinking’ is not unique to the merchandising department or even the fashion sector. This is a widespread issue that needs to be addressed from the ground up. There is no question that this is hard.
The entire industry is geared towards serving this ‘rhythmic efficiency’ that runs from retail operations all the way up the chain to manufacturers and suppliers.
Incremental change is better than no change at all. Nevertheless, the only way to actually change is to re-route all retailing activities towards an aligned objective: meeting customer demand.
How data helps departmental integration in meeting customer demand
Using a ‘loyalty card’ system, most supermarkets have been collecting incredibly granular details of each customer for years. Any retailer can do this, and the options for collecting customer data in fashion retail are much more wide-ranging. A digital strategy that includes the intelligent use of customer can help fashion retailers to meet their needs.
Using personalised information, it becomes possible to track customer’s individual needs and preferences and aggregate these into granular customer profiles. These individual customer profiles need to be detailed enough to explain how who we are dictates our needs and budgets.
With a detailed customer profile it’s possible to determine which products you need and how often. You can aggregate these to inform operational decisions that determine which products are needed where consumers come to buy.
How to make the shift to a customer-centric enterprise
What makes the whole enterprise customer-centric is the ability to match our systems and processes to the customer’s needs. Much of this can be achieved with coordination of operational activities; replenishing stock frequently enough that we can match actual consumption. But all activities need to align to meet this objective. When departments do not align themselves to this goal, they fall short of meeting the needs of the customer.
Examples of departmental misalignment typically include ordering constraints (MOQs, pack sizes, replenishment intervals) or logistics constraints (warehousing, fixed contracts) which seek to make operations efficient, but can limit stock availability and hurt the whole organisation.
To be able to achieve integration, brands and retailers must:
- Share a strategic vision across the company
- Align all departments (and stakeholders) on that shared vision
- Integrate planning systems across the retail operation
- Increase collaboration between departments
- Make data flows transparent and available to all parts of the chain
- Implement agile methodologies to improve responsiveness and remove roadblocks and constraints to your business growth
When departments don’t work in alignment it is usually because they are following behaviours that maximise their own departmental KPIs instead of ones that maximise company throughput. This leads to actions and decisions that add to departmental efficiency while undermining the overall objective of serving the customer. This is a mistake.
Perfect coordination across departmental functions is needed to ensure the right decisions are made at the operational, tactical, and strategic level – ensuring that replenishment, assortment and planning is all focused on the same goal. Transparent data flows and new KPIs that reinforce the company-wide strategic vision are an essential part to achieving this.
Successful merchandising: a coordinated focus on the customer
Merchandising is in an excellent position to help meet customer demands through an expanded and refined role in customer-oriented merchandising. Merchandisers can expand this customer focus to include planned coordination of company operations across traditional department functions.
This new role is therefore a significant broadening of the traditional merchandise planning role. Using new KPIs that reflect the company goal (of serving the customer and maximising throughput for the supply chain) will help departments stay on track and prevent them from slipping into old habits based on ‘departmental integration’.
All departments will then be working towards serving detailed ‘customer of one’ profiles, optimising customer engagement using digital technology, and using granular insights about individual customers to serve an assortment that matches their shopping list.
Fulfilling the customer demand requires the following:
- Departmental integration, working towards serving the customer
- Creating and coordinating holistic solutions that meet the customer’s needs
- Integrated planning of financial, inventory, and customer strategy
- Customer profiling and categorisation of customer needs
- Management of Merchandising operations
- Planning of inventory, logistics and fulfilment across the whole supply chain
- Identifying and mitigating physical supply constraints that undermine effectiveness
- Customer Experience execution
With all these activities in place it becomes possible to better meet the customer needs.
When all the items they want are in stock (and available via whichever channel they use to shop) the customer will never go away disappointed or empty-handed. However, these are considerable tasks to manage, and this new role will require new tools to make this efficient and 100% coordinated.
Automating coordination across departments
Technological solutions such as Business Intelligence tools can help achieve a holistic perspective of company operations, but to manage the seamless integration of supply processes and balanced fulfilment via each sales channel, retailers should use smart software that automates these processes.
It may seem like just another ‘small, incremental step’, but implementing a disruptive technology like this can totally transform working methods through the whole supply chain.
Retailisation’s demand-driven replenishment and allocation solution is a perfect example of a powerful technology that can help to embed cross-departmental coordination, because it enables a responsive supply-model that serves the customer by automating decisions about what to order, ship, make or buy in line with real demand. This is one ‘incremental’ step that catalyses transformational change – while reducing the organisational burden of the operation.