Sunday 17th Dec 2017 - Logistics Manager

Better laid plans

Addressing the Oracle summit in London earlier this year, John Davison, managing vp and research director for retail at Gartner, pointed out that 83 per cent of retailers still use spreadsheets for merchandise management.

Several retail speakers at the conference went on to highlight the problems that Spreadsheet City creates – no single version of the truth, buyers and merchandisers manipulating their Excels to create whichever scenario best suits their aims and, increasingly, vast files that either fall over or
create increasing demands on IT storage.

For retailers, merchandise management has tended to be a catch-all label for a raft of supply chain activities, both planning and execution, but even among tier 1 players spreadsheets are, apparently, the norm for this sort of activity. The annual IT in Retail survey of systems used by 100 leading retailers carried out by Martec and sponsored by Microsoft, suggests that currently 36 of these top 100 players use ‘inhouse systems’ for ‘merchandise management’ some 48 claim not to use ‘merchandise planning software’ at all while 10 admit to using inhouse systems (aka spreadsheets?) for planning. Of those opting for packaged solutions JDA is the clear leader with 20 of the top 100 using its merchandise management tools and 14 its planning applications.

A lack of planning tools
The authors of the report suggest that the apparent lack of planning tools among its survey group is due to the fact that only nonfood companies actually require merchandise planning applications. It’s an interesting thought, but a cursory thumb through the survey data reveals that companies such as Boots, Carpetright, DFS Furniture, Disney Stores, Dixons, Goldsmiths, HMV and Homebase – all non-food – are listed as not using merchandise planning systems. Since Excel is not separately identified as a merchandise planning tool in this survey one can only assume that many of these retailers are using spreadsheets to plan their product ranges. They must, one hopes, be using something. We all know retailing is an unpredictable industry so maybe they really do calculate merchandise needs on the back of an envelope. Perhaps lack of planning explains the poor performance of many retailers.

IT in Retail also looks at ‘logistics software’ – another catch-all category that appears to embrace a wide assortment of supply chain activities. Here 12 of the top 100 claim to have no need for SCM applications citing outsourcing or direct deliveries to stores, while a further 27 also use inhouse systems.

Certainly several of the large retailers interviewed do have extensive inhouse IT teams capable of developing powerful supply chain tools. Tesco, for example, built the core of its new TescoLink application inhouse using a mixture of WebSphere, Business Objects and Teradata systems in just nine months – a task project manager Karen Lockley, admits to being ‘very, very hard work’. As she also points out, when it came to designing the system to a tight timetable dictated by the board, the ‘business prevaricated, so we just had to build what IT thought they might need’.

Of course, once the business users received the basic application from the IT department and began to realise its potential, the list of requirements they’d quite like to have grew. Although the system is currently live with just 25 suppliers – 3,500 will be using it by the end of the year – already Lockley and her team have a list of 27 requirements from the buying teams to work into the next release.

It is a familiar story – buying an merchandising teams raised on Excel spreadsheets which they know and love simply fail to appreciate the additional functions available from today’s sophisticated supply chain management applications.

IT vendors, by and large, sell to IT departments and then, all too often, the IT department has to sell the system to the business. As Marcel Borlin, programme manager for range, space and merchandising at Tesco and currently implementing Oracle’s retail planning application across the group, recalls: ‘It took a year to achieve buy-in from the business. People were familiar and comfortable with the spreadsheet approach. They found it easy to manage their own files so it was not immediately apparent how a connected solution would be of much value.’

Perhaps that says it all. The tools are there to transform supply chains efficiency, but weaning the planners and merchandisers off their spreadsheets is the real challenge.