Achieving Greater Decision Management in Retail | IBM

8/3/2019 Achieving Greater Decision Management in Retail | IBM

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IBM Software

Retail

Thought Leadership White Paper

From touch points to turn ratesCharting a road map for retail success with BPM and decision management



2 From touch points to turn rates

Contents

2 The complex, dynamic business environment facing

retailers

3 Prescribing a road map for scalable solutions to drive

business agility

4 Taking the first step with business process optimization

6 Taking the next step with decision management

8 Taking it to the next level—delivering insight when and

where it matters

13 Driving business agility to address core business pains

14 Future-proofing for success in a dynamic retail network

15 Getting started on a sure path to business agility

Retailers operate in a complex business environment marked

by dynamic change and compounded by better-informed cus-tomers demanding ever-increasing levels of personalization and

customer service. If an organization can’t meet their needs,

customers will quickly take their business to one of the many

increasingly sophisticated global competitors. Meanwhile, the

embrace of new technology helps them broadcast their dissatis-

faction far and wide with a few mouse clicks.

The complex, dynamic business

environment facing retailers The retailer’s expanding business network involves complex rela-

tionships between customers, suppliers, partners and vendors.

Today’s retailer is increasingly challenged to adapt and respond

as these business networks become broader and increasingly

dynamic. In addition to this complex dynamic, a greater number

of critical functions are taking place outside of the business,

requiring improved collaboration within and outside of the

retailer’s organization.

In a recent IBM study, 87 percent of CIOs interviewed declared

that their organization will be more collaborative in the next five

years. As more functions move outside the walls of the business,

the distinction between external and internal members of one’s

business network is disappearing. Hence, companies must look to maximize the value of the interactions throughout their entire

network—viewing each interaction between, for example, sup-

plier and vendor or marketing and customer as an opportunity

to improve a process or relationship and capture greater value.



IBM Software 3

Adding a layer of additional complexity is the fact that today’s

consumers are more discerning, informed and demanding than

ever before. In addition to the impact that technology has on

their buying behaviors, consumers today are more strongly

influenced by the opinions of friends, family and product

experts through new social media channels. They no longer

rely almost entirely on “trusted” product experts, retailers and

manufacturers that broadcast to the consuming public through

the traditional channels of TV, radio and print advertising.

These increasingly informed consumers are short on time and

want to be served, not sold to. They want retailers to listen to

them, know them and empower them to shop, browse and check

out products when and where they want them.

This shift in dynamic between the consumer and the provider

means that retailers must enhance customer insight and

segmentation—to know, for example, that a particular customer

enjoys “preferred customer” status, has been shopping for new

cookware online and will want to take advantage of current price

incentives and coupons, including a birthday discount. This kind

of customer insight can be used to ensure a level of customer

satisfaction that increases the likelihood the customer will rec-

ommend products and services, purchase more and remain loyalto the retailer—in spite of the competition.

Prescribing a road map for scalable

solutions to drive business agilityIn this paper we will discuss the issues retailers face in today’s

complex business environment, and we will prescribe a road

map to success that, first, prescribes retailers to optimize busi-

ness processes and, second, guides retailers to tackle the way

their organization enables business users to make decisions.

We’ll also explore several customer examples of proven results

achieved by retailers on the road to success with BPM anddecision management.

Many retail processes, such as the planning of a promotion,

include a high degree of end-user involvement and frequent

change. Many separate activities and events need to be orches-

trated involving numerous people and information residing in

disparate locations.

Franchisee

Vendors

StoresRetailers

Retailers

Logistics

Consumers

Marketing

Merchants

Stores

Suppliers

Figure 1: The expanding retail network—a complex and dynamic web of rela-

tionships, interdependencies and transactions that increasingly drives the

retail business model.




To succeed in this complex, dynamic business environment,

retailers must move faster, become more flexible and optimize

costs while putting greater focus on the processes that drive

business execution. Today’s retailers demand fast and accurate

business-level decision making—the ability to capture and work

with knowledge about customers’ needs, preferences, buying

patterns and propensities, and the relationships and interdepen-

dencies within the business network, in real time, is crucial to

becoming an agile organization. And, to adapt to the complexity and growing body of information encompassed in and flowing

through the ever-broadening network, retailers need flexible

solutions that can scale to meet those growing demands.

Taking the first step with business process

optimizationIBM’s Smarter Commerce approach recognizes that the sale is

just one aspect of the experience. As with traditional commerce,

the customer is at the center of all operations. Smarter com-

merce turns customer insight into action, enabling new business

processes that help companies buy, market, sell and servicetheir products and services.

Indeed, processes are everywhere. There are people-centric

processes required to reconcile a vendor trade fund agreement;

back-end processes that drive integration of data and inventory

among supply chain systems and customer-facing processes, such

as promotion and loyalty campaigns. Business processes under-

pin most activities spanning a retailer’s business, so let’s take a

closer look at the value of process optimization.

Optimizing performance with process automation and

strategic rules policies

The automation of manual steps involved in a process typically

leads to increased productivity, reduction in errors, lower costs

and less need for manual intervention for exception handling,content management and other common tasks. Many retail

processes can benefit from automation—from simple workflows,

such as a vendor onboarding process, to complex multientity,

multisystem processes, such as order fulfillment. Process

automation spans across any number of disjointed IT systems,

information and human tasks, and orchestrates them into an

optimized process flow.

As retailers strive to build agile organizations, they are seeking

ways to optimize the countless dynamic processes involved in

running the business and delivering products to customers where

and when they need them. A driving force behind an agileorganization is often represented in the alignment of the busi-

ness and IT teams. Retailers with flexible IT infrastructures

tightly aligned to the needs of the business are better equipped

to address the changing needs of the market and the customer.

Agile retailers are able to refine and continually improve

processes over time, and to tap into the information needed to

drive intelligent, effective decision making.



5IBM Software

To help us further explore how retailers can achieve success and

growth in a dynamic business environment, let’s look at the

unique values that two technologies bring to enable agility—

specifically, business process management (BPM) and business

rules management systems (BRMS).

BPM and BRMS—a two-pronged approach to process

improvement

BPM can help retailers to orchestrate various tasks and servicesthat comprise the end-to-end business of their organization. A

business rules management system (BRMS) helps manage auto-

mated decisions at specific points in a business process. BPM and

BRMS can be thought of as two prongs in a business-process

improvement effort. In most cases, a BRMS is exposed to BPM

through web services that are invoked by the business process to

make a decision that directly influences how the business oper-

ates. BRMS is a technology that enables retailers to define,

implement and manage simple routing rules inside a business

process. It can also be used to automate complex, highly variable

decisions that take place at different points in a process and in

other systems that may not be involved in orchestratedprocesses.

The IBM Business Process Manager solution provides a unified

BPM environment for collaborative process improvement,

designed to make it easy for process owners, business users

and IT to collaborate and engage directly in improving the

organization’s business processes. With the single, comprehen-

sive environment for process design, execution, monitoring and

optimization that the IBM Business Process Manager solution

provides, a retailer can gain significant efficiencies, avoid costly

errors and increase customer satisfaction.

For example, the documentation and automation of the process

required for the planning of a promotion can provide the busi-

ness user with an environment for improved collaboration and

continuous change, where the user can monitor the various tasks

in the workflow through a user experience that helps them

engage more fully in the steps of the process. Has the ad been

sent to the printer? Has the price been approved by financing?

Are approved suppliers able to fulfill inventory requirements on

time? These and other questions are quickly answered throughthe end-to-end process visibility and improved collaboration that

IBM Business Process Manager can provide.

By adding a BRMS to the process with IBM ® WebSphere®

ILOG® JRules , retailers can drive powerful rule-based applica-

tions that automate the fine-grained, variable decisions used

in business processes. As a result, business users are equipped

with streamlined processes that include the capability to drive

powerful decision making, based on predefined rules and busi-

ness policies. To expand on the previous example, if the business

user determines that the supplier is unable to deliver enough

inventory to meet the needs of the promotion, the business

user can draw on the predefined rules to determine alternative

vendors that are approved in good standing, have the required

inventory and can deliver in the appropriate time frame. With

this information in hand, a well-informed, effective decision can

be made to improve the business outcome and ensure customer

satisfaction. The value of rule-based decision making can be

realized both during the execution of the business process and in

subsequent processes as the business user is empowered to refine

the rule sets based on the user’s learnings—providing future

opportunities to achieve further optimized business outcomes

and improved decision making.




Figure 2: Driving better-informed decision making by delivering in-context

insight to business users.

The implementation of IBM Business Process Manager and

WebSphere ILOG JRules together provides retailers with a

scalable solution for more efficient, simpler, faster process

improvement that can yield the organizational agility required to

succeed and grow in the dynamic, complex business environ-

ment of today.

Taking the next step with decision

management We’ve talked about the problems that invariably arise when

business processes are not optimized. In the previous section we

outlined the value to retailers of bringing together process

automation and rules management technologies to enable the

flexible creation of solutions for process improvement. That’s

step one of the road map to retail success. Now let’s explore step

two of the road map—how your organization can attain the next

level of business agility with decision management technology.

The value proposition of BPM for decision management goes

beyond process automation, which helps to ensure process com-

pliance and the integration of people, processes and information.

By adding replicable best practices and the use of imbedded logicto optimized processes that span multiple roles and functions,

retailers can drive business agility to another level.

Over the past few years, a lot of attention has been given to

optimizing the planning and management of merchandise

promotions, from coordinating numerous people, tasks and

related information to selecting the right offer to present to

customers. Yet, it is common knowledge that nearly 50 percent

of all promotions fail to reach their volume and profit targets,

because some part of the promotion was not executed as

planned. Implementing a successful and well planned promotion

involves many people within and outside the retail organization

that oversee the development and creation of the advertising

message, the buying of media spots, the sourcing of inventory

and the distribution and display of the promotion in stores and

on the web. In addition, the promotion planning and implemen-

tation process may be started up to 26 weeks prior to circulation

of the advertisements. Many details need to be tracked at the

stock-keeping unit (SKU) and day level throughout multiple

parts of the business to ensure a successful promotion, and

numerous decisions need to be made along the way. Any varia-

tion and change of plan in this complex set of processes will

likely have a negative impact on the promotion performance.



7IBM Software

Therein lies the value of combining BPM with decision manage-

ment to ensure that all activities of the process are tracked in

an efficient manner, along with the many decision points that

intersect the process. As a result, when an issue arises it can be

addressed in an effective and timely manner, based on context-

specific information—helping to avoid problems later. When

BPM is combined with decision management, the functionality

available in business event processing, business rule management

and process orchestration can be leveraged to streamline theprocess and embed decision logic.

To address the increasingly complex demands of today’s

informed consumer, retailers need capabilities to allow them to

design, implement and monitor business processes, manage busi-

ness strategy and automate decisions. They need capabilities to

enable them to deliver insights at the point of impact (or, touch

point) to empower the employee with the tools and information

to make the right decision within a given context.

Let’s revisit the promotions planning process referred to earlier.

Once the process is automated and business events have been

established to enable effective, more informed and timely deci-

sion making, imagine the value of being able to more effectively

differentiate and personalize offers for customers, based on

improved intelligence provided in context. By delivering insights

to the right place at the right time, retailers can offer a consis-

tent experience through all interactions with the customer,

making pricing and promotions more responsive to competitors

and market conditions, and improve the ability to respond to

unforeseen events in the supply chain—before they impact the

business.

Decisions are required to be made throughout all layers of the

organization, and retailers face innumerable opportunities to

improve business agility and customer satisfaction through

optimized decision-management capabilities. Typically, there

are four key areas where retailers can drive business agility through optimized business processes and improved decision

management:

1. Observe and detect. Retailers want to know what is happen-

ing through the tracking of all activities and data that com-

prise a process or event.

2. Investigate. Retailers require the ability to quickly investigate

exceptions once detected, based on the rules defined in

the event.

3. Analyze and decide. Retailers need to understand the mean-

ing of what has been observed and make informed, timely

decisions, based on the insight gained.

4. Act. Retailers succeed when they are equipped to execute on

the appropriate decisions in accordance with defined next

steps, while they continue to observe and detect and make

further refinements to the process and defined events, as

required.




By combining software capabilities and expertise to automatecore business processes and improve operational decision mak-

ing, retailers can achieve greater business agility and fully use

organizational insight and know-how at the point of impact—

when and where it matters.

Taking it to the next level—delivering

insight when and where it matters When it comes to delivering on the promise of improved busi-

ness agility, we at IBM are certain of this: there are no shortcuts.

Retailers must improve the efficiency and integration of people

and information within their business processes through automa-

tion, and decision management—to efficiently and effectively

manage the vast amounts of data flowing in and out of the

business. Add to this the number of decisions that must be made

throughout all areas of the business and we see the need for

retailers to be responsive to the increasingly complex and

dynamic marketplace. Business process management combined

with decision management can empower retailers to further

increase their organization’s agility in addressing three priority business objectives:

1. Improved business agility and responsiveness

2. Enhanced business alignment, compliance and transparency

3. Delivering a customer-centric approach

Let’s explore each of these in greater detail.

Objective 1: Improved business agility and responsiveness

Because customers are more informed and demanding, loyalty isa key challenge for retailers. As a result, retailers are seeking

ways to improve business agility and responsiveness to customer

and market demands. By providing their employees with clearly

defined processes, rules and intelligence necessary to manage

and improve decision making, retailers can shorten response

times and bring the right product to the right customer at the

right time—with speed and increased consistency.

Key Components of Business Process Agility

Decision Management leverages and aligns BPM components to

maximize operating agility and efficiency

Detect Investigate Update

The business

situation is defined

as a single process

event made of

several activities

If an exception is

detected, it is quickly

INVESTIGATED

based on the

business Rules

defined around

the event

The Process engine

executes the Rules

directing the

ANALYSIS of the

situation and the

resulting DECISIONSare passed on to

another process or

to an individual for

follow up

Based on the event

outcome, Rules can

be modified and

UPDATED to

improve on the

tracking, analysisand decision path

to drive improved

outcomes in future

All activities are

tracked to DETECT

any issues that my

impact the process

Analyze/ Decide

Figure 3: Key areas where retailers can drive business process agility—

observe and detect, investigate, analyze and decide, act.



9IBM Software

But many retailers are spinning their wheels and losing sales,

merchandise and customers in the process. Fifty percent of retail

promotions are not executed effectively, resulting in a huge loss

in potential sales because the needed information could not get

into the right hands at the right time. USD93 billion in sales are

missed globally each year because retailers don’t have the right

products in stock to meet customer demand. USD1.2 trillion in

excess merchandise is stockpiled in supply chains, resulting in

long lead times at a great cost to retailers, because of informa-tion gaps or bottlenecks in the end-to-end business process. The

impact to a retailer’s business of not pursuing improvements in

business agility and responsiveness is very serious—and can be

very costly.

Empowering the front-line staff to deliver better service and

improving the systems and technology with which customers

interact enables retailers to create a highly productive customer

experience at the touch points, where it makes the greatest dif-

ference. To make that happen, both systems and staff need to

have the right information to make the right, informed decision

at the right time, effectively answering questions such as: Is this

one of our best customers? Should she receive a special rate or

discount—right now? What should I offer next? Where should I

send her next?

The application of business rules-based decision making pro-

vides the mechanism to help make informed decisions quickly

about what to offer to whom—while the customer is at a retail

touch point. The right decision can be automated using business

rules, helping enable front-line staff to make the right offer with

confidence and providing a high level of service in a predictable

fashion spanning all customer touch points. It is this improved

ability to provide the most-relevant information about a product,

service or customer to the right place at the right time in the

right manner that can greatly boost a retailer’s agility and

responsiveness.

Customer spotlight 1:

Major grocer builds agility and respon-siveness with automated HR process

A major grocer needed a better way of

empowering local managers with the flexi-

bility to adapt their core business processes,

while still adhering to corporate standards and policies. They

turned to IBM’s business process management offering to help

them more efficiently manage human resource (HR) processes

to keep pace with their rapidly increasing hiring needs. Through

process optimization the grocer ensured consistent and timely

response to employees and the business by delivering a guided

self-service option to streamline HR requests and integrate data

with existing HR management systems.

The solution automated manual, error-prone processes, helping

to reduce bottlenecks and enable the organization to leverage

existing data and corporate policies. Results included significant

efficiency improvements, along with a 90 percent reduction in

time spent managing the process and a 400 percent increase

in their HR requests completion rate.





Large specialty retailer empowers store

owners with rules-driven merchandising

assortment

An award-winning specialty retailer needed

to manage the assortment and display place-

ment of thousands of units throughout thousands of stores. This

IBM client required flexible assortment-planning capabilities to

meet the needs of the growing business and to guide space plan-ning for store- and shelf-layout strategies, while empowering

store owners to improve execution quality and efficiency. The

retailer implemented a solution based on WebSphere ILOG

JRules and took full advantage of business rules to redefine

assortment planning and help them identify strategies to increase

sales, improve relationships and boost efficiencies.

The specialty retailer now provides more flexibility to store

managers to change parameters and rules as applied to product

mix and optimal placement, based on the specific needs of their

location, customers, seasons and local buying factors—while

complying with corporate requirements. The resulting benefits

include more effective and efficient dispatching of personnel for

the monitoring, restocking and arrangement of merchandise,

along with the intelligence to drive mark-down optimization,

production planning and scheduling. The retailer has realized

improved revenues from optimal product placement and a

reduction in time needed to determine product mix recommen-

dations for all stores—from 70 hours down to 70 minutes, once

the process was optimized and the business rules were defined.

Objective 2: Enhanced business alignment, compliance and

transparency

Retailers need to achieve alignment among people, information

and processes throughout the organization. Many retailers are

spending money and time on manual processes—for example, in

the way they manage and reconcile the agreements with and

allowances owed to them from vendors.

The cost of handling exceptions, tracking and reprocessingdenied claims and conducting post-audit services can cost a

retailer 20 to 25 percent of the recovered dollars, in addition to

the legal costs incurred for noncompliance. By optimizing the

vendor trade fund management process, retailers can increase

efficiencies and cash flow with timely receipt of hard cash from

vendors that would otherwise be lost or delayed.

Retailers need to automate processes to achieve high pass-

through rates of information to help employees and users in

their business network make informed, in-context decisions

about resources, next steps and required actions to ensure cus-

tomer satisfaction and drive business success. By following theprescribed road map, retailers can improve business alignment,

compliance and transparency through optimized business

processes and business rules management to externalize decisions

and automate the more complex ones.

By maximizing the effectiveness of their decisions, retailers

can achieve optimum allocation of inventory and resources and

reduce risk in many processes. The vendor trade fund manage-

ment process is one example in which retailers can gain signifi-

cant benefit when transparency and alignment of information is



11IBM Software

improved, because in many cases managing trade funds and

administering allowances are still largely manual processes.

Employees are required to locate information from disparate,

nonintegrated sources and systems for manual entry into

unwieldy spreadsheets. This process is not only time consuming

and error prone, it can lead to unnecessary risks for the retailer,

in the form of unused and unclaimed funds, unrecoverable

invoice write-offs and limited tracking and trade fund reconcilia-

tion capabilities.


Outdoor gear retailer improves revenues

through automation of vendor trade fund

process

An outdoor gear retailer opted to automate

the vendor trade fund management process

from vendor contract management and in-season rebates to rec-

onciliation and invoicing. The automated solution positively

impacted many roles in multiple areas of the business, including

the merchant/category manager, financial analyst, finance direc-

tor, CFO and legal contact—and all needed to access key vendor

contract information, maintained in spreadsheets, to perform

their individual roles.

The disparate processes and systems resulted in unused and

unclaimed trade funds; the retailer was leaving cash on the table

by missing rebates and paybacks it was owed from vendors. The

organization knew it needed to integrate processes and improve

documentation control in order to facilitate the recovery of

dollars otherwise written off. In addition, the company needed

improved visibility into usage and return on investment (ROI)

of trade funds in order to effectively conduct annual cost

negotiations with vendors. Moreover, the company knew its

spotty tracking and lack of accountability impacted its ability to

comply with government standards and regulations.

The retailer implemented a process automation solution that

included business rules to ensure compliance of vendor policies,

on-time collection of invoices, tracking and reconciliation of

out-of-cycle negotiated rebates that would otherwise be lost, and

timely generation of invoices, using accurate data from different

sources throughout the enterprise. Anticipated results include

improved cash flows resulting from increased data accuracy and

visibility, lower staffing costs and increased compliance. These

positive results will be compounded by future gains yielded fromimprovements based on better-informed future negotiations.


Leading outdoor equipment and apparel

company applies business rules to reduce

fraud

A leading US-based company selling

apparel, outdoor equipment and advisory

services faced several challenges. They were saddled with dis-

parate information residing in silos throughout the organization

and an obsolete front-end order-entry system with limited func-

tionality that was built on home-grown technologies. This

client’s inability to efficiently make accurate decisions resulted in

revenue losses and wasted time that heightened the business risk

and impacted customer loyalty. In fact the inefficient order-entry

system resulted in three of every 100 orders received proving

fraudulent. The organization implemented a solution founded in

IBM software, including WebSphere ILOG JRules, with support

from IBM Global Business Services®.

The rules-based solution helped enable the retailer to transform

operations and processes and ensure effective fraud detection

and case management. IBM’s flexible, scalable solution helped

business users access the information they needed to make

informed decisions and take appropriate action when they




Let’s look for a moment at another key part of the promotion

area—the opportunity to cross-sell and up-sell a customer by

delivering targeted offers to them based on their interests and

buying habits. Consider what might happen if a retailer could

take their customer segmentation to another level by injecting

additional intelligence into empowering employees and users in

the business network to uncover new correlations between buy-

ing patterns, customer profiles and shopping history, thereby

delivering on-the-spot tailored promotions to the customer.

When retailers follow our prescribed road map, moving

decision-making capabilities closer to the customer touch points

and empowering business users with intelligence to effectively

and efficiently deliver targeted promotions and offers, they are

better able to meet the needs of the customer, increase satisfac-

tion and boost sales. With a combination of process automation,

business rules and in-context intelligence, retailers can deliver

finer-grained promotions, pricing and strategic offers that

increase the precision of operational decisions and improve

the consistency of customer interactions to ensure a customer-

centric approach.


Beauty retailer boosts customer loyalty

with rules-based promotion process

A French cosmetics and beauty company

had in place a manual and highly inefficient

process for its loyalty cards that slowed

down employees and the organization’s ability to respond to

market needs. Cashiers and the promotions infrastructure

could not keep up with the fast-changing, potentially conflicting

promotional offers that had to be tracked in real time. This

IBM client implemented a solution based on WebSphere ILOG

JRules to manage rules that define marketing promotions and

dependencies on the loyalty program.

received alerts about an inappropriate transaction occurrence.

Benefits included significant reduction in the amount of time

spent on loss-prevention activities, including manual auditing

of potentially bad transactions. Today, a potential invalid transac-

tion is diagnosed and acted on within hours instead of weeks.

As a result, customer service is improved, staff efficiencies are

increased and profits are up, while risk to the supply chain

is down.

Objective 3: Delivering a customer-centric retail experience

In response to better-informed consumers with higher expecta-

tions, retailers need to put the customer first throughout every

area of the business. Customers have more choice and more

knowledge than ever before, so customer service really is job-one

today. We’ve discussed the need for retailers to drive business

agility as they also align information and processes throughout

the business for compliance and transparency. Woven through

all of this is the need for retailers to ensure a customer-centric

approach in everything they do. The customer needs to have

efficient, timely access to the products and services they need,

when and where they need them. All this needs to be backedby knowledgeable staff who are informed and able to present a

top-notch customer experience to shoppers.

Earlier, we looked into the promotions planning process and

explored the gains to be yielded by automating a once-manual

process. We discussed the value that predefined business rules

can provide by enabling the business user to make informed

decisions about next steps to take. This represented the first step

of the road map to retail success. Improved process models for

managing promotional campaigns can help retailers reach more

customers, give greater control and improve overall effectiveness

by 20 to 25 percent.



13IBM Software

Now, the organization can turn customer loyalty cards into a

powerful differentiator that takes into account point of sale

transactions, in addition to customer profile and sales history.

Shoppers now receive loyalty cards with embedded magnetic

strips that track their personal information, spending habits

and earned rewards. The solution automates points management

and rewards, while offering the business real-time visibility into

customer buying patterns. The new rules-based solution resulted

in dramatically reduced time to market for hundreds of promo-tional offers every month, improving the personalization and

accuracy of promotions to five million customers through

45 million transactions annually. Customers realized increased

savings and extended their loyalty; meanwhile, the organization

is able, using highly accurate customer data, to quickly adapt to

marketplace conditions.


Large home improvement store

improves efficiencies by automating

supply chain

A large home improvement store faced a

prevalent retail issue: the need to ensure

that the right product is on the right shelf at the right time to

meet the customer needs. Reliance on error-prone manual

processes conducted by entry-level workers put the organization

at risk. More than 100,000 SKUs needed to be tracked manually

in systems based on spreadsheets and manual counts, rendering

the data unreliable and difficult to analyze. The organization

sought to automate this mission-critical business process to

ensure supply chain replenishment would happen in a timely,

efficient manner.

This client implemented a solution based on IBM’s business

process management offering that enabled them to automate

the once-manual process with an application that integrated

smoothly and completely with several existing back-end systems

to drive efficiencies and register exceptions. The solution helped

enable the retailer to obtain clear views of their inventory

so they could forecast seasonal and regional variants and

replenish shelves with the right product at the right time.

Staff efficiencies are improved, which in turn provides improvedlevels of customer service and, of top importance, customer

satisfaction—from having the right products available when

and where needed.

Driving business agility to address core

business pains We’ve outlined our prescription for success and how retailers

following a roadmap based on process optimization and decision

management can realize a wide range of benefits throughout

numerous areas of the organization. We’ve shared real-world

stories of retailers who’ve optimized their business processesto reduce bottlenecks, boost efficiencies and realize tangible

benefits. We’ve observed their ability to make better, more

effective and timely business decisions based on predefined rules

and intelligence that helps business users to make informed deci-

sions that can be further refined in the future for continuous

improvement.

We’ve also discussed how critical it is for retailers to increase

their business agility in order to successfully address the key

challenges they are facing today as they operate in dynamic

business environments laden with increasing complexity, while

striving to meet the needs of better-informed customers with




higher expectations than ever. You’ll recall that USD1.2 trillion

in excess merchandise is stockpiled in supply chains, instead of

on store shelves where they can be seen and purchased. By fol-

lowing the road map outlined here for optimized business

processes and rules-based decision making, retailers can improve

business agility and solve key challenges in several core business

processes that span their organization, including:

● Promotions planning and management. Streamline coordi-nation of tasks and information from disparate areas of the

organization for potential boost of promotion success rates by

50 percent.● Vendor trade fund management. Recoup potentially lost

funds and improve future agreements and increase cash flows

by a much as 20 to 25 percent.● Pricing management. Simplify pricing of simple to complex

products and bundles to ensure profitability while enabling

dynamic pricing to meet customer needs.● Multichannel inventory location. Make available the right

product when and where customers need it for potential rev-

enue increases of up to 30 percent or more.● Vendor onboarding. Get products to market quickly and

boost time to value by up to 80 percent.● Inventory replenishment. Ensure availability of the right

products the customer needs and increase customer spend by

up to 25 percent.

● Customer loyalty, cross-sell and up-sell. Provide targeted

offers to enhance customer satisfaction and boost sales—

improving effectiveness of promotions by 25 percent.

Future-proofing for success in a dynamic

retail network The complex, dynamic and broadly networked environment in

which retailers are operating requires that they find new oppor-

tunities to improve their business. Simple cost-cutting measures

are no longer sufficient. Instead, retailers need to optimize busi-

ness processes to gain efficiencies, while leveraging the insights

gained from customer and organizational data that will provide

the competitive differentiation needed to achieve success and

sustained growth. End-to-end process visibility and dynamic,

real-time insight are needed to enable retailers to effectively

respond to customer demand, and this need is evolving faster

than retailers’ ability to meet those demands, hence the need to

increase business agility with BPM and decision management—

and to get started as soon as possible.

This is the evolution that many organizations are making

today—moving from inefficient access to information, lack of

insight and an inability to predict customer wants or how to

respond to them, to predictability and responsiveness based on

informed decision making that leads to effective action. Retailers

are realizing the value of automating the manual processes per-

formed by back-office employees, while providing employees

with in-depth, context-rich information about changing markets

and customer habits. Those that deliver the information employ-

ees need to make the right decisions for the business position

themselves for increased customer satisfaction and sustained

business success.

Looking ahead, information is only going to gain importance

and power, and retailers who implement techniques for mining,

analyzing and acting on statistics and historical data will be

better positioned to predict and plan for future events, customer

behaviors and buying patterns. To future-proof their organiza-

tions, retailers ought not only to be optimizing processes and

identifying business rules to guide actions; they also must inject

intelligence into the business processes to enable better, more

timely decision making today, while considering historical infor-

mation to help them plan and position for future success and

growth. By embracing predictive analytics, retailers can detect



15IBM Software

useful patterns and discover new insights to help them make

better decisions, deliver suggested next-best offers and empower

their employees to provide an improved customer experience.

Successful companies today are recognizing the increasing need

for business agility, driven by process optimization and decision

management. To help you take your efforts to the next level and

keep up with the pace of change, we’ve defined a road map that

takes retailers to two important stops on the road to businessagility: business process automation and decision management.

The question that remains is which stop does your organization

need to make first? Many organizations find value in starting

with process optimization before they determine the extent of

decision management required. Some start with the decision

points in their process and work from there to achieve agility.

We want to hear your perspective on which stop you’re making

first on your road map to business agility. Join us in conversation

on Twitter: #bizagility—we want to hear from you.

Getting started on a sure path to

business agilityGet your organization started now on the road to business

agility. Depending on your needs, IBM can work with you to

determine the most appropriate starting place—whether you are

ready to start with a specific project, or are wanting to build your

success out into a broader program or a complete organizational

transformation to achieve higher value. To learn more about

how your organization can take part in a complimentary

IBM Process Improvement Discovery Workshop to help

you estimate value and appropriate entry points recommended

to get you started on your process automation and rules

management efforts, visit the following website:ibm.com /process-improvement-workshop

Assess YourBusiness

Objectives

Complete aninitial project in90 days or less

Advance toHigher Value

Accelerate change

Control costs and add flexibility

Define and automate abusiness process

Integrate a core systemwith a partnerapplication

Virtualize anapplication

Extend and enhanceprocess improvements

Deliver new services

12

3

Project Scope

B u s i n e s s O u t c o m e s

Manage and scaleworkloads in the cloud

Integrate withcustomers, suppliersand partners

Figure 4: Three phases of building a road map to business agility.

IBM is a business and technology leader offering hardware,

software and services to help clients effectively integrate business

strategy, business process management, service-oriented archi-tecture (SOA) connectivity and integration and dynamic applica-

tion infrastructure—to drive greater agility and better business

outcomes.

IBM offers a variety of solutions that can be deployed individu-

ally or together. Those referenced in this paper include:

● IBM Business Process Manager, a powerfully simple solu-

tion providing centralized visibility and control along with

industrial-grade scalability ● IBM WebSphere ILOG JRules for the creation and deploy-

ment of powerful rule-based applications

http://www-01.ibm.com/software/websphere/products/business-rule-management/lombardi/workshop/





Please Recycle

Additional WebSphere offerings are also available, including

software for SOA environments to enable dynamic, intercon-

nected business processes and delivery of highly effective applica-

tion infrastructures for all business situations. In addition,

IBM offers the IBM Retail Industry Framework, which provides

a software platform for deploying retail solutions in addition to

specific IBM industry accelerators to speed implementation of

BPM projects and realize ROI more quickly.

IBM has the tools, knowledge and industry-specific experience

to help you optimize your retail organization and drive business

agility on the road to smarter commerce, including enhanced

customer satisfaction and increased sales.

For more information To learn more about BPM solutions from IBM that can drive

business agility in retail and join in the conversation on how

IBM can help you shape your road map to business agility,

please contact your IBM marketing representative or

IBM Business Partner, or visit the following website:

ibm.com /websphere/retail

Additionally, financing solutions from IBM Global Financing

can enable effective cash management, protection from technol-

ogy obsolescence, improved total cost of ownership and return

on investment. Also, our Global Asset Recovery Services help

address environmental concerns with new, more energy-efficientsolutions. For more information on IBM Global Financing, visit:

ibm.com /financing

© Copyright IBM Corporation 2011IBM CorporationRoute 100Somers, NY 10589U.S.A.

Produced in the United States of America May 2011 All Rights Reserved

IBM, the IBM logo, ibm.com, Global Business Services, ILOG,and WebSphere are trademarks of International Business MachinesCorporation in the United States, other countries or both. If these and

other IBM trademarked terms are marked on their first occurrence inthis information with a trademark symbol (® or ™), these symbols indicateU.S. registered or common law trademarks owned by IBM at the time thisinformation was published. Such trademarks may also be registered orcommon law trademarks in other countries. A current list of IBM trademarksis available on the web at “Copyright and trademark information” atibm.com /legal/copytrade.shtml

Other company, product or service names may be trademarks or servicemarks of others.

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Achieving Greater Decision Management in Retail | IBM