Whitepaper: Unleashing the Retail Value Chain

Retailers face a critical threshold in their fight to survive.  They must adapt to the power of the Internet and “new marketplace technologies to connect, watch, track and engage consumers with compelling experiences in the new high-tech, high-touch world of retailing”.  

Put another way: adapt or face possible extinction.  

What is meant by extinction? Consider recent examples of critical failures in operations with Target and its massive credit card security breach.  Or Chipotle’s multi-restaurant e-coli outbreak resulting in widespread health concerns affecting 350 people in 10 different states along with a $60M devaluation in CEO Steve Ells’ Chipotle share value. Or take Takata’s failure to address airbag malfunctions, resulting in consumer death, mass recalls and mounting litigation.  

Each of these examples highlight the failure to comply and to acknowledge, the failure to be accountable for and take action, and the failure to effectively transfer knowledge ownership.  
The bottom line is that the impact of “unstructured collaboration and communication” is at the root of all these failures.  

These organizations were unable to effectively communicate and collaborate within and across their organizations, and with internal or external stakeholders.

Retailers are indeed embracing the challenge of adapting to new technologies, however the exponential growth of “unstructured collaboration” is undercutting their efforts. 

Unstructured collaboration results from a lack of an integrated, accountable, and organized work management and execution environment.  Gartner Research describes unstructured collaboration as “non-routine” work. It is labor intensive with high marginal costs, adds extra administrative tasks for both workers and managers, and absorbs the best worker talent. 

In a recent Harvard Business Review article, “Collaborative Overload,” the time spent by retail operations managers and employees in “unstructured” collaborative activities have ballooned by 50% or more.  In actuality, time spent in meetings, on phone calls, and responding to emails hovers at over 80% of a retail operator’s work week.  

How can retailers structure collaboration, embrace e-commerce technologies, and survive possible extinction? With the retail value chain.

The retail value chain is critical because of globalization, technology, and increased productivity allowing consumers to have faster and cheaper access to more products. If the retail value chain is not in place to manage from conception to consumption, consumers can and will go elsewhere. It is a matter of survival.

The retail value chain is defined as a never ending, fully integrated, virtuous cycle, starting with the consumer, pausing at point of consumption and then starting all over again. This control is especially important in the parts of the chain that touch and connect with the consumer, especially market research, where knowledge about the consumer and his or her dreams is determined; production and marketing, where the dream experience is created; and finally the point of sale, where the experience must be competently delivered.

How the Retail Value Chain Improves Collaboration

The cornerstone to a truly effective retail value chain implementation is a structured yet flexible approach to managing collaboration.  Increasing collaboration, or leveraging human, intellectual and physical assets across the entire value chain, can be achieved only by encouraging collaboration with internal employees, consumers, vendors and customers. The winners in retail will be companies that collaborate across all functions (including planning, logistics, marketing, HR, and more), with a clear understanding of their consumers and their function’s contribution to delivering the brand promise.

Retailers should use technology to enable and realize the promise of the retail value chain. Here are some real-world examples:

Internal Collaboration – The Gap

A clear understanding of both the brand’s consumers and the function’s contribution is necessary to delivering the ultimate brand promise.  For example, Gap reorganized its entire business essentially into four distinct branded businesses: GAP, Old Navy, Banana Republic and Piperlime. Each of the four operates its own value chain and drives its own internal collaborations.  Most importantly, as a result of this reorganization, the old silo structure was blown away, and each brand now has an integrated and highly collaborative value chain, including the integration of e-commerce technologies and physical stores.

Consumer collaboration – Lululemon Stores and Staples

In Lululemon Athletica Stores, there is a chalkboard by the fitting rooms for consumers to jot down any feedback they might have after trying on clothes.  On a regular basis, the store managers have a conference call with their design and production teams to share and discuss any action they should take on these consumer insights.  The stores are now evaluating technology solutions for replacing chalkboards with interactive digital signage.  
Similarly, Staples asks every customer to complete a brief post-purchase survey with product and service quality questions, and uses the results of these survey to become more responsive to customer needs.  This is a simple yet highly effective uses of technology to provide a closed loop between creator and consumer.

Vendor and Customer collaboration – Hasbro

Hasbro uses a technology platform provided by Smartsheet to coordinate store merchandising display components for retailers including Wal-Mart, Toys R Us, Kroger’s, and other mainstream retailers.  The system enables Hasbro merchandisers to coordinate the creation of components with external creative and production agencies along with Hasbro’s internal logistics team.  The system provides aggregate reporting to sales that in turn provides insights into merchandise offerings and promotions effectiveness for use across the entire Hasbro customer network.  This has resulted in more effective retail promotions, less time spent on unstructured collaboration, more coordinated merchandise components shipments, and faster time-to-market with deeper and more comprehensive Hasbro product promotions.

These industry best practices focus on employee empowerment techniques, evaluating technology platforms to control work and execution, and taking a fully integrated view, starting at the executive and board levels:

• Encourage behavioral change to empower high-value collaborators: Show the most active and overburdened helpers how to filter and prioritize requests to reduce unstructured collaboration. Give them permission to say no and encourage them to redirect the request to someone else when the request doesn’t draw on their own expertise. Conversely, work with employees making the requests -- set limits on time for emails, encourage use of knowledge management and support systems, or even consider a moratorium for a period of time on recurring meetings.  
• Improve visibility to manage workers without losing control: Gartner recommends leveraging the technology and applications that you have, integrate where you can, and invest based on needs to support collaborative work management.  In the case of collaboration support products, evaluate those that focus on unstructured information sharing, conversations and shared workspaces. In addition, look for products with the ability to support more structured collaboration around tasks, checklists and even lightweight project management.
• Enable technology into every part of the business: Nordstrom CEO Blake Nordstrom commented on how his company incorporates, understands and implements technology to increase the integration and control of its value chain: “For us, IT investments and upgrades used to run on their own cycle somewhat independent of the business needs or demands at the time and driven more by the technology calendar.  The ‘aha’ moment for our executive team was when we all realized that technology was no longer the responsibility of the IT group, but was the responsibility of all of us and critical for all of us to manage together.  From that day, how we have managed it has fundamentally changed.”

This paper reviewed the challenges that retailers face today in terms of the convergence of the internet and e-commerce technologies.  One of the key drivers undercutting many organizations stepping up to this challenge is the exponential growth of unstructured collaboration: emails, phone calls, and meetings are taking up more than 80% of working weeks.  

This paper recommended taking a structured approach to implementing a retail value chain.  A retail value chain is essential to managing and controlling every aspect of the consumer touch from creation to production to consumption.  And the cornerstone to this retail value chain is an integrated and structured way of collaborating with internal employees, consumers, vendors and customers.  Several examples showed that leveraging technology to implement structured collaboration produced the results promised by incorporating a full-fledged retail value chain.

For more information, contact solutions@smartsheet.com.

Smartsheet is a digital workspace that enables teams to work in a flexible yet structured collaborative system. Smartsheet provides retail operators with improved enterprise-wide control over information relating to store operations, consumer research, supply chain and other key functional organizations within the company. Smartsheet combines the spreadsheet-simple design with powerful automation to enable teams to manage work in a flexible way, without needing to constantly tap IT resources. And because the work becomes centrally managed, you can better secure it and create unparalleled visibility for business leaders.

Key elements of Smartsheet’s approach include: 

• An intuitive, flexible platform for any kind of work that spurs user engagement and requires little training, resulting in widespread adoption and low overhead. 
• Reporting and dashboards that increase real-time visibility into what people are working on, who they are working with and the status of work across the organization.
• An inherently secure platform with rich controls like external domain whitelisting, granular sharing and support for management at scale with SSO and automated provisioning. Smartsheet has cleared stringent security reviews from firms like Google, Cisco and GSA and can adhere to your specific corporate policies.
• Integration with other productivity tools and applications so Smartsheet can extend your core business systems (like Salesforce) to deliver an integrated user experience.
• A Business Solutions Platform that enables highly customizable lightweight applications to deliver rapid time-to-value to solve process and work collaboration problems and reduce the IT application backlog.
• Stored data encryption with NIST approved ciphers, data backups and redundancy, all in top-tier data centers that publish SOC1, Type 11 reports in accordance with SSAE16.