10 Critical Steps for Surviving the Next 18 Months
By Joe Skorupa
It's not paranoia if there really is something to worry about. Today, it's the economy, stupid. Or more accurately, it's the stupid economy. The business outlook has changed dramatically in the last three months. As a result, so have the restless sleeping patterns of top-level executives. To successfully cope with the new reality here are 10 priorities executives need to focus on in the next 18 months.
1. Labor Management. Getting labor right sized for demand is critical. Store-level input is vital, but the data needs to be aggregated at headquarters to create a centralized plan with enforceable, performance-based variances and real-time alerts. Labor is a large, controllable cost, and it must be managed with a level of efficiency and control that can only come from advanced labor management technology.
2. Inventory Management. Inventory is cash, which means it, too, must be right sized for demand. This not only means trimming back purchasing and moving out excessive stock swiftly, it also means addressing a laundry list of supply chain and warehouse efficiencies through real-time monitoring and control.
3. Financial Management. Cash management takes on a new urgency during a credit crunch. Retailers need laser-like precision to monitor payables and receivables. However, many can't do it effectively due to a 30 to 40 percent cash-on-hand gap between dozens of spread-sheet reports. We have now entered the no-spreadsheet zone where 99 percent accuracy is needed.
4. IT Management. Nice-to-have projects get postponed in favor of must-haves. Outsourcing takes on a new urgency. Getting the IT budget right-sized quickly ensures that mandated cuts do not cut to the bone, threatening a swift response when the economy recovers.
5. Sustainability and Energy Reduction. Trimming an organization's fuel consumption bill in the supply chain is a matter of fiscal and social responsibility. Sophisticated transportation routing systems coupled with order management discipline (no late orders to disrupt efficient shipping) can reduce fuel costs by up to 20 percent. Savings through power management at stores and reduction of packaging from suppliers are also proven fiscal and social winners.
6. Real Estate Management. Growth plans are trimmed back, but new store openings continue for a lucky few. For others, it is a time to trim the herd of the weakest performers. In either case, with real-estate values changing so rapidly the need for demographic, competitive, financing and leasing data is more critical now than ever.
7. Execution Supplants Innovation. All of the above strategies are dependent on outstanding execution, which becomes a key strategy in itself. Execution equals efficiency equals cost savings. Innovation takes a back seat, but it can't be abandoned. Sacrificing the future for the present only creates a future of low horizons.
8. Fast ROI. It used to be said that no one ever got fired for installing IBM. Today, retail technology has matured to the point where many applications and hardware devices, beyond those of IBM, are now proven quantities. This makes ROI timeline calculations more accurate. Faster is better in the present situation. Quick wins are key.
9. De-Coupling Big Projects. Along with faster being better, smaller is better, too. If large, multi-year projects are presently underway it is vital to de-couple them into smaller parts with phased rollouts. This allows for flexibility to complete phases in re-adjusted timelines, which allows CIOs to spread costs over multiple quarters and calendar years.
10. Re-Prioritization. Business plans and forecasts are based on assumptions and premises that have a major impact on the goals. Due to the economic events of the last three months, all previous assumptions and premises have changed. As a result, companies need to re-prioritize many of the key tenets of their business model. The above nine considerations will take on new importance as many previous front-burner items will seem less important.
These are my best tips about how retailers can best cope with today's challenging economic conditions. Let me know if you agree or disagree or if you have an important idea I may have missed.
Posted:
11/10/2008 12:00:00 AM by
Joseph Skorupa | with
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