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Treating Non-Merchandise Like Merchandise

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Over the last two decades, strong discipline in the merchandise supply chain has become a core tenant of retailers’ success. Store associates in the employ of the most sophisticated players can scan a bar code with their personal mobile device and look very, very deeply into the chain, in some cases stretching all the way back to a manufacturer’s raw materials inventory. Likewise, reporting on inventory, fill rates, and margin is measurable down to the minute, on a shelf-level basis.

The same cannot be said for the non-merchandise side of the house. When many retailers are asked the question – “What are you using to track your signs, fixtures, and other non-merchandise today?” – the answer is usually a variation on “spreadsheets”, “email”, or alarmingly, “nothing.” It suffices to say that when followed-up with a second question about their diligence on labor spend for the activities involved with installing, servicing, and maintaining those assets, the reply is often just a blank stare. The notion of measuring set-completion accuracy, and holistically reporting on in-store project budgets, are literally “blue-sky” topics for these merchandisers.

This disparity is astonishing if for no other reason than the size of the spend – many retailers have budgets for their In-Store Environment activity that measures in the high-8 and low-9 figures, and the attitude/acceptance of waste and hidden costs is simply par for the course. Many merchandisers have given up on the idea of, or just plain don’t believe in, bringing supply-chain-style discipline and tracking to the non-merchandise side of the house.

Fortunately the tools and technologies that are used to implement merchandise discipline are readily available to the non-merchandise organization today. From traditional warehouse management systems, to barcode, beacon, and NFC-based asset tracking, to associates with smartphones and the software to bring it all together, are quite nearly off-the-shelf. And the return is worth the investment. One big-box retailer who adopted this mentality shaved $30M off their labor costs in the first year alone, and decreased their R12 non-merch logistics spend by 20%.

Overcoming the perceptions of “this is the way it has always been done” and/or “measuring activity at this granularity isn’t possible” is the core challenge, and adapting people and processes to a new level of transparency requires careful planning, but the investment pays for itself in a matter of months.

With competition at its highest level in the history of the industry, one place brick and mortar retailers can cut significant costs is in operational efficiency, and the time to treat and think about non-merchandise like merchandise is now.

By Nick Downey CEO, MerchLogix