Technology: Don’t Neglect Half of Your Business

It’s time to bring the back of house to the forefront of your technology strategy.

B2B and B2C vertically integrated distributors and retailers—businesses that control multiple stages of the supply chain—have poured resources into creating an engaging customer experience from the brick-and-mortar storefront to their ecommerce platforms. However, many have overlooked the important interplay between front- and back-of-house systems in improving a customer’s journey.In particular, these are companies with vertically integrated operations encompassing manufacturing, wholesale, ecommerce and storefront sales who can’t afford to operate in silos anymore. They require seamless integration across every customer touchpoint.

The Disconnect: Challenges in Synchronizing Retail Operations

One of the most significant challenges is the disconnect between front-of-house systems, like counter point-of-sale (POS) terminals and ecommerce, and back-of-house operations, such as inventory, wholesale and manufacturing. The fragmentation causes inefficiencies that ripple throughout the business.

Take inventory management. When data from the POS system fails to sync with warehouse systems, a retailer may show items as in stock online, only for customers to find them unavailable in store. This gap frustrates your customers, eroding their trust and brand loyalty. Given that 62 percent of retailers in a recent Digital Commerce 360 report said that their customers checked online for product availability at a nearby store, this is table stakes today.

One well-known example where systems didn’t align with actual stock levels took place with a large nationally known retailer; it led to customer dissatisfaction and operational inefficiencies. That year, the company took significant steps to address overstocking by marking down items with weak demand, canceling orders, and reducing future purchasing plans. These actions led to an 87 percent decrease in operating profit for that period, highlighting the financial impact of misaligned inventory levels.

What’s causing the disconnect between front and back of house? Among other causes, supply chains have grown increasingly complex, data remains in silos, customer expectations keep changing, pricing tiers can vary across channels, and legacy systems can make it difficult to bring it all together.

But surveys say that creating a seamless customer experience is top of mind for many retailers (40 percent). The Retail TouchPoints Omnichannel and Fulfillment Benchmark Report found that more than half the respondents are prioritizing “reacting more quickly to business/market changes.”

They recognize that end-to-end visibility is not just a luxury but a necessity, providing:

• Inventory synchronization across all sales channels, reducing errors and delays.
• Enhanced customer experiences by ensuring accurate stock levels and seamless order fulfillment.
• Operational efficiency by aligning manufacturing schedules with real-time demand.

Consider an example that we’ve seen firsthand. A major specialty flooring retailer and manufacturer, operating more than 150 stores with $1.15 billion in revenue, faced big challenges from legacy IT. These systems adversely affected sales and customer service. The company implemented an advanced order management solution to streamline operations and overcome their order management challenges.

So, what’s the next step? While ERPs are excellent for handling enterprise business processes, they were never designed to be standalone solutions for all needs, especially in today’s evolving omnichannel environment. Yet many companies haven’t evolved as quickly; you’ll often find them using multiple platforms to fill gaps, which further complicates integration.

For example, some of the largest ERPs offer sales and order processing tools that can be notoriously difficult to learn and lack intuitive functionality. This makes training staff more difficult. Unified systems unlock operational agility through:

• Seamless communication between POS systems, inventory, and manufacturing to reduce errors and inconsistencies.
• Advanced analytics to provide predictive insights so retailers can anticipate demand and optimize their supply chain.
• Minimizing manual data entry and transfers and cutting time to train.

The real game-changer is bridging each part of their operations – whether that is in the front of the house, or the back of the house. For specialty and vertically integrated businesses, embracing this unified approach is not just a strategy – it’s the key to delivering exceptional customer experiences, outpacing competitors, and unlocking long-term growth.

Craig Schertler is senior vice president of partnerships for DataXstream, where his role is to develop and extend the company’s global partner ecosystem. During his career, he has served in a variety of roles, including consulting services, sales support, solution go-to-marketing and partnerships. Prior to joining DataXstream, Schertler spent 19 years working within SAP’s Consumer Industries Business Unit and Industry Partner Ecosystem teams. For more information, visit dataxstream.com.