ARTS Reference Model for Retail
- by Sanjeev Sharma
Consider a hypothetical scenario where you have been tasked to set up retail operations for a electronic goods or daily consumables or a luxury brand etc. It is very likely you will be faced with the following questions:
What are the essential business capabilities that you must have in place?
What are the essential business activities under-pinning each of the business capabilities, identified in Step 1?
What are the set of steps that you need to perform to execute each of the business activities, identified in Step 2?
Answers to the above will drive your investments in software and hardware to enable the core retail operations. More importantly, the choices you make in responding to the above questions will several implications in the short-run and in the long-run. In the short-term, you will incur the time and cost of defining your technology requirements, procuring the software/hardware components and getting them up and running. In the long-term, as you grow in operations organically or through M&A, partnerships and franchiser business models you will invariably need to make more technology investments to manage the greater complexity (scale and scope) of business operations.
"As new software applications, such as time & attendance, labor scheduling, and POS transactions, just to mention a few, are introduced into the store environment, it takes a disproportionate amount of time and effort to integrate them with existing store applications. These integration projects can add up to 50 percent to the time needed to implement a new software application and contribute significantly to the cost of the overall project, particularly if a systems integrator is called in. This has been the reality that all retailers have had to live with over the last two decades. The effect of the environment has not only been to increase costs, but also to limit retailers' ability to implement change and the speed with which they can do so." (excerpt taken from here)
Now, one would think a lot of retailers would have already gone through the pain of finding answers to these questions, so why re-invent the wheel? Precisely so, a major effort began almost 17 years ago in the retail industry
to make it less expensive and less difficult to deploy new technology in
stores and at the retail enterprise level. This effort is called the
Association for Retail Technology Standards (ARTS). Without standards such as those defined by ARTS, you would very likely end up experiencing the following:
Increased Time and Cost due to resource wastage arising from
re-inventing the wheel i.e. re-creating vanilla processes from scratch, and
incurring, otherwise avoidable, mistakes and errors by ignoring experience of others
Sub-optimal Process Efficiency due to narrow, isolated view of processes thereby
ignoring
process inter-dependencies i.e. optimizing parts but not the whole, and
resulting
in lack of transparency and inter-departmental finger-pointing
Embracing ARTS standards as a blue-print for establishing or managing or streamlining your retail operations can benefit you in the following ways:
Improved Time-to-Market from parity with industry best-practice processes e.g. ARTS, thus
avoiding “reinventing the wheel” for common retail processes and focusing more on customizing processes for differentiations, and
lowering integration complexity and risk with a standardized vocabulary for exchange between internal and external i.e. partner systems
Lower Operating Costs by embracing the ARTS enterprise-wide process reference model for
developing and streamlining retail operations holistically instead of a narrow, silo-ed view, and
procuring IT systems in compliance with ARTS thus avoiding IT budget marginalization
While parity with industry standards such as ARTS business process model by itself does not create a differentiation, it does however provide a higher starting point for bridging the strategy-execution gap in setting up and improving retail operations.
