Growth should make a retail business more efficient, not more complicated. But as retailers add customers, orders, stores and sales channels, operational complexity can quickly outpace the benefits of scale.

The problem is often not the systems themselves, says Brian Rault, director, business solutions, at Xtreme Soft Solutions. “It’s what happens between them.

“A retailer might have a perfectly capable e-commerce platform, inventory system, accounting package, warehouse software and logistics provider. Each can be doing its own job correctly, but if information doesn’t move efficiently between those systems, people have to fill the gaps.”

As businesses grow, they typically add new systems to solve specific problems. What begins as a manageable collection of platforms can gradually evolve into a patchwork of disconnected processes.

“This often develops gradually,” Rault explains. “A business introduces systems at different stages of growth to solve specific problems. Over time, order volumes increase, channels expand, product ranges grow, and operational processes become more complex.”

As a result, processes that once worked well become increasingly difficult to manage.

“A workflow that was manageable when someone processed 50 orders can become a serious bottleneck at 500 or 5000,” he says.

This is why, in Rault’s view, retailers need to assess their operations as complete workflows rather than focusing on individual applications.

“Where does information originate? Where does it need to go? Where is somebody re-entering it, checking it, exporting it, reconciling it or correcting it?

“A retailer can therefore have five good systems and still have a poor operational workflow.”

Why employees should not be a bridge between systems

An obvious giveaway that operational complexity has taken root in a business is when employees are acting as the bridge between systems, he says.

“One of the clearest signs is hearing people say things like, ‘Every morning I export this, put it into this spreadsheet, check it against this system and then upload it over here’. That is effectively a human integration.”

Many growing retailers will recognise the symptoms: Staff manually enter the same information into multiple platforms. Teams reconcile stock levels across different systems. They copy data from emails into operational software. Teams assemble reports from several sources because no single system provides a complete picture.

“Another warning sign is when management asks for a relatively straightforward operational answer, and somebody has to collect information from three or four places before they can provide it,” says Rault.

“These processes can become so normal that the business stops recognising them as inefficiencies.”

He cites one phrase as often the strongest indicator that a process deserves closer scrutiny: “‘That’s just how we do it’ is often one of the strongest indicators that there is an opportunity to improve the workflow.”

Spreadsheets frequently play a central role in these workarounds. While they are valuable business tools, problems emerge when they become essential infrastructure.

“Spreadsheets aren’t inherently a problem. They’re incredibly useful tools,” says Rault. “The problem is when a spreadsheet quietly becomes a piece of critical business infrastructure because two systems don’t communicate properly.”

According to Rault, these situations often develop innocently. “Somebody creates a spreadsheet to solve an immediate problem. Then another column gets added, another employee starts using it, another process becomes dependent on it, and eventually you’ve created an unofficial system that sits between the official systems.”

Besides adding to the administrative overhead, such a system often leads to duplicate data entry, errors, version control, delayed information, limited management visibility and key-person dependency, he says.

There is also an opportunity cost. “If capable employees are spending hours moving, checking and reconciling information, that’s capacity they’re not using on customers, merchandising, growth or higher-value work.”

For that reason, Rault argues that automation should not simply be viewed as a cost-reduction exercise.

“We don’t look at automation as a way of reducing headcount. Very often the bigger opportunity is giving existing people more capacity to do the work the business actually employed them to do.”

When inefficiencies emerge, the instinct can be to purchase another software platform. Rault cautions against assuming that more technology automatically means better outcomes.

“Adding another platform can sometimes make the underlying problem worse,” he says. “If the real issue is that existing systems don’t communicate effectively, adding a sixth platform to five disconnected platforms may simply create another integration point and another place for information to live.”

Instead, he advises diagnosing the business problem first.

“Our starting point is: ‘What is actually causing the operational problem?’

“Sometimes an existing system isn’t fit for purpose and should be replaced. But sometimes the systems themselves are perfectly adequate, and the opportunity is to connect them properly, automate the manual processes between them or build a relatively small bespoke layer around the way the business actually operates.”

“The technology decision should follow the operational diagnosis, not the other way around.”

Think strategically, implement incrementally

Rault says that when retailers identify operational problems such as the above, they should not necessarily consider replacing everything.

“There can be substantial investment, knowledge and processes tied up in existing systems, and some of those platforms may actually be working very well. The first question should be whether the problem is the platform itself or the way it interacts with everything around it,” he says.

“There may be opportunities to integrate existing systems, automate specific workflows or develop bespoke functionality around a particular operational gap without embarking on a wholesale replacement program.”

Retailers need to understand the broader end-to-end operation while not assuming everything needs to be transformed at once, he continues.

“A retailer can think strategically about where it ultimately wants its operation to be, while implementing improvements incrementally. That might mean identifying one meaningful bottleneck, solving it, measuring the outcome and then expanding into other areas where there is a demonstrated business case.”

Proof of concept

Rault cites two Australian examples of working with customers to remove operational complexity and boost efficiency: Australian retailer Bed Bath N’ Table and online luxury resale platform Luxe.It.Fwd. 

For Bed Bath N’ Table, Xtreme supported the brand’s e-commerce development and systems integration, reinforcing the same principle at a different scale: The customer-facing e-commerce experience is only one part of the equation. “What happens behind it – integrations, data flows and operational processes – is equally important,” explains Rault.

Luxe.It.Fwd found that as the business grew, several operational processes that had been manageable at a smaller scale became increasingly manual. “We worked with the business to develop technology around the way its operation actually worked, rather than forcing the operation into an off-the-shelf process,” Rault shares.

“The objective was to remove repetitive manual processes, improve the flow of information through the business and create an operational platform capable of supporting further growth. What’s particularly relevant about Luxe.It.Fwd is that the value wasn’t simply in building software; it came from understanding the workflow first – where people were spending time, where information needed to move and where technology could remove unnecessary intervention.”

For suitable businesses, rather than asking them to commit immediately to a larger technology investment, Xtreme can identify a specific operational bottleneck and develop a Workflow Proof of Concept around it.

“The purpose is to demonstrate what a practical solution could look like against a real business problem before the retailer commits to a broader implementation,” says Rault. “It is not about building technology for the sake of demonstrating technology. It is about giving the business an opportunity to validate the thinking, see how the proposed workflow could operate and make a more informed decision about whether there is value in taking it further.”

Where to start

When deciding which problems to tackle first, Rault focuses on frequency, effort, risk and business impact.

“A process that wastes five minutes once a month probably isn’t the priority. But five minutes repeated 500 times a day represents more than 40 hours of employee capacity every day.”

“At that point, what looks like a minor workflow inconvenience has become a material operating cost.”

One practical approach is to map workflows end to end and identify every point where human intervention is required because systems aren’t communicating automatically.

“Then quantify it where possible: How often does it happen, how many people touch it, how long does it take, what happens when it goes wrong, and does the problem become larger as the business grows?”

“That usually makes the priorities much clearer.”

Ultimately, Rault believes retailers should stop viewing technology as a collection of separate products and start seeing it as a connected operational workflow.

“Customers don’t care which e-commerce platform, ERP, inventory system or warehouse software a retailer uses. They care that the product is available, the information is accurate, the transaction works, and their order arrives when expected.

“Internally, it should be similar. Employees shouldn’t need to understand all the gaps between systems or continually compensate for them.”

“One principle we use at Xtreme is that your people shouldn’t have to be the integration between your systems.”

And as retailers evaluate emerging technologies, including AI, he believes the same principle applies.

“There are undoubtedly valuable applications for AI in retail, but we’d apply exactly the same discipline: Start with the business problem. If AI is the most effective way to solve it, use AI. If a straightforward integration or workflow automation solves it better, do that instead.”

“Technology should remove operational complexity, not add another layer to it,” concludes Rault. “Start with the business problem, prove value where possible, and allow the technology investment to follow.”