Introduction to Omni-channel Retailing and Single Platform Approach: Case of Microsoft Dynamics AX 2012 for Retail

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This article introduces the basic ideas behind Omni-channel concept, explains advantages of adopting a single platform approach as business solution and reviews key retail capabilities of Microsoft Dynamics AX 2012 R3.

Requirement for Omni-channel Approach and System Readiness
Retail is one of the industries experiencing impactful changes. It has expanded from traditional brick-and-mortar to call centers, e-commerce and continuing to shift into social and mobile spaces. One of the new industry buzzwords is Omni-channel retailing (where the word “Omni” stands for “All”). It is retail marketing discipline focused on seamless approach to the customer experience through all available shopping and interaction channels - physical stores, kiosks, call-centers, Web sites, social networks, mobile and even TV and radio can be considered here. This approach means tracking and managing customers, their transactions and experiences across all channels. Unless Omni-channel is successfully adopted, it is not a surprise if a customer is better educated of the latest company offerings than sales staff in a store by learning from their e-commerce site . Furthermore, customer can expect to buy online but pick-up at a store. It means that all retail teams shall have the same understanding, readiness and information from systems available in their roles. Customer will expect to have the same great brand experience in both - the physical world of stores and online. Merchandise and campaigns are expected to bring the same value and experience in all touch points with the customer and not differ by a channel.
As the business technology advances, retailers often end-up with separate systems and multiple vendors for their Line of Business (LOB) solutions to be coordinated and integrated. For example, in-store POS systems, separate solution for call-center, and another platform for e-commerce, native mobile apps etc. These front-end solutions also have to link with back-office (financials, SCM, warehouse etc.) to provide seamless customer experience. Supply chain visibility becomes even more relevant in Omni-channel model since merchandise is now a customer centric as opposed to channel oriented. In not so distant future, a retailer might even like to improve customer service whereby warehouse staff is notified as soon as customer enters a store and triggers communication with a nearby beacon device. More about beacons here.

Approach based on Many LOB Systems
Depending on business strategy and existing IT landscape, a retailer could choose updating and extending their often distinct existing systems and adding new LOB packages to keep up with the latest Omni-channel and industry requirements. At first glance, this sort of gradual approach could seem less risky compared to large overall platform changes like implementing Enterprise Resource Planning (ERP) system with integrated retail functionality. The “Big bang” approach is often avoided due to challenges and dependencies associated with large implementation projects. Meanwhile, the downside of having many LOB packages is enabling integration and middleware among all front-end technologies and their linkage to the back-office requiring investments into analysis, interface development, handling data-integrity as more packages are added, modified, extended or upgraded.

Single Platform Approach
Alternatively to handling many LOB packages, a retailer can consider adopting a single, end-to-end business platform, which can support majority of requirements, require minimal integration, provides extensibility and offers a road map into the future. Integrated ERP for retail approach shall provide one solution for back-office areas such as SCM, finance and warehousing as well as enable centralized data management. Retailer shall be able to manage merchandising, catalogs, run POS and various sales channels including e-commerce, call-centers and have variety of CRM functions. Modern ERP solution for retail should enable Omni-channel capabilities possible for business and united technological platform that IT can support.

Microsoft Dynamics AX 2012 R3 ERP in Retail
Besides the back-office support (finance, SCM, warehousing etc.), Dynamic AX currently offers the following architectural components and functionality in retail as part of one ERP package while not being limited only to these features.

Retail HQ
Retail HQ module allows to configure and administer retail channels as brick & mortar stores, call centers and online stores. Retailer can manage assortments and product selections offered at the stores based on various criteria like region, demographics etc. Retail workers can be assigned roles and privileges. The module allows to manage kits, catalog of products attached to channels with expiry dates control if necessary, pricing, discount, and promotion functionality. Replenishment requirements are also supported with push, cross-docking and replenishment rules. Loyalty program management is available as well as gift card management.
Inquiries functionality provides data on retail transactions, sales, posted statements etc. Periodic tasks include data updates and technical level communication with retail channels.

Retail POS (traditional and modern)
Dynamic AX for Retail provides Point of Sales (POS) program built on .Net framework. POS administrator can customize look and feel - font color graphics of the user interface.
POS application can be role tailored. Store manager can access store reports and real-time sales data. POS solution allows to processes sales orders and codes and cash draw. It provides bar codes, printing of receipts, amount and tax calculations, shift close, gift cards, loyalty transactions and other functions. From back-office perspective, it proves inventory receipting, reporting and stock count.
Along with traditional POS, new in Dynamics AX 2012 R3 is Modern POS app for PCs, tablets and smartphones which allows to process sales transactions, orders and daily operations including some inventory management within the store. It can also be used in conversations with customer - clienteling using product catalog details and Bing maps integration for store locations etc. Modern POS must connect to Microsoft Dynamics AX Retail server which performs business logic and processing.

E-Commerce and Social Features
Online store is one of the retail channels published on SharePoint site from Dynamics AX. Categories and hierarchies are driven out of Dynamic AX and mapped to other channels to enable consistency. Functionality includes shopping card capability, real-time inventory updates, sharing on social networks directly from Web site, pick-up at the store, map integration with Bing to find store and many other solutions.

Commerce Data Exchange (CDX) 
Channel database (or store database) holds data that is required for retail transactions while master data is sent to channels from Dynamics AX database. CDX is a synchronization service that transmits data among head office, stores and channels. Data distribution is asynchronous while in some scenarios require real time communication between Dynamics AX and the channel which is also supported in CDM architecture.

Commerce Run Time (CRT) 
The Microsoft Dynamics AX CRT enables multi-channel commerce capability and provides retail content and services in a scalable way. CRT addresses the requirement to manage different channels with same tool via same logic and integration. It can also serve to innovate with new capabilities on the same platform.

Enterprise Portal for Retail
The Web portal and can be set up for access over the Internet to serve retail team for sales reporting, inventory monitoring, receiving and picking. Retail employees can also view retail products and related detailed information as well as access read-only price adjustments and discounts. Various sales reports, such as sales by hour, worker, store, performance by product, sales or retail category are available. Furthermore, staff can perform stock account over the Internet, receive purchase or transfer orders and complete outgoing transfer orders

Retail Hardware Station
Retail Hardware Station is another novelty in Dynamics AX 2012 R3 providing services for Modern POS clients, peripherals as printers, payment devices to communicate with Dynamics AX.