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New Report Emphasizes Importance of Operational Efficiency for Continued Retail Success

Alec_Gefrides
Employee
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Macroeconomic pressures are driving retailers to reduce costs and increase efficiency to stay competitive. Using edge technology to automate processes, reduce losses, support customer self-service and empower associates is key to that efficiency.

 

A recent survey, conducted by Foundry and commissioned by Intel and Capgemini, reveals that the best way retailers can achieve improved operational control and efficiency—as well as better customer experiences, reduced risk, and enhanced sustainability—is by prioritizing IT/OT convergence. In fact, the survey shows that 98% of retail organizations are doing just that.

 

Converging information technology (IT)—the hardware and software that process data—with operational technology (OT)—the systems and processes that control how the business runs—is enabled by Internet of Things (IoT) devices that gather and analyze data at the edge (i.e., in-store, in-warehouse, on-truck, and so on).

 

IT and OT work together to enable better operational efficiency

Let’s explore how edge solutions and IT/OT convergence are helping retailers improve operational efficiency:

  •  Quick service restaurant chain Chipotle Mexican Grill uses computer vision to streamline restaurant operations, reduce food waste, and remove friction for guests and employees. Feeding multiple live inference streams from smart cameras to AI software running on small in-restaurant PCs, kitchen staff are kept up to date on inventory in near-real time. This allows them to always serve fresh food and never stock out.[1]
  • Grocer Nourish & Bloom saw traffic to their grocery store plummet during the pandemic. By shifting to an autonomous, “just walk out” experience, they not only survived but thrived. Customer journeys are faster and store personnel spend more time with customers and stocking shelves, according to anonymous data collected on each customer visit.[2]


Forward-thinking retailers can invest in technology that utilizes data from barcode scanners, video cameras, temperature sensors and digital shelves. They can eliminate data silos so that all their data is available across various applications for inventory management, point of sale, store and warehouse surveillance, and order fulfillment. IT/OT convergence enables quicker adoption of digital transformation strategies, better customer and employee experiences, and improved business efficiency.

 

Here are just some of the business outcomes retailers can expect by embracing edge technology and achieving IT/OT convergence:

  • Zero inventory loss to boost bottom line: Sensors and computer vision in warehouses, transport, and stores manage, track, and analyze inventory in real time, using AI to spot and stop anomalies.
  • Predictive, just-in-time inventory solidifies customer loyalty: Real-time data from stores on inventory, traffic flow, and purchase frequency combines with historical and social trend data to ensure the right inventory at the right time, at every point in the supply chain.
  • Autonomous stores provide ultimate convenience: Sensors, computer vision, and robotics combine to deliver automated “just-walk-out” purchase experiences.
  • Dynamic promotions based on real-time customer behavior generate new revenue: Smart sensors and cameras make it possible for kiosks to recognize products, respond to touchless gestures, and let retailers know when a message is truly effective. This technology also delivers real-time customer behavior analysis, empowering retailers to deliver personalized experiences and exceptional convenience.


According to the Foundry survey, the top five priorities that are driving retailers to pursue IT/OT convergence are fraud prevention (56%), secure/compliant data (52%), inventory management (51%), quality assurance (50%), and sustainable production (47%).

 

Convergence challenges

IT/OT convergence, however, isn’t something that happens overnight. The Foundry survey shows that while 56% of IT respondents report significant progress in integrating IT and OT software and data, only 38% thought they had made similar progress in the physical integration of IT with OT devices and systems. Challenges include a lack of integrated management processes and inconsistencies in technical standards. OEM proprietary environments make it harder to migrate and/or rip and replace existing systems with newer technology.

 

To make further progress toward IT/OT convergence, retailers also need to overcome concerns that convergence will disrupt operations. Results from the survey indicated that 51% of IT infrastructure comprises newer, modern technology. But for OT systems, only 38% are modernized. This underscores a reluctance to replace legacy OT technology.

 

New solutions help drive convergence forward

Intel is working with the ecosystem to provide solutions to help retailers solve these challenges. Intel’s hardware and software solutions have been powering digital transformation for a decade, while open platforms based on Intel technologies can use the IoT for intelligent edge, open machine-to-machine communications, and big data/analytics. The shift from stand-alone IoT platforms to IoT-enabled applications makes it possible to achieve concrete, measurable business outcomes through the management of devices, data, analytics and applications, integration, and security. Increasingly, reference hardware architectures and market-ready solutions from Intel through extensive partner ecosystems make it easier to integrate new capabilities with existing systems. 

 

Want to learn more about how IoT and IT/OT convergence can help improve operational efficiency? Need some top tips for IT/OT convergence success? Read Foundry’s full report: “Bridge the Divide Between IT and OT”.

 

[1] Restaurant Dive, September 2022, “Chipotle tests AI kitchen system, location-based technology.”

[2] Insight.Tech, December 2022, “Frictionless Checkout: The Future of Retail Technology.”

About the Author
General Manager of IOTG Retail Solutions Division