Expanding into international markets with the franchise model
Far too many retailers are relying on manual processes for their supplier management, critical path control and performance tracking in order to manage an expanding franchise operation – risking both profitability and corporate reputation as a result.
Dominic Potter, UK Managing Director of Momentis Systems highlights the risks facing UK retailers looking to expand abroad and explains the role that a streamlined model can play in enabling highly scalable franchise business operations.
Franchising is increasingly being seen as a way to de-risk the business model and is gaining growing traction. From Debenhams to the George at ASDA brand, retailers are exploiting the benefits of a lower cost route to market and local knowledge to achieve international expansion.
The model is compelling: no investment in physical assets or long-term rental; access to strong local knowledge and commitment; whilst retaining complete control over the product quality, brand and messaging.
But for many retailers, the franchise vision is yet to be achieved. For some, a lack of confidence and trusted processes has resulted in repeated postponement; for others, ill-conceived strategies have resulted in an unexpectedly high investment in manual effort to manage the complexity of multi-national franchising. As a result, far too many companies are simply not achieving the scale required to achieve both the vision and expected levels of revenue.
Despite globalisation, improvements in communication infrastructure and an increasingly synergistic international marketplace, retailers cannot simply scale up successful domestic retail processes and expect to achieve a seamless, profitable franchise operation.
Entering a new market raises a whole heap of issues and challenges to consider – from ensuring franchisees in a different hemisphere see the right season’s products, to the prohibition of some religious and cultural symbols, as well as a ban on certain types of leather in some countries. Failure to reflect these issues can result in an entire collection being held in customs indefinitely – or franchisees being offered goods that are completely wrong for the market or season.
Retailers need to be able to control the stock that is offered to each store to reflect seasonality, location, and religious/cultural sensibility. However, to be successful and profitable, retailers need to be able to do this without requiring a massive manual effort.
Rather than taking the time to tailor the catalogue for each franchise, organisations need to streamline the process. By setting attributes for each customer, the catalogue should automatically reflect local sensibilities; each franchisee can log onto a portal and only see a relevant subset of the collection, ensuring inappropriate items, or those that may cause delay at customs, are either not offered or are flagged to the franchisee. Pricing is automatically converted into the relevant local currency; whilst customs documentation is automatically created, further removing an overhead for both franchisor and franchisee.
Taking this approach not only radically reduces the manual effort associated with managing the requirements of each franchisee but also eliminates the risk of inappropriate products being dispatched, customs delays or financial confusion. In addition, the portal approach enables the retailer to have far greater visibility over the franchisee order process – from ensuring franchisees place orders before the Publication closes to proactively addressing potential incomplete orders during the 72 hour window between catalogue closure and placing the final order with a supplier.
A portal ensures franchisees have full visibility of the location of goods in the supply chain at any time, and when they will be delivered. It also eases the process of providing sales figures to the retailer – either direct into the portal or via a spreadsheet that can be uploaded into the system. This in depth insight into local trends in sales performance can be used both to inform on-going international expansion and aid the franchisee in the buying process, exploiting the highly effective tools used by the retailer in the domestic market to improve the relevance of the product mix.
A centralised, portal-based approach to franchisee communication enables retailers to streamline the management of the franchisee network, driving down costs and providing a flexible and scalable platform for rapid expansion.
Creating a transparent system that makes it easy to view the collection, place and track orders, and manage the customs documentation in a single place - with the additional option of accessing the information remotely via a mobile device - plays a key role in building the trusted relationship that is vital to a successful and profitable franchise network.
It is this combination of compelling franchisee offer with highly effective and efficient management of the franchise network that will be key to providing retailers with the confidence to embark upon international expansion and scale up rapidly to realise significant additional revenue.
Elon Musk's Boring Co. planning wider tunnels for freight
Elon Musk’s drilling outfit The Boring Company could be shifting its focus towards subterranean freight and logistics solutions, according to reports.
A Boring Co. pitch deck seen and shared by Bloomberg depicts plans to construct wider tunnels designed to accommodate shipping containers.
Founded by Tesla CEO Musk in 2016, the company initially stated its mission was to offer safer, faster point-to-point transport for people, particularly in cities plagued by traffic congestion. It also planned longer tunnels to ferry passengers between popular destinations across the US.
The Boring Co. completed its first commercial project earlier this year in April. The 1.7m tunnel system is designed to move professionals between convention centres in Las Vegas using Tesla EVs. It says the Las Vegas Convention Centre Loop can cut travel time between venues from 45 minutes to just two.
Boring Co.'s new freight tunnels
The Boring Co.'s new tunnel designs would allow freight to be transported on purpose built platforms, labelled as “battery-powered freight carriers”. The document shows that, though the containers could technically fit within its current 12-foot tunnels, wider tunnels would be more efficient. Designs for a new tunnel, 21 feet in diameter, show that they can comfortably accommodate two containers side-by-side, with a one-foot gap between them.
The Boring Co.’s new drilling machine, dubbed Prufrock, can tunnel at a rate of one mile per week, which is six times faster than its previous machine, and is designed to ‘porpoise’ - mimicking the marine animal by ‘diving’ below ground and reemerging once the tunnel is complete.
Tesla’s supply chain woes
Tesla is facing its own supply chain and logistic issues. The EV manufacturer has raised the price of its vehicles, with CEO Musk confirming the incremental hike was a result of “major supply chain pressure”. Musk replied to a disgruntled Twitter user, confused as to why prices were rising while features were being removed from the cars, saying the “raw materials especially” were a big issue.
Car manufacturing continues to be one of the industries hit hardest by a global shortage in semiconductor chips. While China’s chip manufacturing levels hit an all-time high in May, and the US is proposing a 25% tax credit for chip manufacturers, demand still outstrips supply. Automakers including Volkswagen and Audi have again said they expect reduced vehicle output in the next quarter due to a lack of semiconductors, with more factory downtime likely.
Top Image credit: The Boring Company / @boringcompany