Sooner or later, retail businesses consider implementing an enterprise resource planning (ERP) solution to gain better control of what is going on in their growing networks. On the positive side, such systems provide next-level visibility into all processes and integrate multiple components of the retail business into a single platform, where data flows seamlessly and provides real-time insights to users. On the negative side, ERP platforms are typically rather costly and sophisticated, and you are never completely sure if you need everything you subscribed to.
This does not seem to stop major retailers: Apple uses SAP to manage its workflows, and Michelin has chosen Microsoft Dynamic 365 as the platform for its agencies and subsidiaries.
Of course, you might say, these are global powerhouses with lots of IT talent on board. They can afford to invest in leading ERP solutions. But how can small and medium-sized businesses find tools that are just right for them? This is the question we are going to answer in this blog post. We will show you how to make the most of Microsoft Dynamics 365 for retail and put together an ERP system that works for you without paying for functionality you don’t need.
Overview of Microsoft Dynamics 365 for retail
Microsoft leads the global ERP market, claiming as much as 31.5% of it. Within the Microsoft family, Dynamics is one of the fastest growing products, with US$ 5.44 billion in revenue contributed by all Dynamics products in 2023. Naturally, for a retail business looking for an ERP system, Microsoft Dynamics 365 is one of the first choices that pops up in their search.
Global market of ERP providers
When you land on the web page for Microsoft Dynamics 365, you find a whole suite of applications addressing various issues encountered by customer-facing businesses. Powered by artificial intelligence, they can help you create a data-driven organization with important insights right at your fingertips.
The modular structure of Microsoft Dynamics 365 allows you to mix and match the services that you need to create an intelligent CRM and ERP system that reflects your business goals. This is a great advantage of Dynamics 365: Instead of subscribing to the whole package and then only using what you need (while paying for the rest, too), you only subscribe to what you need and pay for what you use.
As part of the Microsoft Cloud for Retail offering, Microsoft Dynamics 365 is aimed at businesses in any industry involving customer service. With modules designed to manage sales, supply chain, marketing operations, finance, and other functions, Dynamics 365 helps retail businesses face the challenges of online commerce:
- Omnichannel operations. By offering solutions for customer service, inventory management, marketing, point-of-sale, and customer insights, Microsoft Dynamics 365 covers all possible customer touchpoints and creates smooth and intuitive customer journeys.
- Task automation. With retail commerce growing increasingly complex, automating manual work becomes essential. Intelligent apps in the Microsoft Dynamics 365 suite can take over dozens of daily tasks such as inventory control, order management, and report generation.
- Business scalability. The cloud infrastructure beneath Microsoft Dynamics 365 gives you virtually unlimited growth opportunities. You no longer need to worry about on-premises hardware and software and can focus on expansion and development.
- Service personalization. The powerful CRM system in the Microsoft Dynamics 365 suite allows you to understand your customers so you can target them with hyper-personalized offerings.
- Inventory management. Intelligent algorithms in Microsoft Dynamics 365 not only track your inventory but also predict demand based on analysis of multiple trends so that you never run out of stock.
- Employee satisfaction. Microsoft Dynamics 365 creates a workspace that is intuitive, accessible, and efficient. Employees can obtain the information they need from anywhere, using web interfaces or mobile devices.
Before diving deeper into the features of Microsoft Dynamics 365, let’s answer a question that might have arisen by now: What is so unique about Dynamics 365 that retail businesses should choose it?
The answer is quite straightforward: Microsoft Dynamics 365 gathers all the customer-facing and back-office functions you might need to run a retail business on a single platform. Moreover, it gives you the freedom to choose the apps you need and the options to customize them as necessary. As a result, you get an effective retail management system adjusted to your needs with seamless integration of all components.
Microsoft Dynamics 365 apps for retail: The building blocks of your ERP system
Microsoft Dynamics 365 supports the composable commerce approach, where instead of finding uses for features that come with your purchase, you only purchase what you are going to use. To make it easier to choose the products that you need, let’s look at some of the key modules and features of Dynamics 365 for retail businesses along with typical use cases.
Dynamics 365 Commerce
The Commerce module, previously named Microsoft Dynamics 365 Retail, is usually the first to come to the attention of retailers. It was designed specifically to create omnichannel retail platforms and assist commerce businesses in multiple ways.
Combining, among others, such features as point of sale, content creation, inventory management, and order management, the solution has virtually everything a company may need to run a retail operation: integration of online and offline commerce into a single platform, AI-powered website content editors, personalization tools for boosting customer engagement, analytical algorithms for generating insights that can help to drive conversions. The uses of the Commerce app in retail are numerous. Let’s look at some of them.
Creation of omnichannel retail experiences
Dynamics 365 Commerce joins all retail channels into a cohesive platform, giving customers the ultimate freedom to choose the most convenient buying options – online or offline. A single platform ensures data consistency across all touchpoints so that customers get the same prices, promotions, and personalized offers wherever they choose to interact with the business.
The Commerce module allows for creating seamless customer journeys with intelligent chatbot assistance, which drives sales and reduces the abandonment rate.
AI-driven recommendations and product discovery
Customer data stored in Microsoft Dynamics 365 CRM is a source of insights into customer behavior, preferences, and expectations. Based on this information, AI algorithms generate personalized product recommendations, opening cross-selling and upselling opportunities.
To streamline purchase journeys, the Commerce module offers intelligent contextual product search, helping customers find what they need in both online and offline retail locations.
Intelligent targeting and personalization
The Commerce application analyzes available customer data to identify grouping trends and target customers more precisely, both in marketing campaigns and personalized recommendations. With all customer interactions in a unified view, Dynamics 365 Commerce provides rich data that it transforms into insights with AI features.
Dynamics 365 Finance
The Finance module of Microsoft Dynamics 365 covers all of a business’s accounting, financial, and taxation needs. From cash flow management to AI-powered analytics that support intelligent planning and forecasting, Dynamics 365 Finance has everything you may need to set up a working environment for your finances. Here are a couple of cases where the Finance module can help a retail business.
Network consolidation
With Microsoft Dynamics 365 Finance, you can gather and integrate data from multiple locations and branches with automated statements and reports. For large retailers with an international presence, Finance offers lots of localization and scaling options. You can run your accounting in multiple regions and select corresponding language for statements and reports. Moreover, your accounting and reporting will be in strict compliance with regional laws and regulations.
If your business is still growing, the Finance module will help you onboard new locations and products, adapting specific procedures to existing standards. Additionally, the Copilot feature integrated in all Microsoft Dynamics 365 apps makes it easy to generate invoices, reports, and other documentation.
Cost control
With the Finance module, you have all your costs and expenses in one place, which facilitates monitoring and control. Whether you are dealing with vendor payments, rent, utilities, or other expenses, you can process them in a consolidated environment.
Built-in intelligent analytics provides you with trends and patterns in your payments, allowing you to identify unnecessary expenses and optimize your finances.
Cash flow management
Microsoft Dynamics 365 Finance enhances your control over incoming cash flows by automating invoice processing and monitoring corresponding payments. AI algorithms under the hood of the Finance module analyze your cash flows and generate trend predictions for their dynamic management.
Moreover, the module comes with intelligent revenue recognition features that automatically identify revenue from sales and help to generate correct and compliant accounting reports.
Dynamics 365 Supply Chain Management
As a retail business grows, its supply chain becomes more complex, incorporating new products, branches, warehouses, and, of course, customers. The Supply Chain Management module in Microsoft Dynamics 365 has everything needed for retailers big and small to intelligently handle all supply chain matters.
Inventory management
Using the AI analytics functionality in Microsoft Dynamics 365 Supply Chain Management, you can run your inventory proactively, optimizing stock levels according to demand predictions. Whether you have one store or a network, you can always keep your inventory under control, avoiding overstocks and never running out of products.
If you are expanding your business with new warehouses, the Supply Chain Management module will help you onboard them quickly, either by copying existing warehouse configurations or by setting up new layouts in a guided process.
Omnichannel supply chain management
For retailers running hybrid operations with both brick-and-mortar stores and an eCommerce website, Microsoft Dynamics 365 Supply Chain Management provides flexible integration options. With all order processing, inventory, and shipping processes on a unified platform, you can speed up customer orders by shipping goods from the nearest warehouse or suggesting the most convenient pickup locations.
Multi-vendor procurement
With Microsoft Dynamics 365 Supply Chain Management, you can collaborate with as many vendors as you need in multiple geographic locations. The module allows you to monitor orders and shipments, maintaining inventory at the optimal level.
Using the Supply Chain Management module, you can put your repeating orders on autopilot, reducing the manual effort required to manage your inventory. Additionally, analytical features provide you with reports on vendor performance and give insights for building stronger relationships with your suppliers.
Dynamics 365 Field Service
While retailers do not typically provide field service to clients, they can use the Field Service module of Microsoft Dynamics 365 to streamline internal processes in their networks.
Store equipment maintenance
A retail business can improve the efficiency of its maintenance crew by enabling self-scheduling and automated reminders. With the Field Service mobile application, technicians can view and manage their repair and maintenance orders in real time, wherever they are.
Documentation lookup
Microsoft Copilot integrated into the Microsoft Dynamics 365 suite can provide various types of information related to maintenance works, including order details and issue descriptions. Copilot can also serve as a real-time reference, enabling quick and efficient search in equipment manuals.
The NLP technology used in Copilot allows technicians to request information in natural language, accelerating their work.
Delivery and installation optimization
When retailers deal in large items, such as furniture or home appliances, they often offer delivery and installation to customers. The Field Service application helps technicians to schedule customer visits, plan routes, and receive real-time updates on any changes. Meanwhile, Microsoft Copilot can assist with installation, providing instructions and other necessary information. As a result, customer satisfaction increases, which may lead to sales and revenue growth.
Dynamics 365 Sales
The AI-powered Sales module in Microsoft Dynamics 365 is a complete CRM solution that helps retailers build and manage their customer relationships.
Sales performance tracking
The Sales module comes with customizable dashboards that allow you to monitor various KPIs and trends in your sales activities: revenue targets, conversion rates, sales cycle length, etc. The analytical capabilities of the Sales module assist with identifying problem areas and help users make the necessary improvements.
At the same time, you can plan your sales better using AI-generated predictions for future periods. Microsoft Copilot makes performance analysis easier with natural language support and prebuilt prompts.
Upselling opportunities
The comprehensive CRM capabilities of Dynamics 365 Sales provide you with a 360-degree view of your customer base, including their purchase history, engagement patterns, and preferences. Based on these insights, you can create personalized product recommendations, increasing your upsell opportunities.
The AI models in the Sales module can help you qualify your leads and prioritize them for follow-up activities.
Lead management automation
The Sales module gathers lead data from multiple channels – social media, website inquiries, offline interactions – and consolidates it in a unified database. Analytical algorithms process incoming data and apply scoring to identify the most promising leads.
Workflow automation enabled by Microsoft Dynamics 365 assigns leads to the appropriate sales representatives, who follow up with personalized content.
Microsoft Dynamics 365 implementation challenges
To fully benefit from the capabilities of Dynamics 365 applications, retail businesses need to take into account the potential challenges that they may face when choosing modules and implementing their functionality in the organization.
Selecting features
The first problem businesses, especially small and medium-sized, face when planning adoption of Microsoft Dynamics 365 is the choice of modules and features. It often happens that modules do not fully meet a retailer’s needs and expectations with out-of-the-box functionality. As a result, it becomes difficult to choose modules that fit the business goals.
This challenge can be overcome with professional consultations and customization by an IT service provider. With their help, you can configure Microsoft Dynamics 365 exactly as you need it, without paying for unnecessary features.
Migrating data
When switching from legacy systems to Microsoft Dynamics 365, it may be challenging to transfer all of your accumulated data, especially if you did not use a CRM or ERP system. If data was managed in spreadsheets or other unconnected applications, migration may become a major effort.
Data migration should be considered a critical step in the migration roadmap. Before migration, all data needs to be audited and catalogued to determine what needs to be migrated to the new system. For successful migration, collaborate with a professional Microsoft Dynamics 365 partner to design an all-encompassing data migration strategy.
Integrating with legacy systems
If you choose to use Microsoft Dynamics 365 modules together with your existing solutions, such as another ERP or CRM, it may be difficult to smoothly integrate all components. If you are running legacy software and no suitable APIs are available, integration becomes even more complex.
Plan integrations in advance, leveraging advanced integration solutions such as Microsoft Power Apps. For custom integrations, partner with a Microsoft services provider to create a special connector enabling seamless integration between your legacy software and Microsoft Dynamics 365.
Ensuring data security
When Microsoft Dynamics 365 is integrated with legacy software, some security concerns may arise. With data flowing between all of them, retail ecosystem components must include proper security mechanisms and have access control and regular audits in place.
At the same time, it is essential to ensure compliance with applicable data protection regulations, which may be more complicated in an integrated environment. The best solution is to collaborate with Microsoft experts who can help you set up a secure data management system.
Microsoft Dynamics 365 implementation tips
From our experience implementing both out-of-the-box and custom products in the Microsoft Dynamics 365 family, we have come up with some tips that can make your adoption of Dynamics 365 smoother.
Plan ahead
- Define the goals you expect to achieve with Microsoft Dynamics 365.
- Set approximate timelines and milestones.
- Inform key stakeholders in your organization of your implementation plans.
Get a professional consultation
- Partner with a reputable IT company that has experience working with Microsoft retail solutions – in particular, with implementing Dynamics 365 applications for retail.
- Get a detailed assessment of your current infrastructure and its readiness to migrate to or integrate with Microsoft Dynamics 365.
- Decide whether you need to configure an out-of-the-box Dynamics 365 product or customize it to meet your needs.
Prepare for change
- Inventory your data and prepare it for migration to the Microsoft Dynamics 365 environment.
- Design a change management strategy covering all aspects of your business’s transition to Dynamics 365.
- Ensure your data is backed up and develop a risk management plan.
Plan the infrastructure
- Evaluate your business’s performance and scalability requirements and plan corresponding cloud resources.
- Leverage AI, ML, and data analytics built into Microsoft Dynamics 365 applications to ensure maximum benefits.
- Assess the security requirements of your retail business and include appropriate protection mechanisms.
Deploy and maintain Dynamics 365 solutions
- Migrate your business data according to the planned strategy.
- Test and validate the data to ensure its integrity and completeness.
- Establish required integrations with other software components.
Ensure adoption and continuous improvement
- Organize training for your employees to ensure familiarity with Microsoft Dynamics 365 functionality.
- Monitor your infrastructure performance to identify and address issues and optimize software operation.
- Implement the required updates and security patches to protect your data and maintain the required level of performance.
Intellias experience implementing Microsoft Dynamics 365 for retail
As a Microsoft Gold Partner, we focus on helping our clients enjoy the benefits of Microsoft’s state-of-the-art solutions. For our retail clients, we configure and customize applications from the Microsoft Dynamics 365 family to support their businesses with modern ERP and CRM systems.
ERP solution for a dental equipment and service retailer
A nationwide retailer of dental products serving thousands of practices and beauty clinics needed to completely rethink its approach to resource planning and customer relationship management. The existing setup consisting of Excel spreadsheets and multiple disconnected applications could no longer meet the needs of a 21st-century business committed to providing excellent service.
We helped the client transform their resource planning flows by implementing and configuring a suite of Microsoft Dynamics 365 applications to address multiple pain points:
- Implemented a quote management tool based on Dynamics 365 Sales that enables accurate and consistent quote calculations
- Reconfigured the client’s Dynamics 365 Field Service module to optimize field operations and improve productivity
- Implemented Dynamics 365 Customer Insights, an application that streamlines marketing campaigns and improves visibility of the client’s customer base
- Migrated the client’s financial data and operations to Dynamics 365 Finance, creating an efficient finance management system based on high-quality data
Such a transition allowed the client to get better control over various resources and processes, improving data quality and accuracy, reducing the number of errors, and raising customer satisfaction.
Direct-to-consumer solution for an online fashion retailer
To help a global fashion and beauty retail business transform its warehousing and logistics operations, we enhanced its supply chain with a custom ERP system integrating various features of Microsoft Dynamics 365 applications:
- Dynamics 365 Finance to streamline revenue and third-party commission calculations
- Dynamics 365 Supply Chain to connect data from client and third-party warehouses into a unified database, ensuring stock availability and improving shipping efficiency
- Dynamics 365 Sales to enable direct management of customer orders by both client and third-party store locations
- Dynamics 365 Commerce to generate tailored customer recommendations and create highly personalized experiences
Leveraging the capabilities of Microsoft Dynamics 365, we helped the retail business optimize logistics costs and broaden the selection of products offered to customers.
Route planner design for a tire and automotive parts retailer
To facilitate supplies to service centers in multiple regions, the company was looking for an efficient milk run route that could optimize delivery costs and improve scheduling. Using the features of Microsoft Dynamics 365 modules, our engineers helped the client design a route planner system customized to the specifics of their retail business.
To automate order management and delivery scheduling, we integrated Dynamics 365 Supply Chain into the client’s logistics system. This module is also responsible for delivery tracking, truck load mapping, and AI-powered route planning. To enable invoice processing, our team enhanced the system with Dynamics 365 Finance.
With this transformation, our client improved the efficiency of logistics by optimizing routes and automating processes. Besides lowering costs, implementing Microsoft Dynamics 365 led to an improvement in customer satisfaction due to higher delivery accuracy and commitment to declared delivery times.
Microsoft Dynamics 365 – Your step towards the retail of the future
Coming back to the challenge of implementing an advanced ERP system, we can now answer a few straightforward questions:
Do retailers need Microsoft Dynamics 365?
Yes!
Can Microsoft Dynamics 365 meet most of a modern retailer’s needs?
Yes, it can.
Is it too difficult to implement Dynamics 365 in a way that offers maximum benefits?
No, not if you partner with a professional IT company that will guide you through the intricacies of configuring Dynamics 365 and help you customize it for your business.
We will be happy to share our expertise in unlocking the true power of Microsoft software solutions to make them work for you. With an intelligent ERP and CRM system built on Microsoft Dynamics 365, your retail business can do so much more!
