Earlier this week Foot Locker announced it was going to start testing same day delivery for consumer purchases. Click here for the press release. This is an excellent case study of what we at Constellation Research are discussing with Matrix Commerce. It is a prime example of where the consumer voice and needs have converged with the retailer’s supply chain.
Foot Locker will be testing the same day delivery in 5 locations between the San Francisco and the Los Angeles area. In order to address the last mile delivery challenges, Foot Locker will be partnering with Deliv for the logistics of getting the product from the stores to the consumer’s location. Think of Deliv as doing for small parcel shipping to consumers as what Uber did for personal transportation – crowdsourcing last mile transportation. A very interesting challenge and service to say the least.
The voice of the consumer continues to grow when it comes to asking for and seeking the ability to get their products where they want it and how they want it. For retailers such as Foot Locker it is imperative that they determine how they can meet these demands from their consumers. They are already addressing their customer’s needs by allowing for online ordering with in store pick up. This new pilot is the natural next step.
As Daphne Carmeli, CEO at Deliv stated, “Foot Locker who surpass their customer’s expectations by giving them the ability to receive their merchandise when they want it, including same-day…” This is one area where the likes of Foot Locker, who are brick and mortar retailers at heart, have an advantage over eCommerce giants like Amazon. Foot Locker already has a number of distribution centers (DCs) that are located close to their customers – the actual Foot Locker stores. With the likes of Deliv’s services, they can now solve the last mile delivery issue that has made such services a logistics headache.
This success of the pilot project will be interesting to observe. Some questions a retailer such as Foot Locker will have to address:
- Can the staff in their stores be able to not only service the customers that come into the physical store, but also efficiently pick and pack the orders? Store personnel are trained to service a customer in person, Foot Locker will now have to ensure proper training for this staff to have to properly prepare orders for home delivery. Not as easy as it may sound.
- How does a crowdsource delivery offering like Deliv handle customer interactions? Once you start delivering products to consumers’ home you are exposing your brand – the person doing the delivery represents your company whether or not they are on your payroll.
- If your store acts more and more as a DC, how do you handle returns and restocking issues? Again, similar to the first bullet point, your staff is trained to sell products to customers who are in the store, now you are adding tasks to their jobs. How ready are they to handle this added demand?
The ability of companies such as Foot Locker to offer same day delivery is a natural progression when it comes to Matrix Commerce (other retailers such as Macy’s and Bloomingdale’s also announced this week they are running same day delivery pilot projects). That does not mean the challenges aren’t there…on the contrary the complexity remains and may become increased as Foot Locker travels down the learning curve. These companies are making the correct choice when it comes to offering such services, but they need to show patience with the process. There will clearly be some growing pains. However, similar to when eCommerce exploded on the markets in the late 1990s, the genie is out of the bottle. Now it is a matter of how well retailers and their partners meet the ever increasing speed for fulfillment.
As the Foot Locker EVP of Operations, Mike Owens, stated, “We want our customers to experience speed in everything they do, from shooting hoops to on the track.” It is all about speed…just make sure you don’t sacrifice quality for speed!
Later tonight we will be reminded about the power of Apple and consumers’ apparent insatiable desire for new devices (consumers can pre-order the new iPhone). But this is not a post about the iPhone 6 and whether or not I should get the 6 or the 6 phablet…instead this is a reminder about the rise of mobility within supply chains.
Not too long ago, when Apple introduced the iPad it was viewed, rightfully, as a revolutionary consumer device. A device that would threaten the laptop market. Which it has. An unintended consequence was the iPad becoming a device that found its way onto the manufacturing floor, truck fleets, warehouses and other parts of the supply chain. Tablets gave workers on the floor a simple, mobile and connected interface with the necessary systems to allow the factory to run effectively and efficiently. Companies like GE’s Energy Storage have been leveraging tablets on their factory floor to reduce the alerting time when outages occur. Rather than having floor managers monitor everything from a central control center, they now have that computation power and communications in a portable device. Truck fleets have adopted the usage of tablets to bring more intelligence and connectivity to their vehicles. Of course none of this is a bad thing for the likes of Apple, Google, Samsung or other players in the mobile device ecosystem.
Tablets have also become a vital cog when it comes to how supply chain solution providers such as Llamasoft and JDA, offer their customers access to their offerings. Allowing for greater access to their software solutions – anywhere and anytime.
But is the world of mobility limited to tablets and smart phones? Absolutely not. On the contrary, the rise of wearables is the next wave of mobility in the supply chain. I remember walking the floor a few years ago at CSCMP’s annual event and seeing a number of companies displaying their devices – gloves, headware and other wearables – that would bring more efficiencies to supply chains. Many of these had to do with ensuring factory workers or those who pick and pack in the warehouse were as efficient as they could be. The problem is many of these devices were bulky and quite unwieldy. But similar to the adoption of consumer based tablets by companies, look for consumer wearbles to find their way onto the factory floor, warehouse and other environments. Let’s face it, consumer focused companies tend to make more aesthetically pleasing mobile devices, both in form and function.
For supply chain practitioners, do not hesitate to look to consumer device providers for your mobile needs. While there will be industry specific providers of devices, you might be able to find what you need from the likes of Apple or Samsung. Device manufacturers could consider these potential other uses, but in truth they should just focus on their primary targets – the consumer. Technology players must take into consideration what this growth in mobility for the supply chain means for them. Not only might they be asked to created apps for the devices, but how else can they take advantage of the increase in mobile and connected computing power?
New sleek gadgets like smart watches, clothing with senors, smarter tablets and phones are not only exploding in the consumer space but also for your supply chain. Interesting times we live in. Now I have to get back in line for my new iPhone.
The term journey carries many connotations. In one sense it defines an epic trip. Something that one might look forward to as a once in a lifetime adventure. For others, a journey might be seen as a difficult and arduous trip – think the Mayflower crossing the Atlantic. These connotations are not that different when it comes to supply chain. In particular with regards to such adoption as S&OP. There seems to be more S&OP journeys than any other. But are we looking at this with the wrong lens?
The other aspect that is implied with a journey is that we have a clear destination – a final goal. For those of use that see journeys as wonderful adventure – the destination maybe a tropical island for holiday or hiking in the Andes. For the passengers on the Mayflower that journey was a new home far from the oppression of England. A journey filled with disease, boredom, fear and for some death. But when it comes to technology adoption, for say S&OP, is there a true end goal? Or a constantly evolving and changing number of levels and stages we are looking to reach. With many of the systems we put in place for our supply chain, we are looking to add efficiencies in how we handle inventory, make our production more profitable, meet customer demand faster and better and the lists go on. However these are not goals, but more continuously evolving aspirations and stages. We might want to attain a 98% customer satisfaction, but once we achieve it, we cannot stop there and gloat in our achievements. The business environment is constantly shifting, so we need to maintain our nimbleness. Supply chains look to rid themselves of excess inventory, but once they have reach a specific number…the work does not stop.
Now the fact that there cannot be a true “end goal” with this journey, it does not mean service providers do not need to be held to a high level of expectations and demands from their clients. From the user stand point they must have a frank discussion with their service providers about what is realistic for different results at stepped stages.
Both service providers and their customers need to change their perspective when they mention a “journey.” Easier said than done, but don’t think about reaching an end goal but really about the key steps in that journey.
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Amazon announced today it was going to jump right into the deep end when it comes to physical, in-store payment systems. They have unveiled a mobile payment service for brick and mortar stores. Taking direct aim at other mobile POS systems – Square, Paypal as well as Google and Apple. From the reports, Amazon will look to undercut other mobile payment systems – taking 2.5% of transactions versus 2.7% for the likes of Square – to grow their market presence. They are giving merchants an introductory rate under 2% to build that beachhead (feels like a credit card invitation – 0% APR and then only a slight bump to 33%).
In the online world, Amazon already knows how to handle and secure credit cards. They are also well versed when it comes to mobile payments as their iOS and
Coming to a brick and mortar store near you…
Android apps’ success has demonstrated. The natural progression was to push into the brick and mortar space – where 90% of retail transactions live. In the near term I am not sure that Amazon will do more than offer a secondary maybe even tertiary option. Brick and mortar retailers could view the Amazon system as letting the fox into the hen house. It would be understandable if these brick and mortar players do not flock to embracing Amazon and their payment systems. But I am sure that the favorable financial set up will force a large number of players to give it some serious consideration. Whether or not Amazon is widely successful with this venture is secondary to what the eCommerce 800lb gorilla is doing with regards to their overall supply chain disruption.
A quick look at what Amazon has been doing to become the 800 lb gorilla in supply chain:
- Acquired Kiva Systems to add sophisticated robotics and automation to their massive distribution centers.
- Gobbled up the likes of fabric.com, CDNow, Zappos, Pets.com to constantly expand their ability to offer a wide array of inventory.
- Pushed out a tablet and now a mobile phone under the Fire umbrella. Both of which are really hand held sales terminals for Amazon to leverage.
- Started pushing last mile grocery delivery in certain markets with their AmazonFresh offering.
- Even leaking that they are thinking of delivering via drones.
This is in addition to their deep experience in the online retail world. Taken together and you have the 800 lb gorilla that is disrupting the supply chain jungle. Add to this the news of them pushing into the payment space and you see Amazon gaining access to POS data from brick and mortar, coupled with all the data they have on consumer online buying. Amazon is quickly aggregating vital data sources on how consumers buy, where demand is being generated and how it impacts the retail supply chain.
So now Amazon is dabbling in last mile logistics, continually working on more efficient warehouse management, putting portable POS systems in consumers’ hands and now putting POS systems in the retailers’ hands.
That 800lb gorilla might have added another 50lbs of lean muscle.
Customer loyalty is the holy grail for retailers, consumer product companies (CPG), airlines, credit cards, media, and so on and so on. Companies across the majority of industries are striving to understand why their consumers are willing to hand over their hard earned income for goods and services. Why or will these consumers continue to purchase from the same source? And how can these companies keep these customers coming back and hopefully spending more and more.
Companies have created and leveraged many creative means to gather and nurture information from their customers – whether it be loyalty cards you have at CVS or Shaws
How many of these are in your wallet or on your key chain?
grocery store or Vineyard Vines or Barnes & Nobles or Starbucks. These vendors know that for the most part they need to give you something for you to give over some information – usually they give you discounts, early views of new product lines, reward points etc. Airlines, of course, were one of the first movers to give you what was a highly sought after reward for your business – miles and status. Hotel chains were quick to follow. Anyone who spends time on the road, knows how vital is it to have “status” on an airline. While it still doesn’t beat flying private…so I have been told…having that status can usually make the drag of travel a little more tolerable.
All this information has added fuel to these supply chains – an insight into the most profitable client and demand. A view into a data source that can potentially drive the most profitable and desirable side of the supply chain. But are our supply chains getting a less than complete picture of what is really happening?
Looking at our consumers’ buying patterns for just our products is far from a complete picture. Grocery chains and drug stores are very aware of this. They work with vendors like IRI, Neilson, Orchestro or RSi to get a more complete view of the consumer basket. These software vendors will aggregate data across a category or across an entire store or region. This allows a more complete view of what is truly happening. But is that enough? No. Not if our supply chains want to be even more finely tuned when it comes to servicing our clients.
The reality is that our supply chains are no linear and they do not exist in a vacuum. They are all intertwined. The way to make sure our customers stays loyal to our supply chains is to understand how the interact with all the supply chains that are connected. This type of visibility cannot occur if we are only looking at that data that comes in from the loyalty program specific to my business. I need to understand how that customer interacts with tangential goods, potential substitute goods, services and even items that might not appear to be in the same cohort.
Companies need to step away from the loyalty card table…okay they still need to take in and leverage that information. But the data that needs to be added to the supply chain is information of how consumers behave when they are not giving you their information – meaning when they are doing other things with their time and money. Credit card companies have a leg up on this, they already have all that data. Smart supply chains will find ways to get access to that information. Just think about how much wiser your supply chain could be with true demand.
The World Cup in Brazil came to an end over a week ago…I am still going through World Cup withdrawal! For a recap on the tournament click here to read my thoughts. But the World Cup winners can teach us about the future of the Internet of Things when it comes to wearables. There is a wonderful article about how the German national team adopted some cutting edge training methods…enabled in large part by wearable technologies. The German fitness coach was able to create and adapt focused training sessions for each of the players. This ensured each player train to their optimal level. Was this an option before IoT? Of course. But with the precision of data being gathered by each player makes the task much easier to craft. The rise of wearables in sports is not a new phenomenon, I have see companies like Adidas advertise their boots with sensors for a few years already. They are even offering a ball that has sensors, allowing coaches to study the power, direct
Adidas soccer boots with connectivity
and swerve players’ kicks produce.
The story of German soccer players being monitored and having their training programs closely modified and measured might appear something only professional athletes can enjoy. On the contrary it is an example of what is accessible to an ever growing number of consumers. Companies like Garmin and Fitbit are already putting sophisticated wearables for a large swath of consumers. My cousin who is an aspiring triathlete uses his Garmin and their software to constant monitor his workouts, results, targets and efficiency. Recent ads by Apple highlight the iPhone 5s and the ability to tie into some wearables that monitor your workouts. Wearables for the consumer is mimicking how we leverage the same concept for our supply chains – monitoring and adjusting actions, with targeted goals in mind. Just like we are able to monitor in real time the movement and levels of our inventory, and adjust where need be, we can now do the same with our personal efforts and inventory of energy levels.
The success of the German national team demonstrates what the power of such precise data can do for the individual athlete as well as the overall team. We have seen these types of results from IoT when it comes to our supply chains as well. But just like the example of the German team – it still takes the mind and creativity of a human coach to take full advantage of this information.