Bringing the store experience to fulfillment…close…but still long way to go.

I finally broke down and recently decided to upgrade for my iPhone. Side note, a few years ago, when the newest generation of iPhone was available it was treated like Christmas morning by some of us Apple fans. Some of us would literally wait online until the magic hour when you could pre-order the new version. Today, it is a non event. I will upgrade when I get to it, type event. For me, I finally broke down and upgraded after seeing the new phone at the Apple store, demonstrates the importance of a brick and mortar presence! Granted that pushed me to action, but I wasn’t as excited about it as in the past. But this post isn’t about the changes in behavior with getting a new iPhone. What this latest saga of upgrading my phone has provided an example of trying to bring greater experience to the fulfillment process. And how much we still have to learn.

Dreaming of the pacific…

Let’s set up the situation. My carrier is AT&T, I went through their portal to upgrade my phone. I went through the configuration – I went with the Pacific Blue option with 256 GB of memory. I selected my payment plan and then was told item could be delivered later in the week. Perfect. At least I thought. What happened next is a good effort by AT&T…but falls a little short. I was told that a customer representative would show up between 2-4 on Thursday, and spend 30 minutes with me. Hmmmm. Their tag line “we are bringing the store to you.” Makes perfect sense. I have been preaching the importance of making fulfillment a key part of the experience. Looking to replicate the in store experience at the last mile is a great example of this. However when it comes to the execution there remains much to be desired. While I appreciated the service, all I wanted was for the phone to be delivered to my address. I did not need to have a 30 minute tutorial on how to switch my phone. I realize I am not a millennial or a Gen Zer, but I can still switch my phone on my own, thank you very much. Additionally, I was told I would have to show ID and credit card…really? Are they delivering the Excelsior diamond to me? Finally they showed up, I was in the middle of all day meetings, couldn’t reach me and didn’t deliver the phone (mind you there is a perfectly safe location where packages are delivered every day). This started a cacophony of emails and messages from AT&T and their delivery service to try and reschedule the delivery. I also called AT&T customer service (the chatbot wasn’t working). Through all this communications gymnastics, I still don’t know when the phone will be delivered.

So what are some lessons from this awkward dance I am having with AT&T?

• Figure out how to bring added value to fulfillment: Clearly AT&T is trying to add value to the last mile fulfillment. But it is not one size fits all experience – some customers might want to be walked through the process of switching phones, others, like me, do not require this service. Make it an option. What about other value added services such as taking an old phone and recycling it? Could AT&T even offer to take back other small electronics for recycling or refurbishing? Headphones, chargers, tablets or even laptops that have accumulated in our homes. I appreciate the effort to add value added services to the delivery, but you must make sure that each customer truly desires and sees value in what you are offering. It cannot be a one size fits all.
• Communication is crucial: Like with many things in life, being able to communicate clearly is paramount. I appreciate AT&T and their efforts to communicate, however it has been disjointed and confusing. Between text messages from the delivery service, emails from AT&T, emails from the third party and a telegraph from Alexander Graham Bell, it has been clear as mud with regards to what next steps are. Even on the web site there is no clarity as to when delivery will be made. Have one central location to communicate – a centralized web location – so customers have a visual source of the truth. Any email or text message can always refer back to the location. If Fedex and UPS can do this, why can’t AT&T?
• Provide customers options…at the point of commerce: I realize that the goal is to simplify and reduce friction at the point of sale, so suggesting you ask for more decisions to be made might be counter intuitive. However, when it comes to decisions on delivery times and value added services at delivery, these are crucial variables that consumers will see value in. More importantly they impact the overall experience and need to be properly offered and accepted by the retailer before the “buy” button is pressed. I had no idea that I was getting a 30 minute session with delivery. I also did not realize having this service impacted delivery times. These need to be clearly explained and offered before the purchase is made. I am all for providing value added services tied to fulfillment, but you need to make sure your customer is aware of the offering, understands the value and is allowed to make a choice as to whether or not to leverage these options.

So I will see when this Pacific Blue iPhone arrives. Maybe 5 years ago I would have been more worked up about the delay and not having my new toy….errrrr…device as soon as possible. Today I just focus on the break down in the delivery and the effort by AT&T to make this a more valued experience. A for effort, no grade yet for execution.

Happy New Year! On to 2021…bold predictions for a better or simply a “normal” year!

Happy first week of 2021! I hope you all had a safe, happy and most importantly healthy holiday season. While the latest trip around the sun has challenged us many ways, there is a light at the end of the tunnel and hopefully better times ahead. Better, simply meaning more normal times! But let’s look at some BOLD predictions for what 2021 might hold in store for us.

Blanket prediction, with multiple Covid 19 vaccines having been approved and now getting into arms, the globe will move towards controlling the virus and allowing the world to put this pandemic behind us. Let’s hope this comes to fruition sooner rather than later. But what else can we expect?

• Stores are not dead…they’re continuing to evolve. Okay I might sound like a broken record, and yes this trend is not unique to 2021. But what is going to be different is the impact Covid 19 had on retail as a whole and stores in particular. It has been well documented of how the lock downs adversely impacted physical stores, restaurants, bars and a plethora of service business that could not be done over Zoom, Teams or Google meet. From a retailer perspective, 2020 accelerated a number of store shuttering, by some accounts doubling the closures from 2019. While brands like GNC, Pier 1 and Chico’s are closing stores, you still see other players such as Amazon, Warby Parker, Bonobos, Indochino and Peleton opening physical locations. We are not seeing the end of the store, we are seeing the accelerated evolution of how the physical store is being leveraged. Yes it will continue to be used to attract and drive traffic to come in and acquire inventory. But will take on an ever growing role – service center (think Apple genius bar), a return center (look at Kohl’s and what they have done with Amazon) or a micro fulfillment node (look for grocers to push this usage). As we emerge from the lockdowns, savvy brands and retailers will continue to rethink and retool how stores fit into their overall strategy. They will not be blindly shuttering those assets.
• Sustainability and the circular economy drives consumer behavior. There is no doubt that what we saw in 2020 was a massive acceleration when it came to ecommerce. And with those mountains of online ordering creating a tsunami of goods being delivered to our front doors, this will invariably lead to a return tidal wave of coming the other way. The amount of returns and how retailers and brands will handle this volume is potentially more than a headache for the industry. Forward thinking retailers will see this as part of a larger theme – sustainability. Returns are a part of the circular economy that has been growing. It is not only the amount of product coming back into the supply chain, but also how retailers will strategically address this as their overall go to market. How do retailers and brands ensure that sustainability is not an afterthought but is integrated throughout the business? Consumers’ sustainability awareness, are deciding factors in how they spend their money. Retailers and brands need to keep this in mind with regards to how they approach all aspects of their businesses – from sourcing to returns.
• Automation gets closer to the consumer. Yes I know, the robots have been here for a while now. But we will automation start getting closer to the end consumer. Granted robotics have already made their way into our homes – see the Roomba. When it comes to our supply chains, automation has been a presence for decades. Starting on the manufacturing floor and now pushing into the sourcing, warehousing and distribution parts of the supply chain. Look for automation to push into consumer spaces in 2021. From sanitization robots keeping public spaces hygienic, robots focusing on security and automation that will function amongst the public to complete order picking or store replenishment. We will also see more usage of automation in the last mile fulfillment, from Kroger to DHL, companies will seek to leverage autonomous robots and drones, to get our stuff to us when and where we want it. Look for automation to become a greater part of our lives, from our homes, to how we get products delivered to our doors and when we are out in public. Hopefully this is not the start of Skynet…
• Not your parents’ point of sale. My first prediction is the store is not going away it is changing…same can be said about point of sale (POS). The days of static, fixed cash registers has long been eclipsed by mobile and cloud based POS. But even this is evolving. POS will become untethered. Only requiring an internet connection and digital interface, modern POS will occur almost anywhere these two tools are present. You might say, so what, we already knew this…but this will expand into social media. We are already seeing a surge into Facebook, Instagram and TikTok to allow for transactions to occur on these platforms. We are finally seeing it come to content via your television (I remember working on a report in 1998 while at Forrester talking about this possibility). We are not far from science fiction shopping where QR codes and other scannable objects will be sprinkled through out our physical world allowing us to interact and shop almost anywhere. Advertisement on a billboard, scan the QR code to purchase. Walking through a park and there is a nice flower arrangement in a planter, take a picture via the PictureThis app and connect with local florists that can sell you the arrangement or individual plants. Our “limitations” to participate in commerce will continue to crumble, as POS becomes omni present. Retailers and brands need to be prepared to service demand anywhere and anytime…in locations not imaginable a few years ago.

Let’s hope that 2021 proves to be all that we hope for. Especially with regards to a wide spread vaccine. Captain obvious comment – but the ability to spread the vaccine globally will be a massive driver to getting the Covid 19 nightmare behind us. Fingers crossed this continues to march towards reality in the first half of 2021. What we did learn from 2020 was the major shock to our system accelerated the thinning of the herd. It also will reveal with brands, retailers and supply chains are best prepared for 2021 and beyond.

Happy New Year to everyone. Here is to a boring and normal 2021.

Peak…what peak? Demand spikes predictability…I don’t think so.

Any of you who work in supply chain, retail, fulfillment or shop, know that we are in entering into the crazy holiday season for retail. Otherwise known as the “peak season.” A season where we look forward to Black Friday, Cyber Monday and other massive revenue driving events. But does this mean anything anymore?

Much has been written about how we look at demand signals and where these are coming from. In the good old days, we looked at some simple times – Christmas peak season and back to school as the big events, with smaller events such as Valentine’s day and Mother’s day. Fast forward to today, and now we are seeing mini-peaks emerging all over the calendar. Whether they are artificial events such as Amazon’s Prime Day or Singles’ day in China, we are now seeing these types of commercially created demand spiking events. On a smaller scale, retailers such as Old Navy created artificial demand from their $1 flip flop day. But we also have to think about other bolt of the blue demand drivers. The latest one comes from the recent US Presidential election.

Those of us who spend much of last week switching between all the major networks as states were counting votes, were exposed to a number of pundits working the “big boards.” Whether MSNBC, Fox or CNN, we all watched as states and counties were analyzed over and over. Counties like Houston County in Georgia were highlighted as they were counting votes. Of course John King from CNN was corrected in his pronunciation. Outside of counting votes, an interesting demand spike emerged. As Steve Kornaki from MSNBC mentioned his stockpile of Gap Khakis on air, the San Francisco retailer enjoyed an unexpected spike in their Khaki pants sales. A pleasant outcome for the Gap. But in a world of hyper-connectivity and social media, we are seeing more of these mini-demand spikes. Whether it is national soccer team that goes further in a tournament than expected or a princess wearing a specific dress, demand spikes are and will continue to emerge from a random and unexpected places.

So what does this mean for retailers and their supply chains?

• It all starts with visibility – supply chains are always chasing the elusive network visibility. Being able to have a rich and real time picture of your supply chain. This quest for this Holy Grail continues to be elusive. But the effort must continue. Know what is happening within your supply chain is the first step.
• Rethink your inventory strategy – not simply when it comes to your working capital, but also your work in progress, raw materials to name a few. How do you better meet these demand spikes? Know what is available to promise, in real time. Rethink how you build and place your safety stock across your network.
• Work your data governance – end of the day, we are all digital and data companies. Double your efforts when it comes to how you work your overall data strategy. How are you leveraging data within your network, which sources are you tapping into and how are you internally leveraging this data?

End of the day, demand driven events are going to be difficult to predict and anticipate. Consumers, with all their available choices and empowered by their digital assets, are increasingly fickle and unpredictable. Retailers and their supply chains cannot depend on the predictability of known demand driving events. While they will continue to adapt to meet the demand associated with Black Friday, Cyber Monday, Singles Day, Mothers’ Day etc, they will also have to be nimble enough to meet demand spikes when a journalist gets prime time coverage for a week and is pitching your khakis.

Coupa acquires LLamasoft…didn’t see that one coming.

News came out this morning that procurement solution provider Coupa was acquiring LLamasoft. Interesting and unexpected news to say the least.

Over the past few years, Coupa has enjoyed some impressive growth, doubling revenues from 2017 to 2018. Coupa and Jaggaer were two of the fast growing supply chain vendors, both focused on procurement. LLamasoft has long been the lone champion of the world of supply chain simulation (granted they expanded their offerings.) I have always wondered when they would be acquired or merged to offer a large supply chain offering. That day has finally arrived!

Some initial thoughts:

• Reaching into a new addressable market – I had a conversation about this merger with the comment, “Why would a procurement department need supply chain network optimization?” 100% agree. But if the merger is done properly this will expand the reach of Coupa, get away from the procurement department and into a wider addressable market. Coupa seems motivated to fill out their offerings via acquisitions, could this just be the beginning of other such moves to expand deeper into the supply chain planning and execution space?
• It’s the data stupid – We are all digital businesses now. I remember Jeff Immelt hammering away on this during a General Electric event. He was right. Whether you are a sneaker company like Nike buying Celect or Koch acquiring Infor, the name of the game now is expanding your data footprint. Coupa knows and works on the procurement side of the street, lots of data around costs that impact our supply chains. Now add a powerful analytics engine to the mix. Trying to do some advanced supply chain network optimization, wouldn’t it be nice to have some rich data about costs added to that mix?
• Procurement pays the bills but…to truly help drive business growth you need to bring some planning or execution know how. There is no doubt that supply chains always need to keep an eye on their direct and indirect spend. Savings on that side of the ledger frees up opportunities elsewhere. But these same companies need to have sophisticated tools to ensure they can identify and capture new market opportunities. Look for procurement focused solution providers to continue to look towards planning and execution providers to expand their portfolio.

It will be interesting to see how Coupa leverages Llamasoft moving forward. Will this be the beginning of a shopping spree from Coupa? E2open did something similar a few years ago, granted they were private and were able to make aggressive moves without too much scrutiny from the public markets. Keep an eye on Coupa to see if they continue to push into the planning and potentially execution space.

Congrats to Razat for navigating a great deal for LLamasoft!

Amazon’s interesting play with their new stores.

Hey look Amazon is in the news again! Surprise surprise. They just announced their first Fresh grocery store – click here for article. On the surface it appears to be a traditional grocery store, but with a number of technological goodies from Amazon. From Amazon Echos allowing patrons to ask for directions and help in the aisles to smart shopping carts that allow for frictionless transactions. Of course all this can be tied to the customers’ Prime account. It is almost as if Amazon was looking to combine the online experience to the brick and mortar world. So is there something beyond simply grocery shopping here? Absolutely.

Bezos always has some secondary goals with his efforts. Other than world domination. Let’s go beyond the fact Amazon wants to capture even more of your household spend. This concept grocery store is an opening to more micro-fulfillment centers for Amazon. Amazon is known for opening mega fulfillment centers to service geographic areas. These distribution centers are sprinkled across the country, with the idea in mind to ensure customers are within easy reach of an Amazon fulfillment center. If you want to see where the centers are located, check out this wiki page. But what about getting into denser population centers. Where having a massive distribution center might not be optimal? What about having a micro-fulfillment center where consumers are trained to interact with automation? Hmmmm….exactly.

These Fresh grocery stores will allow Amazon to offer a location for their

customers to get groceries and pick up or return orders. They have an opportunity to interact face to face with these customers. Amazon will also be able to fulfill online grocery orders within the store. Adding the automated grocery cart mimics similar technology leveraged in traditional warehouses where eaches picking is done with automation. Could Amazon leverage the automated shopping carts to do order picking when the store was closed to the public…or even where the store was live. Amazon could basically flip between a traditional grocery store and a micro-fulfillment, warehouse lite. The technology could empower more sophisticated home delivery or BOPAC (buy online pick up at curb) from the store. Amazon could also leverage these facilities to train consumers to interact with more in store automation. Consumers would be introduced to the automated shopping carts. A shopping cart that could guide the consumer through their shopping lists. Next step would be getting used to having other automated devices doing replenishment, cleaning, stock counting or security within the store.

These new store concepts are not simply about getting you to buy groceries from Amazon. They could prove to be the beginning of new play from Amazon to create more micro-fulfillment centers and introduce more automation into the shopping experience. So the ecommerce giant continues to expand its brick and mortar presence. How times continue to change!