Supply chain strive to achieve precise demand shaping – doubled edged sword

Over the past few weeks I have been meeting with a number of supply chain services companies who are talking about and focusing on developing solutions that will allow users to be laser focused with demand sensing and shaping. This was particular evident during my meetings at NRF in New York. We also have the likes of eCommerce giant Amazon who have patented technology that claims to be able to put on the truck the product you have yet to order because they know that you will order it! All very interesting and exciting for supply chains – these supply chains strive to eliminate or at least control the lumpiness associated with their demand patterns.

However this begets a question – is this necessarily good? For example. The situation I hear often is what takes place at Starbucks. A regular client walks into their local Starbucks, the barista notices them standing in line and knows their preferred order. The customer reaches the cash register and their usual venti, skinny, vanilla latte is already waiting for them. All they have to do is pay and pick up their piping hot coffee.  Sounds lovely.

They know what you want before you order it!

And for the most part maybe that customer appreciates the convenience, and feeling of being so well known that you are the “mayor” of that Starbucks. But what if that customer does not want that skinny vanilla latte? What if the customer wants a hot chocolate one day? Do they dare deviate from their usual order or do they accept the usual order for the convenience?

The same holds true for grocers such as Stop and Shop or Walmart, who let you order online and pick up in store – and will predict what your basket will look like. So all you need to do is drive to the grocery store and pick up your order. There is no need to think too much. Of course the positive is that there are tremendous time savings for the customer if they do not want to contemplate a new mix of groceries. But what if the consumer wants to try a new cheese or kitchen cleaner? If their order is already compiled for them will they get the opportunity to see what else is available? Or do we not want to give them the opportunity? How do we make sure they have the opportunity to browse?

My point is not that supply chain users and vendors should not stop striving to get too smart and more effective when it comes to demand shaping and sensing. However there must be some balance when it comes to how precise and “effective” the supply chains need and want to be with regards to the customer. Yes, we want to eliminate lumpiness and extract those savings from the supply chain. But retailers and other players in the supply chains need to still keep a balance with being very precise with how they manipulate and predict demand with the opportunity for their customers to deviate from their usual demand. Retailers and other customer focused industries need to determine how precise they want to be with their demand shaping and how much freedom they want to give their customers to roam and wander through options.

The end of money as we know it…Dunkin Donuts empowers app

As someone who cannot really function without some coffee, I go to both Starbucks and Dunkin Donuts on a regular basis. Both have their uniqueness. One aspect that bothered me was the lack of a Dunkin Donuts app, similar to the Starbucks one which allows you to pay directly from your iPhone or Droid. Now Dunkin offers the same service! About time!

Aside from the fact this will make my purchases oh so much easier…it is another sign of why most people are more concerned about losing their smart phones than their wallets. The trend will be for more vendors to leverage smart phone apps to empower transactions. For vendors this has a multitude of advantages:

• Free cash flow – when I put another $100 on my Starbucks card (the scary part is that amount doesn’t last nearly as long as it should) that is $100 of free cash that Starbucks gets to leverage. Clearly I do not get $100 worth of Starbucks immediately, Starbucks gets cash before having to deliver the product.
• Data data data – through the app the likes of Starbucks and Dunkin have a great opportunity to mine very specific data related to their customers. What stores they go to, what are their favorite products, at what cadence do they reload their cards…and so on.
• Channel opportunity for up sell – they are on your phone. Imagine those opportunities when it comes to pushing promotions and the likes.

I could imagine other firms moving in this direction, think about any company that has some type of customer loyalty program. Empower it with purchasing power. Makes one wonder what the future of cash is…

Customer service…learn from Starbucks

Okay, this is a blatant plug for my local Starbucks, but this morning I experienced great customer service and made me think about how other companies and industries could learn from this. The situation – I ordered my coffee drink, which was served to me barely tepid, and it was suppose to be hot. I informed them of this problem and was immediately told I would get a new, hot drink. No surprise there.

What was pleasant was the other worker who was running the cash register overheard this and immediately fished into the food case to give me a complimentary pastry. Now let us put aside the fact I did not need the extra calories nor sugar, but ensuring client satisfaction was exemplary. Regardless of having to make me two drinks and give me a free pastry, Starbucks still made margin off my sale and I knew that, but the anticipation of what might become a disgruntled client is a lesson we can all learn.

Thinking back to my former life in supply chain, that is one of the promised capabilities with good supply chain planning, execution and monitoring. For example, you are a computer chip manufacturer and realize that you will have a shortfall with delivery of your product to certain consumer electronic manufacturer. If you had good front and back facing visibility you could reach out to that consumer electronic manufacturer’s end client and offer a 10% rebate on their next order…or pay for the shipping due to delay.

Not only will you make the end consumer happy – you anticipated a delay and gave them something of value – but you also make your client happy since you made their customer happy. Oh and you gain some brand recognition with a client who otherwise might not know about you.

Of course companies will need the appropriate systems in place to anticipate and act on such situations. Something to think about next time you are at Starbucks or wondering about how to generate better customer service.

Starbucks – shaking things up

So I was away this past week, in a land where I do not require my usual Starbucks since the “regular” coffee I can get is what my Starbucks is trying to imitate. Regardless I was still reminded of my favorite local “coffee shop” when they boldly unveiled a new logo. What surprised many was the fact the words coffee no longer appear on the new sleek design, the company name also is absent from the logo. Hmmm. Makes you wonder what Starbucks is up to.

Has their brand name become so synonymous with overpriced coffee that they can remove all text and assume that users will always know that the green mermaid is dispensing hot water and ground up cocoa beans? Unlike McDonalds who also had a similar logo change where they dispensed with words and just kept the golden arches…which is a letter…the green mermaid is not necessarily an icon we easily associate with coffee. Shell gas also removed all text from their logo…then again their logo is a simple….yellow shell.

Removing the word coffee from the logo might be a sign that Starbucks is looking to expand their offerings. That makes sense. With the likes of McDonalds offering “premium coffee” as well as regular competitors such as Petes and Dunkin Donuts, Starbucks has felt the heat from the coffee machines. Over the past few years they have slowly started to expand their food offerings. Could the removal of the “coffee” from the logo be an indicator that they will move into more food offering or even other beverages such as premium alcohols? But removing the corporate name, that still does not make 100% sense to me nor others.

Has the logo become so iconic? Not sure. Few logos, other than sports teams, have that muscle. Target’s logo is just a simple red target, that works, but they are not really a global brand. Apple’s logo is a simple silver…apple. That has become a global icon, but the logo is the fruit that give the company its name! The reworking of a logo is a business occurrence, but sometimes forgetting to include the name is not a good strategic or marketing decision. Then again maybe the green mermaid has more cache than I give her credit for.