Executive Briefings

Retail Copes With Changes Taking Place in Every Aspect of the Industry

Leaders have to be nimble and agile if they are to keep on top of the evolution, particularly in the technology arena, that is roiling their vertical.

Retail Copes With Changes Taking Place in Every Aspect of the Industry

In the age of the Internet of Things, e-commerce and big data analytics, no industry can afford to stand still. But you can forgive folks in the retail vertical if they feel that the changes their industry are being hit with is a perfect storm unlike anything that colleagues in other areas might be experiencing. The effects of these technology changes are felt throughout the retail supply chain - from sourcing to warehousing, from DC site selection to last mile delivery, and from fulfillment to returns. Few industries are feeling the impact so broadly and with such force, according to industry leaders. The following comments are excerpted from interviews with SupplyChainBrain at the annual Retail Industry Leaders Association conference, held this year in Dallas.

Q: Every industry is talking about "green" and sustainability and, of course, retail is no different. Tell me about the "greening" of the retail supply chain. What's going on there?

Michelle Livingstone, VP, Supply Chain-Transportation, Home Depot: Well, "green" freight is very important. In fact, sustainability in general is very important, and we hold ourselves accountable and we hold our suppliers accountable.

Q: Why?

Livingstone: First of all, because it's the right thing to do, and secondly, our customers are expecting us to do that. So we provide green solutions in terms of the products we offer our customers. We also take a very green solution to our stores in general. And the best thing about being green is that it saves money, particularly in transportation, which is why Home Depot is part of the EPA's SmartWay green freight transportation program.

Q: Returns must be an enormous headache for retailers in the age of e-commerce, when you can order anything online, then decide you don't want it.

Sylvie Thompson, VP, Solution Strategy, Optoro: Traditionally, retailers have focused on the forward side because that's the core of their business. A hundred percent of the product has to get to the store, after all. When you look at the reverse side, traditionally, it was a small portion of their business.

Q: What did they do?

Thompson: It was outsourced, kind of left aside, because it wasn't the core competency of many retailers. But when you look at some of the trends going on in the retail industry right now, things like omnichannel, the desire of customers to have product anywhere at any time, which means by default they want to return it anywhere, any time, when you look at localization of in-store inventory, the breadth and depth of the SKUs that retailers are carrying now, the reverse supply chain is becoming more and more critical in the entire supply chain network. But what we're seeing now is, you can have an amazing in-store experience, but when a customer tries to return something, if that experience isn't positive, so many of them have said they would not return to shop.

Q: You say visibility is more than just knowing where your stuff is in the supply chain. Elaborate on that, please.

Brian Bourke, VP, Marketing, SEKO Logistics: Visibility used to be just tracking and tracing for shipments in transit, anything outside the four walls of the DC. Today it means communication and sharing information within the departments of a retailer. A perfect example could be from the sourcing perspective: understanding the metrics behind vendor compliance and performance as it relates to a vendor you may be importing goods from, be it China or some other location. It can also mean within different departments as it relates to store expansions. So it could mean the purchasing department, the business development department, the sales department – it could even mean construction – getting all the parties on the same page.

Visibility means sharing information as it relates to the supply chain within different functional areas of a retailer.

Q: What about the cost of implementing an e-commerce solution?

David Erickson, VP, Supply Chain Technology, 4SIGHT Supply Chain Group:

Omnichannel presents challenges at the intersection of traditional cost drivers that haven't previously met each other: inventory orders, customer fulfillment – these things are important cost drivers. They're important and they need to be protected because they all have their own business processes and data. But now, they are meshed together in this omnichannel world that's so much more complex where demand is being met by all these systems working together in ways never done before.

Q: Where do you start?

Erickson: The first thing to understand is the current landscape, the road map of the enterprise architecture as it stands, versus where they need to be to tackle these issues.

Q: You feel investment has been inadequate or at least it hasn't always been in the right place?

Kurt Cavano, Founder & Chief Strategy Officer, GT Nexus: We've gone through a period where retailers and brands have focused on investing in the front part of the supply chain – how do they interact with the customer, how do they have a great customer experience? Those investments have led to a period of time where now customers are coming online, buying lots of stuff and you need to be able to fulfill that demand, you need to be able to make sure you get the right stuff to the right place at the right time. The challenge is this: it's not good enough to have good product, you have to have great product and make sure you get it in the customer's hands, and if you don't have the right technology managing your supply chain, you're not going to be able to do that. That's why it's really important to invest there.

Omnichannel is driving a lot of that investment. There's been a lot in the front end of the business where you're interacting with the customer, but the supply chain is in the back, getting that stuff from around the planet. The investment has not been there, and that's where people need to focus right now.

Q: Your view seems to be that the right transportation management system can have a positive effect on sustainability.

George Harrison, VP, Sales, North America, Eyefreight: Sustainability and carbon footprints are big. And, yes, a level type 5 TMS would not only help retailers keep an eye on their global transportation network but also establish reporting and dashboards on what their eco-footprint might be in a certain market.

Q: Are retailers keeping their heads above water when it comes to technology changes?

Steve Wilson, VP, Solution Design, Redwood Supply Chain Solutions: What we've found with our customers is that the biggest single obstacle, frankly, is lack of IT resources. So many solutions now, whether for supply chain or merchandising or a planogram or whatever, everything revolves around a high level of technology and because technology is ever changing, the IT department of any large retailer or any manufacturer, is always maxed out. So generally speaking, what we find with customers is that they lack the IT resources to really drive change or implement something very quickly. The upside of that, though, is that many providers have some very good integration and cloud-based technologies that really help take the burden off the IT department.

Q: You feel a valuable resource is lost to retailers who don't see people with disabilities as potential hires.

Meg O'Connell, President, Global Disability Inclusion: Change is all about evolution and looking for new ways to make your company more profitable, and so the first part of that change is really having companies recognize that people with disabilities are a valuable part of the talent pipeline.

Q: What do you have to back up that proposition?

O'Connell: We've seen over the past 10 years lots of successes in retail and in the supply chain industry as a whole. There have been great companies like Walgreens and Lowe's and Toys 'R' Us that have really proven the model of employment with people with disabilities. Specifically, we've seen such successes as 48 percent greater tenure and 40 percent less absenteeism, so the business benefits are there. We just need to help people change the way they think about people with disabilities.

Resource Links:
Home Depot
Optoro
SEKO Logistics
4SIGHT Supply Chain Group
GT Nexus
Eyefreight
Redwood Supply Chain Solutions
Global Disability Inclusion

In the age of the Internet of Things, e-commerce and big data analytics, no industry can afford to stand still. But you can forgive folks in the retail vertical if they feel that the changes their industry are being hit with is a perfect storm unlike anything that colleagues in other areas might be experiencing. The effects of these technology changes are felt throughout the retail supply chain - from sourcing to warehousing, from DC site selection to last mile delivery, and from fulfillment to returns. Few industries are feeling the impact so broadly and with such force, according to industry leaders. The following comments are excerpted from interviews with SupplyChainBrain at the annual Retail Industry Leaders Association conference, held this year in Dallas.

Q: Every industry is talking about "green" and sustainability and, of course, retail is no different. Tell me about the "greening" of the retail supply chain. What's going on there?

Michelle Livingstone, VP, Supply Chain-Transportation, Home Depot: Well, "green" freight is very important. In fact, sustainability in general is very important, and we hold ourselves accountable and we hold our suppliers accountable.

Q: Why?

Livingstone: First of all, because it's the right thing to do, and secondly, our customers are expecting us to do that. So we provide green solutions in terms of the products we offer our customers. We also take a very green solution to our stores in general. And the best thing about being green is that it saves money, particularly in transportation, which is why Home Depot is part of the EPA's SmartWay green freight transportation program.

Q: Returns must be an enormous headache for retailers in the age of e-commerce, when you can order anything online, then decide you don't want it.

Sylvie Thompson, VP, Solution Strategy, Optoro: Traditionally, retailers have focused on the forward side because that's the core of their business. A hundred percent of the product has to get to the store, after all. When you look at the reverse side, traditionally, it was a small portion of their business.

Q: What did they do?

Thompson: It was outsourced, kind of left aside, because it wasn't the core competency of many retailers. But when you look at some of the trends going on in the retail industry right now, things like omnichannel, the desire of customers to have product anywhere at any time, which means by default they want to return it anywhere, any time, when you look at localization of in-store inventory, the breadth and depth of the SKUs that retailers are carrying now, the reverse supply chain is becoming more and more critical in the entire supply chain network. But what we're seeing now is, you can have an amazing in-store experience, but when a customer tries to return something, if that experience isn't positive, so many of them have said they would not return to shop.

Q: You say visibility is more than just knowing where your stuff is in the supply chain. Elaborate on that, please.

Brian Bourke, VP, Marketing, SEKO Logistics: Visibility used to be just tracking and tracing for shipments in transit, anything outside the four walls of the DC. Today it means communication and sharing information within the departments of a retailer. A perfect example could be from the sourcing perspective: understanding the metrics behind vendor compliance and performance as it relates to a vendor you may be importing goods from, be it China or some other location. It can also mean within different departments as it relates to store expansions. So it could mean the purchasing department, the business development department, the sales department – it could even mean construction – getting all the parties on the same page.

Visibility means sharing information as it relates to the supply chain within different functional areas of a retailer.

Q: What about the cost of implementing an e-commerce solution?

David Erickson, VP, Supply Chain Technology, 4SIGHT Supply Chain Group:

Omnichannel presents challenges at the intersection of traditional cost drivers that haven't previously met each other: inventory orders, customer fulfillment – these things are important cost drivers. They're important and they need to be protected because they all have their own business processes and data. But now, they are meshed together in this omnichannel world that's so much more complex where demand is being met by all these systems working together in ways never done before.

Q: Where do you start?

Erickson: The first thing to understand is the current landscape, the road map of the enterprise architecture as it stands, versus where they need to be to tackle these issues.

Q: You feel investment has been inadequate or at least it hasn't always been in the right place?

Kurt Cavano, Founder & Chief Strategy Officer, GT Nexus: We've gone through a period where retailers and brands have focused on investing in the front part of the supply chain – how do they interact with the customer, how do they have a great customer experience? Those investments have led to a period of time where now customers are coming online, buying lots of stuff and you need to be able to fulfill that demand, you need to be able to make sure you get the right stuff to the right place at the right time. The challenge is this: it's not good enough to have good product, you have to have great product and make sure you get it in the customer's hands, and if you don't have the right technology managing your supply chain, you're not going to be able to do that. That's why it's really important to invest there.

Omnichannel is driving a lot of that investment. There's been a lot in the front end of the business where you're interacting with the customer, but the supply chain is in the back, getting that stuff from around the planet. The investment has not been there, and that's where people need to focus right now.

Q: Your view seems to be that the right transportation management system can have a positive effect on sustainability.

George Harrison, VP, Sales, North America, Eyefreight: Sustainability and carbon footprints are big. And, yes, a level type 5 TMS would not only help retailers keep an eye on their global transportation network but also establish reporting and dashboards on what their eco-footprint might be in a certain market.

Q: Are retailers keeping their heads above water when it comes to technology changes?

Steve Wilson, VP, Solution Design, Redwood Supply Chain Solutions: What we've found with our customers is that the biggest single obstacle, frankly, is lack of IT resources. So many solutions now, whether for supply chain or merchandising or a planogram or whatever, everything revolves around a high level of technology and because technology is ever changing, the IT department of any large retailer or any manufacturer, is always maxed out. So generally speaking, what we find with customers is that they lack the IT resources to really drive change or implement something very quickly. The upside of that, though, is that many providers have some very good integration and cloud-based technologies that really help take the burden off the IT department.

Q: You feel a valuable resource is lost to retailers who don't see people with disabilities as potential hires.

Meg O'Connell, President, Global Disability Inclusion: Change is all about evolution and looking for new ways to make your company more profitable, and so the first part of that change is really having companies recognize that people with disabilities are a valuable part of the talent pipeline.

Q: What do you have to back up that proposition?

O'Connell: We've seen over the past 10 years lots of successes in retail and in the supply chain industry as a whole. There have been great companies like Walgreens and Lowe's and Toys 'R' Us that have really proven the model of employment with people with disabilities. Specifically, we've seen such successes as 48 percent greater tenure and 40 percent less absenteeism, so the business benefits are there. We just need to help people change the way they think about people with disabilities.

Resource Links:
Home Depot
Optoro
SEKO Logistics
4SIGHT Supply Chain Group
GT Nexus
Eyefreight
Redwood Supply Chain Solutions
Global Disability Inclusion

Retail Copes With Changes Taking Place in Every Aspect of the Industry