- YoY shipments are up 7.1%
- YoY expenditures are up 7.4%
Friday, June 30, 2017
Monday, June 26, 2017
But then I re-read an article I posted in March of 2013 titled, "The Battle for Retail is Really The Battle of Supply Chains". In this article I opined that the big retailers are all essentially selling the same products, many of which have been or very quickly are commoditized. This means the real value add of a retailer is in their supply chain.
I also concluded in this article that Wal-Mart should be able to kill Amazon as they already have the bricks and mortars along with the capability of great e-commerce. Finally, I concluded that due to the age old issue of The Innovators Dilemma which was created by Clayton Christensen in his seminal book of the same name. Unfortunately, for the last 4 years, and for Wal-Mart, my prediction came true.
The good news is Wal-Mart, like the sleeping giant, has now been awoken. With its purchase of Jet.com it admitted it needed great e-commerce and, in the same transaction, admitted it could not do this on its own. The big behemoth could not innovate so it had to buy. That is OK as it is at least now on the path to competing with Amazon.
But then a funny thing happened. Amazon admitted it could not grow bricks and mortars fast enough in the grocery space to compete so it made a bold purchase. In this purchase, Bezos is essentially admitting he wants to move a little more towards a Wal-Mart model and also showed, in this purchase, the only reason Wal-Mart has not crushed Amazon is due to lack of execution and lack of strategic foresight.
Well, no more. I believe Wal-Mart truly has awoke and they are starting to adjust their supply chain very quickly to mirror a "be where ever the customer is" retailer. This means if you are out and need something quickly, you can pull into your Wal-Mart and get it. If you want to order on line and have it shipped, you can do that. If you want to avoid shipping charges, you can buy on line and pick it up in the store. Basically, any configuration of how the consumer wants to interact to get the products she needs, Wal-Mart will be there. Wal-Mart can ship from DCs or from any of its 4,177 stores of which 3,275 are super centers. Wow! Wouldn't Amazon love to have that footprint.
If Wal-Mart executes they have a chance of beating Amazon. I recently used Wal-Mart on line to buy a UPS for my computer. It was a great experience, shipped fast and was less expensive than Amazon.
I do think the speciality retailer is dead. Consumers want the "endless aisle" that Amazon and Wal-Mart provide. They do not want to bounce around to 100 different websites to find what they want.
Wal-Mart can do everything Amazon can do (or they should be able to do it) yet Amazon cannot come close to all the capabilities of a Wal-Mart. If I were investing, the only stock I would buy in the retail space is Wal-Mart. I would then go to their shareholders meeting and scream two phrases: "Wake Up" and "Execute"!
Welcome back Wal-Mart - I missed you!
Monday, June 5, 2017
I am sitting on a plane right now, on the Tarmac, moving nowhere. This reminds me of another aspect of a truly customer centric supply chain: Define terms as your customer sees them and not for your own internal metrics.
So, the airline app says I have "departed" and in their mind, I am sure I have. But in my mind, I am sitting in a tube, on a tarmac, going nowhere. I, the customer, consider departed to mean I am up in the air and heading to my destination.
Lesson:. Define terms from a customer lens, not from an internal lens. When you do this, you will be on your path to customer centricity.
Friday, June 2, 2017
As I work with companies I continue to emphasize that it is important for our supply chain to drive revenue. Great supply chains (Read: Walmart and Amazon for example) are core to the company's revenue strategy and not just an evil cost to reduce.
But, there is this pesky thing called "profit" that also has to exist to make a world class supply chain complete. The question really is what do you do first? My view is you take care of the customer then figure out the cost. If you are designing supply chains you are in a war with your competitors and the weapons of that war are speed and availability. Customers, whether they be industrial, commercial or consumer are asking for the same thing: They want what they want, when they want it, in the right quantity at the right price. Those who figure all this out will win. Those who do not will perish. What are some things you should do now to get on the path to figure this out? A few ideas below:
- Start with the Customer: Don't lift a finger to design a supply chain until you have personally interviewed, visited with, surveyed and embedded yourself into the customer. This does not mean asking sales their opinion. Sales is a first derivative source. Go right to the customer.
- One Size Does Not Fit All: Design with the idea of multiple supply chains to service specific groups of customers.
- Use Pricing to Give The Customer Options: You need to probe what customers are willing to pay for and what they are not willing to pay for. Amazon is a master at this. Do you get next day delivery? Yes... Do you pay for it (through Prime)? Yes... Do most people spend more on Prime fees then they get back in avoidance of shipping costs? Most likely. The key here is to not say no to the customer, just provide options.
- When In Doubt, Provide The Service Then Figure Out The Cost: Many times there just is not enough time to ensure everything is perfect before you decide which direction to go. But, once you are confident you are "close enough" to figure out the cost, launch! There is no better way to ensure you have pressure to lower costs. This is not a "ready, shoot, aim" strategy but rather it is one that avoids a supply chain being stuck in a conference room for years.
- Constantly Reevaluate: The industry is moving too fast to design a supply chain every 10 years. You must constantly reevaluate where you stand relative to customer demands and competitive forces.