Creating Supply Chain Excellence
The Tompkins International Blog
By Bruce Tompkins
Executive Director, Tompkins Supply Chain Consortium
What does the phrase ‘get local’ mean to you? No, it doesn’t mean ‘get local’ while traveling or ‘get local’ in your neighborhood.
It’s a call to action for supply chain leaders everywhere. From a supply chain perspective, ‘get local’ means meeting your customers’ final delivery demands—from personalization to speed of delivery (and everything in between).
Tompkins Supply Chain Consortium was interested in companies’ final delivery capabilities, so we recently conducted a survey to our database on this topic. We found that many companies are ‘getting local’ to be successful in final delivery.
The survey took a closer look at the challenges companies are facing for final delivery, and what plans they have for the future. Read the full results and analysis on this topic by downloading the new report, Final Delivery: Today’s Companies Are ‘Getting Local.’
The report reveals that same-day delivery is not as common as we assumed. In actuality, two-day and next-day are the most popular delivery options. Added charges for same-day and next-day delivery are also very common.
Companies are also ramping up their personalized options. The report shows an increase in store pickup and delivery locker options for customers. Standalone fulfillment centers are on the rise, which indicates companies are ‘getting local’ by improving volume and availability.
In my opinion, we will continue to see these trends grow. Are you seeing any of these trends in your supply chain? How is your company evolving its final delivery capabilities? Are you ‘getting local’? Let me know in the comments.
Video: The Alibaba EffectLeave a comment
By Chris Ferrell
Director, Tompkins Supply Chain Consortium
Retailers are paying close attention to labor disputes threatening to bring a stop to imports coming in to West Coast ports. They are anxiously awaiting (and hoping for) a successful dock worker agreement between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA).
Retailers rely heavily on these ports for imported goods coming in from Asia. How could this affect them in the long run? Will this continue to be a major disruption?
We do not expect the ongoing labor negotiations at the West Coast ports to cause a substantial interruption on a wide-spread basis. Shippers still bear the scars from the disastrous 2002 work stoppage and have countermeasures in-place to avoid major disruption.
While it is true that retailers still rely heavily on the U.S. West Coast ports, on a percentage basis they are not as reliant as they used to be. Even when there isn’t a threat of a West Coast work-stoppage, retailers are utilizing Atlantic and Gulf ports to support stores in the Eastern half of the U.S. a lot more than even a few years ago. Savvy shippers have also diversified West Coast destinations to include Vancouver and Prince Rupert in Canada where labor disputes are not at issue.
So, while the West Coast situation may cause a minor up-tick in freight being routed to the Eastern Ports (Eastern freight is up from 38% in January to 41% in May, according to Hackett Associates), it won’t go a lot higher because the Eastern routes have been running near capacity for several months and are now basically full.
What we’ve primarily been seeing is retailers advancing their order timeline—bringing the goods into the same ports as always but ahead of any potential West Coast work stoppage. According to the National Retail Federation, cargo volume into the West Coast was up 6.6% in May over the previous year, with estimates for June being even higher. Even when factoring in an economy that is healthier than a year ago, these numbers suggest retailers are pre-loading Holiday inventory.
Bottom line: the mere threat of a West Coast work stoppage has already been a major imposition and inconvenience to shippers but the actual risk to the 2014 Holiday season is much less.
What are your thoughts on this issue? Do you agree with these predictions? Share your opinion in the comments.
Photo Credit: Jim Bahn
By Jim Tompkins
Since 1999, when Alibaba first started their marketplace of Alibaba.com, it has been clear that the Chinese company has a strong passion for the U.S.
With the recent news of Alibaba going public, some are surprised that they selected the New York Stock Exchange (NYSE) over NASDAQ, that the ticker symbol will be “BABA” and in my view, puzzled as to why the date and price of the IPO will involve the numbers “8″ and “9″. None of these things come as a big surprise to me.
A few revealing points to consider on the Alibaba IPO:
And finally, it is fascinating to watch how Alibaba is changing the way supply chains are viewed in the U.S. In my new video, The Alibaba Effect, I discuss these points in more detail. What you will hear is critical and will help you plan your counteroffensive now and lead your company to success in omnichannel.
Photo Credit: Daniel Foster
By Tompkins International Staff
How many of you have heard of Alibaba, the Chinese e-marketplace? Alibaba is the fastest growing e-commerce company in the quickest growing market in the world. CEO Jim Tompkins recently sat down to discuss how Alibaba is changing the way supply chains are viewed in the U.S. Here are the top 6 reasons why you need to watch The Alibaba Effect:
What you will hear in The Alibaba Effect video is critical and has never been discussed in detail from a supply chain perspective. Alibaba is changing the game when it comes to supply chains in the U.S. Watch this video so you can plan your counteroffensive now and lead your company to success in omnichannel.
Photo Credit: epSos .de
By Jim Tompkins
In my blog post last week, I discussed two types of supply chains in today’s omnichannel world: the titans and the industry leaders. I talked about what makes them successful and what challenges them the most.
As part two in this series, I’d like to shift the spotlight to the other two categories in supply chains: the “players” and the “laggards.”
Let’s first consider the players in omnichannel. While their channels are independent, their work is ongoing to facilitate cross-channel capabilities. Their inventories are separate by channel, but cross-channel transfers are accommodated when allocations are wrong.
The players constantly seek to improve customer satisfaction, but only do so when it can be done without adding significant cost. They do not have an order management system, so orders are filled from the assigned fulfillment center and back orders handled via work-a-rounds.
They are making efforts to improve forecasting and increase inventory turns and product availability. Omnichannel players work hard to control variability to, in turn, improve customer satisfaction.
Then there are the laggards. Their inventories are separated by channel, and each channel is responsible for hitting its forecasts. Omnichannel laggards believe the best way to control costs is to have all inventory of an item warehoused in one building. If customers want faster delivery, it is offered at an increased cost.
The order entry system knows where all inventory is located so that orders for those products are sent to the correct warehouse. Forecasting has not been accurate enough to rely upon, so laggards allow the merchandising organization to predict future demand. Variability is also a challenge, with efforts to have the merchandising organization get better control of it.
Now we have looked at all the different types in omnichannel: the titans, industry leaders, players, and laggards. Which one are you? How can you better improve your omnichannel supply chain? Send me a tweet @jimtompkins or let me know in the comments.
By Jim Tompkins
In today’s omnichannel world, there are four types of supply chains. You can either be a titan, industry leader, player, or laggard.
In this new two-part series, I’ll share in-depth profiles of these four key categories—how they operate, their priorities, and what you need to know about them. Understanding their profiles gives you an advantage. Not only you can you see which category you fall under, but you can also discover which category your competitors are in.
First, let’s look at the titans. Titans understand that channels are an invention of retailers and consumer products companies, and that customers do not see channels. As a result, today’s titans do not see channels.
They have inventories throughout the supply chain that are physically and logically visible. Their inventories are available for any customer—anytime and anywhere. Titans believe customers should define delivery parameters and that it is their job as a titan to respond.
We also know that their order management system is focused on meeting customers’ delivery parameters. Their integrated business planning is supported by a demand-driven supply chain that supports the synchronization of supply to demand. The titans have a high degree of supply chain adaptability that supports a responsive supply chain.
How about industry leaders? While channels focus on offering customers a uniform view of the company, the channels do exist and operate unto themselves. Omnichannel is not about combining channels, but rather about building enough interfaces so that the channels appear to be operating as one.
Industry leaders have inventories throughout the company’s supply chain that are logically linked to be available for any customer at any time and location. They believe customers should decide what excellent delivery parameters are and execute according to these parameters.
Their order management systems allow for achieving great customer delivery at a minimum cost. Sales inventory operations planning (SIOP) is done well and significant progress has been made on high inventory turns and low product mark downs. A high degree of organizational adaptability supports an organization’s ability to respond to marketplace gyrations.
Coming up next week in part 2 of this series, I’ll place a spotlight on the players and laggards of today’s omnichannel supply chain. How do they view their customers? What are their strengths and weaknesses?
And the most important question to consider: which of the four categories do you fall under?
Q&A with Gene Tyndall, Global Supply Chain Strategy Expert
Q: How do you define demand-driven supply chains in today’s e-commerce landscape?
A: It’s hard enough to predict retail store sales, but predicting online orders can be even tougher. Why? Because there’s no software with the ability to predict fashion or fads. Consumers want to know instantly what they can have, and they want their products shipped and delivered quickly. This can be done two ways: have everything stored that might sell OR push it back to vendors for them to store. Retailers need to be demand-driven in order to forecast what people will order and have it ready to ship. Understocking and overstocking just won’t work in today’s e-commerce world.
As we know, one of the best ways to stay competitive is to reduce errors in your forecasting. It’s more difficult now with so much demand variability to forecast accurately, but you must try your best to be demand-driven and stay on top of customers’ changing expectations. The smartest retailers forge good relationships with vendors and manage the inventory that they have or can promise. Retailers must always ask themselves, “What are we going to carry?”
Q: What current, real-world examples of demand-driven supply chains stand out to you?
A: Wayfair.com is a great example of an online Internet retailer that doesn’t own anything, and therefore, can be very demand-driven. The products they sell are shipped direct by vendors. Many big box retailers that sell online also don’t carry all of the products that they offer. All that matters is that the product ordered gets to the consumer as quickly as possible.
Another good recent example is Office Depot. They have really improved their online demand-driven strategy by ensuring that their website (which has hundreds of items that they do not own) stays in sync with their vendors for those products they do not stock. Online cart abandonments are problematic, especially when you’re not able to promise product availability. As a solution, the company implemented software from One Network Enterprises and now vendors are online, making product availability instantaneous.
Q: Where do you see demand-driven supply chains going in the future? What trends can you predict? Or can we even predict the path forward?
A: Retailers will never get it perfect, but the closer they can forecast real-time demand, the better. One of the biggest questions will involve where to store what product, and how much of it. One of the right answers will be to “get local.” We will see more companies storing locally – in localized fulfillment centers, and in the retail backrooms.
Business-to-Customer (B2C) personalization will also play a big role in the future. Keeping the customer committed by offering a loyalty program will be increasingly important. A lot of online retailers already do this with exclusive flash sales and free shipping for members.
Business-to-Business (B2B) will also require more accurate forecasting patterns and trends spotting. For instance, an office supply chain store knowing when the client will run out of paper will become a necessary function that customers will expect. Forecasting what they will need when they will need it – that’s demand driven.
Q: How do Tompkins International’s services help move companies toward demand-driven supply chains?
A: We drill down into a customized pull (vs. push) strategy, meaning we move companies away from pushing products to their networks and selling customers and towards pulling products to points of sales based on customer demand. We do this by examining their current processes and analyzing their demand and supply practices. For example, a retailer cannot sell 200K units when it only has 100K in stock and only 25K on order. Sales and operations must be more in balance, and as close to real time as possible.
We also help companies determine their “operations strategies,” or how they should operate their businesses in order to achieve their business goals. Defining necessary capabilities in a demand-driven strategy is essential for deciding on networks, facilities, processes, and technology. Viewing and improving supply chains from an end-to-end perspective ensures that operations are demand-driven.
Q: If you could give one single piece of advice to a company looking to become more demand-driven, what would it be?
A: Define it for yourselves. What does demand-driven mean to you? How do you want your company to be viewed by customers and stakeholders in operations terms? And this isn’t something you can just copy from another organization. It isn’t universal. Every company has its own goals, objectives, brand, differentiators and culture. Why customers buy from your company is much more important than whom you are as a company. Deciding how your company will execute will lead to a better operations plan and satisfied customers, which is critical to succeeding in today’s rapidly changing marketplaces.
By Tompkins International Staff
Nashville is commonly known as the home of well-known country music artists and the famous Grand Ole Opry, but what you might not know is that Nashville will also be the home to the 2014 Tompkins Supply Chain Leadership Forum.
Join top supply chain leaders and head to music city for this exclusive forum on August 25-27. Expect plenty of networking opportunities, thought-provoking sessions, and action items to take back to your company.
The conference will kick off on Monday evening, August 25, with a reception to unwind and meet other attendees. We’ll start Tuesday morning bright and early with an opening keynote by Jim Tompkins, CEO of Tompkins International. The morning and afternoon are packed with hot-topic sessions and speakers.
But keep your energy up, because we’ve got big plans for Tuesday night. We’ll head over to famous local restaurant and musician haven The Listening Room Café to enjoy Nashville-style eats, cold drinks, and a private live band.
On the final day of the forum, attendees will participate in more thought-provoking sessions in the morning and join together to discuss key takeaways of the overall event.
Click here to visit the Leadership Forum website and learn more about the event and registration rates. Reserve your spot and register now by contacting Patty Trocchio at email@example.com or (919) 855-5424.
Photo Credit: Elliott Billings
By Jim Tompkins
CEO, Tompkins International
Online retail sales in B2C are estimated to grow by nearly 75% by 2018, and today’s B2B sales are more than twice the sales of B2C—and growing faster.
Increasingly, consumer product companies are selling goods online. Specifically, consumer packaged food companies are moving to online retail sales as traditional grocery stores and the Walmarts and Targets of the world transition into private labels. But can these changes affect the real estate industry? Absolutely.
My new article, “From Malls to Click-and-Collect: How Today’s Pace of Change Is Impacting Real Estate,” explores this rapid growth in online ordering and fulfillment and how it is affecting the real estate industry.
Retail stores and malls are experiencing some of the biggest impacts of online sales growth. We see this almost daily with store closing announcements—the biggest being Radio Shack with 1,100 planned store closings for this year. There are also significant effects on distribution and fulfillment as supply chain networks grow substantially more complex due to the sales channel switch from direct to online.
How have you seen the real estate industry impacted by growing online sales? How will your company respond to this pace of change?
By Jim Tompkins
CEO, Tompkins International
The five of us sat around a conference table. My colleague and I were meeting with the CEO, CFO, and Chief Supply Chain Officer (CSCO) from a multichannel fashion and apparel retailer.
The discussion was lively and interactive. We talked about omnichannel, “get local,” and store fulfillment. Just as the CSCO began to make a point on the opportunity to combine distribution and fulfillment, the CFO interrupted the discussion:
“I have not said much in this conversation as the four of you have gotten all excited about e-commerce,” the CFO explained. “To tell you the truth, I don’t think you all know what you are talking about. You guys think the tail should wag the dog. I don’t understand all this discussion about e-commerce, since e-commerce is less than 5% of our sales. What’s the point and why all the discussion?”
My partner and I did not want to push back on the CFO, so we waited for the other two to set the record straight. But to our amazement, the CEO replied: “Wow, yes I guess you are right. E-commerce is only 4.74% of our sales.”
Obviously we could not let the discussion end so far from reality. I had no choice but to speak up.
“I am sure your data is correct with respect to the channel whereby you capture the order,” I said. “For your retail sector, a 4.74% of order capture on e-commerce is typical for a firm with your e-commerce experience. But a common misconception is that the importance of a channel is somehow related to the revenue recorded in that channel.”
The CFO tried to interrupt me at this point, but I continued. I told him today’s reality is that the majority of customers in the store have shopped their merchandise via e-commerce before they come to the store. In fact, the majority of sales that they call “in-store” are sales that were significantly influenced by e-commerce. So we are not talking about the tail wagging the dog. I explained that we are talking about the value they deliver to their customers and therefore their company’s profitable growth by succeeding in omnichannel and in all channels.
Can you guess what happened next? Yup, there was a very awkward pause that seemed to last five whole minutes. (In reality, it was probably only about five seconds.) Finally, the CFO started to speak.
“Yes, e-commerce is very important to our customers,” he said. This statement was followed by another awkward pause before the CSCO rewound the discussion to where it was before the CFO interrupted him.
Thirty minutes later as the CEO was thanking us for coming, he asked my partner and me if we could prepare a proposal to help them develop their omnichannel operations strategy and related supply chain capabilities.
Later, as my partner and I sat in a car on the way back to the airport, we both reflected on what would have happened to the interaction if the CFO’s 4.74% data point was viewed as information, and if the company never began the pursuit of their omnichannel strategy.
We will never know, as we are now scheduling the project kickoff. But it reinforced a good message for all companies to remember: never treat data the same as information.
Article: The Omnichannel Retail Supply Chain
Photo Credit: Tim Reckmann