I just read Jim Tompkins’ Food Fight: Discovering Eight Truths of the New Era of Retail. I wrestle with conflicting thoughts as Jim compares the movers and shakers of today’s retail universe, thinking of the truths and how it effects some of the clients I have worked with.  The effects of the new era of retail are not just thoughts, but an introduction for new challenges.  This sets the stage for current business stakeholders to really question how quickly their business is evolving in the retail landscape.  There is a need to focus on numerous supply chain topics that need to be re-energized to survive in today’s business environment.  Without a strategy and structure, a company will fail in the ability to implement a plan that will meet the needs in this new era.

Strategy

Does a retail company really get to experience success without a strategy?  Where does the strategy start?    How fast is fast enough?  Maybe Jim is right in that it is not a fight between Amazon and Walmart, but maybe it is a fight to survive for some companies.  I think back to a couple quotes from George Patton and why a sense of urgency is not needed, but required.

“A good plan, violently executed now, is better than a perfect plan next week.”

“A good solution applied with vigor now, is better than a perfect solution applied ten minutes later.”

I attended a speech given by the President of Lowes Foods, Tim Lowe.   It dawned on me that he has eliminated the wasting time in making decisions. He sets difficult time lines and challenges his teams to be innovative.  Sometimes I think this is missed today, we must evolve in our decision- making ability at the same pace that the business is evolving.  We need core executive team alignment, with direction and decisive backing that change is needed at the pace business is morphing.

Structure

The impacts are huge on both the impact to the fulfillment network and inside fulfillment centers with the evolution of replenishing bricks with eaches. The pressure to reduce inventory on a SKU level has increased to gain shelf space. This is hard due to the fact the number of SKU’s on the shelf at the store become more dynamic.  No one wants more inventory that will not sell.  From a transportation perspective it used to be okay for a seven-day cycle. Today the cycle needs to be accomplished in three or less days just for store fulfillment.  Retailers/Suppliers may not get to the 24-hour turnaround that Amazon maintains, but they will strive to reduce the time to customers to not lose market share.

Today’s retail fulfillment centers must transition.  Cross dock merchandise must be packed in a store ready container, but knowing how to hold inventory for further replenishment which will maximize your profit, without losing time and money to repackaging efforts.  It is not simple but change must happen to enable your company’s survival.

I have been in several distribution centers recently, and have recognized the reduction in full case volume. It impacts the rigid design from 15 years ago, creates ambiguity in cost-to-serve metrics, pressures each pick areas to produce more lines than ever before, and drastically increases replenishment labor, just to name a few design considerations. 

Implement

Once we figure out the structure to move forward, we must implement.  Today it is a constant struggle to get permits, stay on schedule (manufacturing delays and labor shortages), and test components to meet go-live dates.  How do you prepare?  Solid project management is a start and you must have flexible solutions that can grow. 

Your customer profile will be evolving.  Now is not the time to wait for the perfect design, with the perfect solution.  I believe we must work as a team that can understand the business, make decisions together, and work to evolve your business.  Implementation must utilize today’s technology capabilities, to create the foundation to evolve the material handling systems around them, and the use of advanced analytics is a necessity as we prepare for the future.

In closing I view the impact of the New Era of Retail as an opportunity to challenge your team to think, expand, produce, and yield results as not seen before.  Hang on this fun for tomorrow is a great day not to stress, but embrace the evolving opportunities.

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Dale Pickett
Dale Pickett
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Retail