Musings on Columbus Day

by Lora Cecere on October 13, 2011 · 0 comments

The concept of  “Columbus Day” as a holiday is new to me, but I love the day off.  Every year, when I get this extra holiday, I find that I like Columbus MORE and MORE.  I used the time this year to do some fall shopping.  It was a time for a welcome relief from travel, and to reflect.

Columbus discovered new worlds.  Remember the grade school poem of  “In 1492 Columbus sailed the ocean blue…”?  Oh, how it brings back memories for me of Mrs. Young’s class and the feelings of a young child trying to understand what it was like to take the steps on a new continent.  A symbol of unlocking new potential….  In this spirit, here I share three of these type of experiences from my Columbus Day:

Amazon is redefining Grocery.  I am a typical “Boomer”:  a gal in my late 50s that is constantly being reprogrammed on how to shop. For this, I give thanks for my daughter and all my “Millennial Friends.” 

Amazon is now sixteen years old.  I became an Amazon shopper in 2000.  As an avid reader, I loved their redefinition of the “book buying experience.”  When I moved into my apartment in Baltimore in March of this year to become a new grandmother, one of my millennial friends suggested that I buy from Amazon.  Oh my….!  I have learned that I can get ANYTHING that I want from Amazon!

So on Columbus day, I bypassed the grocery store trip to buy paper towels, cleaning supplies, ingredients to support my new love for Asian cooking, and grocery staples directly from Amazon.  I firmly believe that Amazon is redefining grocery store formats.  eRetailing is now a great solution for buying of those bulky, pantry items that we previously had no choice but to lug and haul home from the stores.

In addition, Amazon is targeting a new vision: the connected home.  The introduction of mobile devices/tablets from Amazon–the New Simple– will enable the tracking of consumption and drive shopping list creation through the connected home.  I find three elements of this to be exciting:

  • New Insights. Consumer products companies, partnering with Amazon, will have new ways to test and learn about shopping behavior.  Since etailers are further advanced in their thinking about demand shaping, this is a great opportunity to test more advanced predictive analytics based on actual data for pantry loading and consumption.
  • New Formats:  Grocery retail formats are being attacked in the middle.  More and more shoppers, like me, will turn to etailers to order bulky items like paper towels, diapers and cleaning supplies forcing grocery formats to focus on the exterior of the store:  deli, fruit and vegetables, meats and dairy products.  Grocery retail will become more competitive with restaurants as a destination spot for meals, and the supply chains will become more complex.
  • Supplier Relationships. Amazon embraces suppliers in new ways.  They have demonstrated the value of supplier partnerships and there is new potential for consumer products companies to redefine value chains.  While Wal-Mart has been attacked by dollar stores in 2009 and 2010 for the lowest price basket, the competition for the center of the store will become more intense.  I firmly believe that the war will be won by the redefinition of value chain relationships to deliver value.  In the words of Hau Lee, a seminal supply chain professor at Stanford, ” …the future of supply chain will be determined by value chains competing with value chains.”  I think that we have a new case study brewing for the halls of supply chain management classic case studies.

Tablets accelerating Cross-channel.  I also went to Nordstrom to purchase boots and Coach to purchase fall handbags.  I was surprised to find that both stores were actively using tablets to deliver a better cross-channel experience.  At each store, part of my purchase was available in the store and part became an eCommerce order.  It was great to have the dialogue about the order in a more personal way (it was great to not have to talk about the purchase with the cash register as a physical barrier).  I got the information for the order more quickly and I felt better about the experience.  However, for retailers, this means:

  • Stepping up to deliver the Cross Channel Experience:  The customer master at both of these retailers was problematic. Seems that I have a different identity in both Nordstrom and Coach for in-store and online transactions.  While the data was similar, both required a conversation before the order could be completed.  Neither of the purchases were seamless.
  • Recognize the need to Improve Inventory Data:  To deliver on this promise, inventory data needs to be redesigned for both speed and quality.  Available to Promise (ATP) capabilities is especially problematic.  In the words of Jon Kubo, previously CIO of WetSeal, “the redesign of the retail experience for convergence (mobile, social and ecommerce) is 80% back end and 20% of the front end.”

Mobile is forcing Outside-in Processes.  Over the weekend, I also needed to purchase some turtleneck sweaters.  They are a staple of my wardrobe and every year, I purchase these from Lands End.  The Lands End mobile application is the worst that I have seen.  It is a wonderful case study to make the point that the mobile experience is very different than the eCommerce experience.  Lands End has made a mistake of plopping a catalog on a mobile device.  Mobility–anytime and anywhere shopping–is not a catalog experience.  Lands End, like many retailers, is missing an opportunity to redefine the shopping experience.

So to sum it up, I am now ready for fall. Columbus Day gave me a good chance to think about how disruptive technologies are changing the retail value chain.  While I am ready for fall, I am not sure that all retailers and suppliers have thought about the new opportunities in supply chain management.  How about you? What are your thoughts? Any interesting retail stories to share? Any insights for the reshaping of the consumer value chain?


The “it” that needs to be in IT

by Lora Cecere on October 11, 2011 · 1 comment

In the 1990s, it was all about transactions.  In the early 2000s, it was about catalogs and shopping carts.  Later as teams tried to integrate the end-to-end supply chain, the focus was document management.  Today, with the introduction of F8 by Facebook it is about effective story telling and harnessing the Open Graph.  What is the “it”?  It is the ability to reach the customer: the heart of the supply chain.  The story is the same, but reversed in supplier interaction.  I firmly believe that the evolution of different data types can unlock new insights for supply chain leaders.

Today’s supply chain needs to be able to sense and respond across ALL of these data types. For supply chain management it is the “it” in IT (information technology). Yes, we have entered the era of BIG DATA supply chains.  It is a world where the volume, type and the velocity of data has exploded.  While companies have successfully scaled to handle transactional volumes, the other data types mentioned above combined with enrichment data –content, weather, location, maps, voice, video, digital images–can enable new capabilities to sense and respond more intelligently.  Let me give you three examples:

  • Why is my Customer not Buying my Product? Or Buying a lot of my Product?   Point of Sale (POS) data can be successfully harmonized and integrated into Demand Signal Repositories (DSR) to answer the question of what sold when.  However, it cannot answer the question of “why”.  Only through the integration of structured data with unstructured text –ratings  and reviews, blogs, social sharing and and listening posts– can a company answer the “why”.   The new work by IBM on the Netezza appliance and the work by Teradata on Asterdata signals a technology shift for the DSR market.
  • What did my Customer really Want?  In extended supply chains,  product flows through distributor relationships.  Frequently what is sold is not what the customer REALLY wanted.  This is especially true in automotive supply chains where the color of the car is determined in the first step of production.  Again, semi-structured data is the answer.  The combination of click through data on the web (how many times did a buyer request a quote of a certain car color) combined with social news feeds and distributor data can give insight on what the customer really wanted.  Today, we only know what was bought.
  • When is the Supply Chain at Risk?   To improve buying power, companies have aggregated procurement into commodity buying groups.  This consolidation in large, global companies (greater than 1 billion) is a maze of supplier relationships.  The use of unstructured text mining on suppliers can signal early warning of  potential risks.  The use of  risk sensing alerts when the supply chain is at risk, but must be combined with transactional data (e.g purchase orders, quality data, shipments, receipts) to answer the magnitude of the risk.  Supplier risk sensing was pioneered by Open Ratings, now a Dun & Bradstreet company.

The case studies abound.  It is exciting.  We can answer old questions in new ways.  And, yes, I think that we can teach old dogs –like me– new tricks.

What are your favorite use cases for Big Data Supply Chains?  I welcome your thoughts.