digital path to purchase

“You are speaking a new language. Where do we go to learn these new concepts?”

A recent client comment during a session on Big Data Usage in Supply Chain

It is July 3rd. For most of us YANKS, tomorrow is a holiday. It is time for us to wave flags, sing patriotic songs and watch fireworks blaze magnificent patterns on night skies. For me, while I will watch the fireworks, it will be a calm day in the middle of a calm week. One that I hope will be a productive one.

It is welcome relief: a week with no travel. I am off the road!  Today, there is no mad dash to the airport, or crazy searching in my purse for the lost hotel key. With my travel schedule I constantly struggle to unravel time zones, remember the number of the hotel room I checked into or the color of the rental car; but not today.  This is the first week that I have not traveled in six months. WHEW! Where has time gone? My body is decompressing a bit, not quite knowing what to do next.  With freedom, and being unshackled from the busy travel schedule, it is hard to decide. Shall it be a blog, a report, the design of a quantitative study, or more work on the book?

As I write this, the east coast of the United States is blistering hot. So, I am looking forward to spending the week writing with the air conditioner running full tilt. Hopefully, I will not blow a circuit breaker. With any luck, I will finish four reports, two blog posts, five quantitative studies and review two chapters of book edits for Bricks Matter (can be pre-ordered at Amazon.com ). Most of my team at Supply Chain Insights are kicked back enjoying vacation with their families. So, won’t they be surprised when they come back to FULL mailboxes?

Next week, I work with a global supply chain executive team on the Future of Supply Chain Management and the pending impacts of big data, digital business, and mobility. To get ready, I am compiling the data from the Supply Chain Insights  survey on Big Data. It is fun. I am having a good time.

It was a tough survey to complete in an area that is not well understood by supply chain leaders.  So much so, that only one-in-four respondents could finish the survey. While over 240 people started the survey, only 53 could finish it.  I thought that the “open-end” comments from the study listed below summed up the current state well.  They are shown in figure 1.

Bottom line, it is a new language and a new  way of thinking at a time when we are not really using the data that we have.  I particularly like the comment that “Big data seems like a silly term invented by a bunch of IT nerds trying to sell more ‘stuff’.  Why not name it for the results not the data?” I could not agree more.

I firmly feel that “Big Data Concepts” will rock the boat of the nice and neat traditional supply chain application world that companies have worked on for two decades. So, as we start this discussion, light the fireworks.  I feel that the discussion of Big Data is a revolution, not an evolution.  The world of supply chain applications that has been defined by neat, nice packaged application definitions where the vendors are well-known and defined around traditional business models is changing. It not about cool technologies or the re-marketing of Web 2.0 concepts; instead, it is a fundamental rethinking of supply chain business problems.  So, as we begin the discussion on Big Data, realize that much of what we have learned over the course of three decades gets thrown out the window.

These concepts are not some crazy waving of hands. It is here to stay; but, like the fireworks in your backyard, approach it with caution. Yes, the concepts are over-hyped, and everyone is using the terms; but the basis of the definitions are well-rooted in business need states. It started with eCommerce and telecommunication giants.  Web search had a problem. It had the characteristics of very large, distributed aggregations of loosely structured data that was often incomplete and inaccessible (requiring inference from new forms of predictive analytics). The volume of the data was usually large (petabytes and exabytes of data), the variety of data was high (new forms of data including geolocation, unstructured data from social, customer call centers, warranty information, ratings and reviews and blogs) and the velocity of the data was high (streaming data, sensor data, and mobile data). Simply stated Big Data is a data set that is too large and complex to process using traditional methods. It requires new techniques and architectures to process the data and to sense data problems.

As we extend the concepts of supply chain from the customer’s customer to the supplier’s supplier, we are also facing this boundary. The data is no longer structured.  We cannot listen, test and learn about shoppers without embracing unstructured data. While the largest complaint in enterprise supply chain systems is dirty data, we haven’t seen anything yet. The building of the end-to-end supply chain will give us new forms of different data (that will be called dirty) that will need to be embraced using new and different techniques. This is the world of Big Data.  Here is the Shaman’s advice:

 Big Data Needs to be Focused on Delivering New Value-based Outcomes. The discussion should start with the business need state and the impact on value-based outcomes.  For example, retail demand insights, agroscience crop yield, food safety and pharmaceutical serialization/tracking are Big Data problems. I think that demand sensing, digital path-to-purchase and digital manufacturing will become Big Data problems. I also think that we will gradually solve master data issues in the enterprise through master data techniques; however, you don’t start with the data and work out. Instead, you start with the problem, analyze the data set requirements and then look for appropriate technology.  The ah-ha moment comes when you find that these new data forms do not neatly fit into traditional enterprise applications. It is not data that neatly stuffs into an ERP or APS architecture. They are too large, too different, and moving at too fast of a rate of speed.

It Needs to be Led by Line of Business Leaders.  The survey had 53 completes from 44 companies. The companies were primarily in retail and consumer products industries.  In the study, I find that retailers are further ahead in their thinking on demand, and consumer products companies are thinking more about big data to unleash new opportunities in supply. 8% of companies have an ERP system that is currently at a Petabyte of data and 47% expect it to be a Petabyte within five years. In the survey, 38% of organizations had a cross-functional group chartered to better understand Big Data. This team was twice as likely to exist in the organization if the size of the ERP instance was believed to be a Petabyte of data within five years. However, it was most likely to be led by the CIO (47% of the time). I find this problematic. I feel that the greatest success in these new types of initiatives happens when it is focused on solving a business problem led by a line of business leader.

The Use Cases are Many. Start Simple.  In fact, there are so many use cases that the problem for many teams may be where to start. In figure 2, I share the relative importance and perceived performance of twelve use cases from the survey responses from the study for companies that currently have cross-functional teams working on supply chain Big Data problems.  Note that the sample size is small, and we can only take away high level trends.  My insights are that the business cases are varied and many.  And, that teams are confused.  Today, the biggest focus is against two use cases:  safe and secure supply chains and building listening capabilities for sentiment.  I predict that it will soon include digital manufacturing and digital path to purchase initiatives.

I am a data-driven girl. I deplore hype. I love thinking about the art of the possible and helping clients to drive first mover-advantage.  Getting data like this was hard.  This survey was in the field for five months and I begged and pleaded with every advanced supply chain thinker that I know to fill it out.  I was grateful to have help from WIS Publications, Red Prairie and Susan Scrupski, Founder of the Social Business Council. Each organization shared a link with their audience and helped me to gather the data.

My Fear

 This week, I received notification that the Grocery Manufacturers Association (GMA) IT committee is sponsoring a project on Big Data. I received the information via a press release attached to an email to discuss the project with Deloitte.  Reading the press release gave me a headache. Talking to Deloitte sent shivers down my spine.  (Reference the press release at http://www.gmaonline.org/news-events/newsroom/gma-selects-deloitte-to-harness-big-data/) Why?

1) My Wish. These concepts are new and overhyped. I have traveled the last year to Big Data after Big Data conference and I have never seen folks from my GMA contacts or Deloitte at the conferences. I also just finished a study where I tried to get information from the GMA audience and found that the respondents could not fill out the survey.

I fear that GMA and the GMA IT committee have lost relevancy.  As the organization has focused more on lobbying, the entry fees for membership  have increased in price.  It is too high for smaller manufacturers and technology providers.  Most of the smaller manufacturers (less than 5 billion) question the value. (e.g. to participate as a member, I would have to spend $10,000/year. And, I am barred from helping the workgroups because I am not a member.) I find that the most advanced thinking is found in smaller consulting firms, not the large system integrators or technology providers.

As I read the press release, I worried about the project definition. As a data-driven gal, I fret about these kinds of things.  The definition of Big Data as “the recent increase in largely external and unstructured business and consumer information” disturbs me.  Big Data is SO much more than this definition.  I am also worried by the definition of the statement of work to “create a Big Data and analytics roadmap for CPG companies focused on driving top and bottom-line growth.” I think that the evolution of the Big Data techniques and practice is too early to define a roadmap. Instead, I would like to see the GMA IT committee focus on education and insights from current pilots in the industry. What I would not like to see is slick consultants in nice suits talking about theoretical applications at the upcoming conferences. <And, while we are at  it, please save the trees. Please do not give me another pretty brochure without any insight (I am finding the quality of the GMA publications done by big consultants to be declining in value.)>

If the committee wants to do real work, I would look at the early case studies and understand the barriers and enablers more completely. I would analyze how these teams got initiatives funded and how organizations are using Big Data systems to solve new type of problems and improve policies. I would define a handbook of terms and practices that companies are using.  I would educate consumer products and retail executives on why Big Data concepts matter. I would start with:

  • Digital Path to Purchase. The work that McCormick is doing on Digital Path to Purchase is breakthrough thinking.  I would start there.
  • eCommerce. Amazon‘s work on understanding demand insights of pantry shopping is exciting.  They are an early leader in Big Data techniques.  I would have them at the top of my list.
  • Supply Chain Visibility.  Let’s face it, we have been talking about supply chain visibility and agile supply chains for many years, but it has just been talk.  The use of rules-based ontologies and learning systems to redefine supply chain visibility at Conair is a new way to think about sensing supply chains. While early, it is a great case study on how to use Big Data techniques to solve a tough problem.
  • Listening. Text mining and ratings and review information at Bazaarvoice is a Big Data service.  How could companies use this data? How could it help in sensing early product failure? Only one out of ten companies that I talk to have ever heard of Bazaarvoice and the great work that they are doing.
  • Supplier Sensing.  The work at D&B on supplier sensing is a great use of  Big Data.  I would include them in the list and work with them on how consumer products companies and retailers can sense supplier failure early and use it to build stronger supplier relationships. We have talked about collaboration, but in reality, we have pushed costs and working capital back into the chain increasing risk. The further back in the supply chain that we go and sense supplier health, the weaker the players and the greater the risk to the brand.  The work at D&B is a great start to better understand this.
  • Safe and Secure Supply Chains. The work at Eli Lilly on product serialization of pharmaceuticals has direct applicability of where we are headed on food safety.  Food and beverage companies need to learn from this early work in Big Pharma.
  • Demand Insights. The work at Kraft on consumer insights, or the work at General Mills on downstream data are Big Data problems in the making. While both companies today are using more conventional techniques, the size of the data is growing and insights can be gained on where we are headed.
  • Large-scale ERP. The race is on for global companies to better serve emerging markets.  These markets are fraught with disparate data that is often incomplete.  These large consumer products companies are also the companies with BIG DATA ERP systems. What are best practices for companies in the ERP Petabyte club? How does the data change? How does it affect maintenance and upgrade cycles? And the definition of business analytics?

2) The second best thing that GMA can do is Rethink the Value Proposition.  I am disappointed that GMA has largely become a lobbying organization losing relevance in helping the industry move forward.  It is largely dominated by large consumer companies and technology providers that are jockeying for position. The presentations are stagnant. The studies are largely dominated by large system integrators that are delivering declining value.

Let’s face it. We are not moving the industry forward. A decade ago, the consumer products industry wasted 500 million dollars in the investments in Transora.  While other industries moved forward with trading exchanges that were rooted in value  — E2Open, GHX, Exostar — the consumer products industry lost momentum by focusing on data for the sake of data, not on driving value-based outcomes.  I would hate to see this happen again.

 Wrap-up:

Light the fireworks tomorrow and enjoy the show.  Sit back and watch them light up the sky.  As you stand back and look at the show, reflect that this is a form of pattern recognition. It is what we need to do with Big Data Analytics. It is about SO MUCH more than rows and columns and traditional analytics.

Data is piling up at the doorsteps of our organizations. It is in different forms offering new opportunities. We cannot just stuff the data into traditional applications. It is time to step up and accept the challenge while realizing that we are at the start of a long journey.  What do you think? Please let me know your thoughts.

For more on this topic, reference my earlier posts on Big Data:

Boosting Your Vocabulary for Big Data

Big Data: A Revolution not an Evolution

ETC.

User in the Era of Big Data Supply Chains

Free the Data to Answer the Questions that you do not Know to Ask

Convergence Is REAL. It Is NOW.

by Lora Cecere on June 23, 2012 · 2 comments

This morning I am sitting at my kitchen table, sipping coffee, writing a report. The coffee is good, the sunflowers are blooming on the deck and the words are flowing from my fingers.  The results of the Supply Chain Insights retail mobility study are compiled, and I am excited to report on the data.  I think that it is compelling.

Tomorrow, I will roll my suitcase onto yet another airplane to present the findings at the RetailConnections Mobile Impact Summit in Dallas (check out the PowerPoint presentation on SlideShare). For me, it is the last conference before I can take some time off for the summer.  I badly need a break.  Starting a new company, writing a book, and keeping up a frenetic pace on the road with clients has been grueling.

Marc Millstein’s events (@retailconnect on twitter) are always good ones.  At the event, I look forward to sharing the insights from the study with some of my favorite retailers. (Look for my tweets from the event using hashtag #RSSummit.) Here, in this blog post, I share my current thoughts on the study and the key points of my upcoming presentation:

Convergence.  The focus for retailers from the study is clearly convergence.  Mobility is important to retailers, but it is not mobility for the sake of mobility.  Instead, the focus is convergence of e-Commerce, mobility and social.  And despite the doomsayers on the concepts of social commerce, the study results show that the greatest increase in the intended use of mobile is to fuel efforts in social commerce. When I use the term social commerce, I am not speaking of slapping an e-Commerce presence on Facebook.  For me, and I hope for my readers, it is much more than the “F-WORD.”  Social commerce is the use of social technologies to drive commerce through brand engagement and improvement of the path to purchase.  Retailers have 1/3 more sites on Facebook than e-Commerce and they now have a strong presence on Twitter. The focus on mobile applications and mobility throughout the supply chain is a means to an end of serving customers better and driving brand differentiation.

In the study, the average retail company has 1.6 mobile applications, they have been working on a mobile strategy for a little over a year, and their biggest challenge is getting the right talent. It is a fundamental shift from a two years ago when the primary focus was mobile for the sake of mobile.  We are slowly starting to see the shift from social marketing to social business. For me this is EXCITING! I look forward to sharing my thoughts from the conference on this topic on twitter and on the blog.

My advice:  35% of retailers have a dedicated team focused on mobility.  Make sure that it is cross-functional.  Use this as an opportunity to be market-driven not marketing-driven.  Use it as an opportunity to redefine the organization outside-in from the shopper back.

Fundamental Shift.  So, you might be asking why an old supply chain gal like the Shaman is writing about mobility and social in retail. The answer is simple. I believe that these technologies offer the opportunity for us to build the extended supply chain from the customer’s customer to the supplier’s supplier for all industries. I also believe that the increased use of mobility in consumer interactions will change the fundamental rhythms and cycles of the supply chain.  The pace will change.  It will be quicker.  We will have new data sources, new forms of demand insights and increased expectations from consumers.  We will be forced to redefine old paradigms, and that is the stuff that gets the Shaman’s blood going!

I think that it is a new opportunity for ALL parties in the consumer value chain to drive differentiation.  I am currently working with several companies that are forging exciting new frontiers on the Digital Path to Purchase (Follow the action at #DP2P on twitter.)  Slowly, consumer products and retail leaders are redefining four moments of truth in the shopping experience –the list, the basket, the purchase, and usage–through digital insights. The list is becoming more automated, the basket is becoming the focus for retail/consumer products collaboration, and social technologies are allowing us to gain new insights about usage.

The shift from near real-time to real-time data is not trivial.  Downstream data and demand signal repositories will be the foundation and big data techniques will eclipse our traditional transactional thinking.  The building of outside-in processes will become increasingly important.  It is my hope that the supply chain will become less about US and more about the shopper.

My advice:  Take a piece of butcher paper and paste it on the wall. Using the principles of mobile, social and e-commerce convergence, facilitate a cross-functional group of leaders to map what an outside-in process could look like for your company.

Disintermediation.  This shift offers new horizons for the consumer value chain.  Let me explain.  Last week, as I flew back from a client, I placed an order from Amazon on my mobile application on an airplane somewhere over Ohio for delivery of pantry items to my apartment in Baltimore.  It was one click away. The package was waiting for me when I got home.  Whoever thought that we would be ordering flour, sugar and paper towels from Amazon?  And that the landed price would be less than Wal-Mart?

Retail grocers are under attack.  Amazon wants to own “the center of the store.”  This is happening at a time when retail grocers are struggling with store profitability and attempting to squeeze suppliers for every dollar.  Year-over-year consumer products companies have talked about “collaboration with retailers,” but the reality is that we have steadily moved costs backwards in the supply chain from the retailer to the supplier to the supplier’s supplier.  This is an opportunity to change the equation.  The power is shifting to the shopper. The traditional retailer is losing power.

This is the time to think about disintermediation.  Is Amazon the new Wal-Mart?  Does the store become a place for excitement and fresh items? And, as such, is there an opportunity to move traditional trade funds into digital programs to improve the shopper’s experience?  Is there an opportunity to drive new types of purchase through third-party applications (e.g. like recipe sites for food manufacturers) in social commerce? I believe that consumer products companies have a new opportunity to move trade funds into digital demand shaping programs with Amazon and change grocery retailing forever. I also believe that Digital Path to Purchase programs are a form of the convergence that will permeate and permanently transform the supply chain.

As channels change, the supply chains behind them morph.  Bricks matter.  Behind every pretty application on a handheld device is a manufacturing plant, a distribution center and a truck.  They will all feel this impact.

Let’s face it.  Why do shoppers need to go to the traditional grocery store for a pantry-loading trip when they can order items through their mobile device and have free shipping?  Why do shoppers need a piece of paper anymore–or paper coupons –when they can go to a recipe site, plan their meals for the week, pull a digital list and place it on Amazon for delivery? Or, alternatively, cross-shop it digitally across retailers, combining mobile offers, for the best price?

So, in summary, I believe the time for convergence is now.  Few are ready, but all should be.  Slowly, day-by-day, power is shifting to the shopper.  The paradigm of what is a retailer and what is a supplier is changing.  New business models are opening up, but they will only be captured by those that are truly market driven.  It will not be seized by those that rely on marketing-driven initiatives.   I look forward to sharing more when I get back from the conference.  Please let me know your thoughts.

Supply Chain Insights Update

Lot’s happening at my new company.  I have five hard-working employees. We are busy working on research, serving clients and designing a community.  We feel that we are making progress on our goal to drive new and compelling research on supply chain management into the industry.  This week, we pulled the “Big Data” survey from the field.  Finishing it has been a struggle. The concepts are new ones for the industry.  After two months, we were able to get 50 completes.  Only one in four respondents was able to complete the survey.  As one participant in a strategy session said last week, “This is a new language, and a new way of thinking.  How do I retool my brain?”  I think that this will be a challenge for all.  I look forward to sharing the results with you next week on the blog and I will post the entire deck on SlideShare soon.

Our focus is cranking out new research on new topics. We will continue to publish research reports in front of the firewall to help all supply chain teams. We want to be known for leading edge research.  To this end, we placed a survey on packaging design for consumer products and the role of Product Lifecycle Management (PLM) into the field, and we have four new surveys going into the field this month.  The list includes: downstream data; trade promotion management; supply chain business process outsourcing; healthcare reform and transportation management. (The link for the packaging artwork study is http://tinyurl.com/7s4ecm7.)

If you would like to be a part of one of these new surveys, just let us know.  We will be sharing the final reports of all the studies in a monthly newsletter.  Please let us know your feedback.  We want to redefine the analyst model to be a more caring, insightful and useful business model. With your help, we feel we will be successful. Have a great weekend.  I am going to go get another cup of coffee. I have more writing to do…  The Shaman’s day is just starting.