Supply Chain Shaman

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Convergence Is REAL. It Is NOW.

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
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.

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