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Category Archives: Manufacturing

C.H. Robinson CEO John Wiehoff Talks Transportation Trends

April 27, 2018 · By 24/7 Staff ·
John Wiehoff, CEO of C.H. Robinson, is one of the keynote speakers for the Connections 2018 supply chain conference, which will take place June 25-27 at the Greenbrier Resort in West Virginia.

He recently spoke with SMC³, which has served as one of the 3PL’s long-time partners, about emerging technologies in the industry, unique supply chain opportunities, and how C.H. Robinson uses technology to optimize its business.

What are some of the major trends you’re currently seeing in the LTL marketplace?
Demand for LTL is higher than we’ve seen it in nearly 10 years. This shift is an especially significant change when paired with supply changes. Both manufacturing and e-commerce are extremely strong right now, and both have close ties to LTL.

Online orders are driving smaller shipments to the LTL space, not just in the final-mile area. Smaller orders are becoming more common for the middle mile – from one distribution center to another.

LTL capacity is tight because carriers have not added a significant amount of equipment to their fleets in recent years. But even if there was an influx of tractors, there aren’t enough drivers available.

Historically, the driver shortages that affected the truckload market remained mostly out of the LTL space, but even that is changing. Growth in other sectors that have a shared labor force with truck drivers means more LTL drivers are leaving for options that are more lucrative.

As LTL carriers look to be more productive, we are seeing them place a large emphasis on optimizing their networks. With the data, analytics, and tools like dimensionalizers available to them, LTL carriers are paying more attention to accepting the right freight in the right lanes at the right time. More isn’t absolutely better anymore.

How has the ELD mandate impacted the domestic transportation market?
Drivers are reaching their hours of service in shorter timeframes, especially given the tight capacity. Organized and efficient loading/unloading times will become even more important. Reducing driver wait time at either the origin or destination can have a significant impact in a driver’s hours of service.

Both carriers and shippers may rely more heavily on 3PLs. A 3PL can help identify and solve capacity shortages, handle potential rate increases and address other issues from the mandate.

John Wiehoff, CEO of C.H. Robinson

How does C.H. Robinson use new technology to optimize its business, and are there any emerging technologies that will be game changers for the supply chain industry?
We are using technology to reinvent what it means to be a leading 3PL for this industry, our customers, and carriers.

Our technology offering is at the center of what we do and is embedded in our services and solutions every day.

You can see the importance technology has within C.H. Robinson by the number of IT staff and investments we have made and continue to make – we’ve added more than 800 IT staff and invested over $1B in the last decade.

As our business grows – now to more than 120,000 customers who worked with us on more than 19 million global shipments last year – we increasingly rely on technology.

Technology backed by data is critical to the success of our business. As one of the largest 3PLs, we have arguably more first-party data than anyone else in the industry. But, that data doesn’t matter if we don’t use it to our and our customers’ (shippers and carriers) advantage.

That’s why we are continuing to invest in and build tools that leverage the amount of data we have available to us.

The Connections 2018 supply chain conference is perfectly positioned at the midpoint of the year, giving speakers a chance, to sum up, the first half of 2018. What themes have defined the first half of the year, and what will define the transportation market during the second half?
For the first half of the year, we saw efficiencies in utilizing capacity, as truckload utilization climbed to more than 95 percent, according to FTR Transportation Intelligence. At the same time, new trucks increasingly entered the market to replace retiring trucks.

For the second half, these factors will combine for a focus on hyper-efficiency and the most effective use of capacity. We’ll be able to see if the strong truck sales of the first half of the year will add capacity or primarily serve as replacement capacity. We’ll also be able to put our finger on the real effects of ELD.

How can shippers and 3PLs better position themselves to take advantage of supply chain opportunities in the marketplace?
As supply chains grow in both size and complexity, transportation management technology will be an important way for 3PLs to help shippers gain a competitive advantage and exceed their customers’ expectations. That’s why we are invested in delivering and implementing flexible, efficient and integrated technology solutions that connect all aspects of the supply chain.

Read: Transportation Management Systems Market 2018

It is not so much what changes are coming to the industry; it’s more important to focus on what the innovative supply chain of the future will look like and recognize that it will take people, processes, and technology to bring positive change.

Digitalization of supply chains is our opportunity to continue bringing technology to our customers and their supply chains that make them smarter and more efficient. The technology we are able to bring today and into the future has to go beyond freight matching to encompass the complexities of today’s and tomorrow’s supply chains.

An algorithm can do amazing things, but when a truck gets delayed or a delivery window changes, people are still able to provide the most effective solution.

To hear more from John Wiehoff and other industry experts, sign up today for the three-day supply chain conference Connections 2018 to learn about emerging trends, current challenges and new innovations in the supply chain.

Register here by April 30 to take advantage of early-bird pricing.

Raise Your Supply Chain IQ
Connections 2018 | June 25 – 27 | The Greenbrier, WV

Why Attend Connections 2018

To REGISTER for SMC³’s Connections 2018, visit www.smc3connections.com

Related Article: SMC³ Announces Connections 2018 Speaker Lineup

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Game Over as Bankrupt Toys ‘R’ Us Files for Liquidation and Begins US & UK Store Closures

Toys R Us, the toy superstore chain that became a dream factory for kids nationwide, said in a U.S Bankruptcy Court filing early Thursday that it must liquidate, a move that will likely lead to the closure of all its stores and sale of remaining merchandise.

As reported by Reuters, the closure is a blow to generations of consumers and hundreds of toy makers that sold their products at the chain’s U.S. stores, including Barbie-maker Mattel Inc, board game company Hasbro Inc and other vendors like Lego.

“This is a profoundly sad day for us as well as the millions of kids and families who we have served for the past 70 years,” Chief Executive Officer Dave Brandon said.

With shoppers flocking to Amazon.com Inc and children choosing electronic gadgets over toys, Toys ‘R’ Us has struggled to boost sales and service debt following a $6.6 billion leveraged buyout by private equity firms in 2005.

Toys ‘R’ Us said on Thursday it is seeking approval to liquidate inventory in its 735 U.S. stores, which debtors anticipate will close by the end of this year.

It is in talks to sell 200 of those stores as part of a deal to sell its 80-odd stores in Canada.

For its operations in Asia and Central Europe, including Germany, Austria, and Switzerland, the company will pursue a reorganization and sale process. The already announced administration of its UK business will continue, the company said.

The wind-down follows a bruising holiday season when the company failed to stay competitive and sales came in well below projections. The quarter accounts for 40 percent of its annual net sales.

Toys ‘R’ Us’ creditors said in a court filing that Target Corp, Walmart Inc and Amazon pricing toys at low-margins and a greater-than-expected decline in toy and gift card sales following its bankruptcy filing in September led to the weak performance in the quarter.

“Even during recent store closeouts, Toys R Us failed to create any sense of excitement,” said Neil Saunders, managing director of retail research firm GlobalData Retail. “Its so-called heavy discounts remained well above the standard prices of many rivals.”

Toys R Us Store Closures

Wayne, New Jersey-based Toys ‘R’ Us was already in the process of closing one-fifth of its stores as part of an attempt to emerge from one of the largest ever bankruptcies by a specialty retailer.

In September, when the company operated more than 1,600 stores globally, with roughly 800 stores outside the United States, it got court permission to borrow more than $2 billion to start paying suppliers.

But efforts to keep the business going collapsed after lenders decided that in the absence of a clear reorganization plan, they could recover more in a liquidation by closing stores and raising money from merchandise sales.

The company’s troubles mirror those of other mall-based retailers in the United States that have shut stores and fired employees in a bid to stay relevant.

More than 8,000 U.S. retail stores closed in 2017, roughly double the average annual store closures in the previous decade, according to data from the International Council of Shopping Centers.

The disappearance of Toys ‘R’ Us leaves a void for hundreds of toy makers that relied on the chain as a top customer alongside Walmart and Target.

7 Retail Management Lessons You Can Learn from Toys ‘R’ Us

While the final reason for the closures may be the debt – the truth of the matter is that Toys ‘R’ Us landed in this predicament for many reasons. Their poor performance, which led to their not being able to afford their debt, can be attributed to many things.

For small and medium-sized businesses, there are several lessons that can be gleaned from the Toys ‘R’ Us shutdowns.

Here are a few other ways, detailed by Kris Hiiemaa of Erply, why Toys R Us contributed to its current condition:

1. They closed down the main store at Times Square

In 2015, the company closed its flagship location in Times Square, without having a new location in mind for the new flagship. This location was more than just another location for the chain – it was a tourist attraction. The giant Empire State Building built of LEGO pieces in the store, as well as the indoor ferris wheel featuring the company’s logo, were frequently photographed by tourists and visitors from all over the world. The reason for shutting down this location was, reportedly, inability to afford the rent at the location any longer.

The problem here is two-fold. First, Toys ‘R’ Us closed down what was their most popular attraction for shoppers. Second, they didn’t reopen that store in any other nearby location. Instead, they simply retired the flagship and let other locations in Brooklyn, Queens, and Union Square take over the retail duties of this store. When you have an attraction that visitors flock to, be sure you have a backup plan if you must move or close down that attraction.

2. They treated their stores like warehouses, rather than experience shops for kids

The biggest reason that the Times Square location was so loved by guests was that it was more than just a warehouse to go to for shopping purposes. It was an experience, with something unique that really made visiting worthwhile. Giving consumers an additional reason to walk through the doors, beyond just buying a product, is essential for building a brand.

One of the best examples of this is Disney’s retail locations, which are located all over the country. These stores are not just simple retail stores but have fully interactive experiences for kids. Most of these locations have a movie area where kids can sit and watch Disney releases while parents shop nearby; a dress-up area with mirrors, a “clubhouse” area, and more. These experience-based additions to the stores make it impossible for kids to resist, which makes it more likely that parents will be in the store longer – and thus, will spend more money. By treating every Toys ‘R’ Us location like a basic retail location, instead of creating an experience to draw kids and adults in, the chain missed a vital opportunity.

Toys ‘R’ Us CEO Dave Brandon has said that plans for the future of the company include adding more experiences to the stores that remain open, such as toy demonstrations and other fun activities.

3. They couldn’t compete with Amazon in logistics

If you are going to treat your business like a warehouse, rather than an experience, then you have to focus on competing with the world’s leading warehouse for just about everything: Amazon. While Toys ‘R’ Us’ failure cannot be totally blamed on Amazon, it’s hard to ignore the way this mega-corporation has changed online shopping. If companies can’t compete with the amazing selection, super-fast shipping, and low prices on Amazon, then they are definitely not going to perform as well.

For many businesses, the problem isn’t necessarily in how much stock they carry, but in getting it to the store or the customer in a timely manner. Managing multiple warehouses and tons of product lines is much easier when you have a POS system that automatically tracks every item in your system. This allows you to give customers accurate estimates in arrival times for products, and also helps you better predict need, so that you can eliminate how often customers are forced to wait on the product in the first place.

One thing that Toys ‘R’ Us CEO Brandon mentioned in plans to revamp the chain is a push for making stores more accessible in smaller towns. That could be one way to compete against Amazon; audiences that haven’t been able to reach your store before may appreciate the ability to see a product in person before buying.

4. Their presentation was hectic, leading to poor customer service

Any customer who had ever shopped in a Toys ‘R’ Us before could report feeling overwhelmed when walking into one of their locations. With too many different products arranged in messy displays, most of the chain’s stores could be described as hectic. This not only led to customers feeling unwelcome but also made for poor customer service. When inventory is all over the place, not neatly or stylishly displayed, and frequently in a jumble, it is hard to help customers find what they are looking for.

This is one of the biggest lessons that any small or medium-sized business can take from the Toys ‘R’ Us debacle. In many cases, limiting the variety of your in-store inventory, and making sure it is displayed in organized and stylish ways, can be more inviting than having all your inventory out in view. Additionally, giving employees access to inventory in a mobile POS system can ensure that they are better equipped to offer great customer service.

CEO Brandon mentioned that Toys ‘R’ Us stores will begin carrying fewer products in the future to cut back on this problem, which would also help simplify operations and customer service.

5. Their inventory management wasn’t well-planned or executed

Something that Toys ‘R’ Us could have benefited from was a better inventory management system. Customers frequently reported that the newest products being advertised weren’t available – in fact, there was an iconic Christmas movie made about toy stores running out of the latest and greatest toys that closely mirrored many people’s real-life experience with Toys ‘R’ Us. By not having great inventory management and poor attention to detail when ordering stock, many of the stores left customers no choice but to head to Amazon or other online retailers to find things they wanted.

The lesson here? If you are a niche retailer, it is your job to carry the most popular items in that niche. You need to know what your customers want, and when they want it. A great inventory management system for planning and executing restocks is vital for keeping your business operating smoothly. A system like Erply can help you learn your customers’ buying habits, predict what types of products will be selling when, and automatically handle orders for you so that you don’t run out of popular items during crucial sale time periods.

6. They didn’t carry original products

One of the biggest reasons that Toys ‘R’ Us struggles to compete against the likes of Amazon and Wal-Mart is that they don’t carry any exclusive product lines. Their products are the same products that you can find at other big chain retailers, and often at more savings and in more convenient ways. Customers can get the same products online without having to venture into stores where they can’t be sure that the product will even be in stock.

The lesson here? Stores must give customers a specific reason to visit them over shopping elsewhere. It isn’t enough to offer a good selection of products, great customer service, or even an experience-based sales strategy. Stores need an exclusive line of products, whether they are house products or an agreement to exclusively sell a third-party product. This ensures that customers must come to you because they can’t get what you offer anywhere else.

7. They lacked a modern strategy for customer engagement

Finally, Toys ‘R’ Us lacked an engagement strategy when it came to their customers. Customer engagement means building and nurturing relationships with customers to promote brand loyalty. Without it, customers feel no connection to the company, and that gives them even fewer reasons to return. Today’s modern customer expects to connect with a brand online (via social media and email); through loyalty programs; through personalized content; and more.

A better loyalty program and a bigger focus on engaging through the Babies ‘R’ Us registry program are two of the things that CEO Brandon said the chain would be doing in the future to improve in this area.

For small businesses, the message here is very clear: engaging with current customers to nurture long-lasting loyalty is vital to the success of a company. A strong online presence and a focus on keeping customers engaged after a sale will both be a big part of keeping a business afloat. This is why it’s important to collect customer data at the point of sale. Information like a customer’s name, birthday, what they tend to buy, what social media they prefer to use – can all help you to better connect with them in the future. A POS system that gathers some of this information at each transaction can help you build a customer database that you can use for valuable information when building your engagement strategy.

Source: ERPLY

 

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Amazon Begins Grocery Delivery from Whole Foods Market

Amazon and Whole Foods Market announced the introduction of free two-hour delivery of natural and organic products from Whole Foods Market through Prime Now, with plans to expand across the U.S. in 2018.

Starting yesterday, Prime customers in neighborhoods of Austin, Cincinnati, Dallas and Virginia Beach can shop through Prime Now for bestselling items including fresh produce, high-quality meat and seafood, everyday staples and other locally sourced items from Whole Foods Market.

John Mackey, Whole Foods Market co-founder and CEO

“We are happy to bring our customers the convenience of free two-hour delivery”John Mackey, Whole Foods Market co-founder and CEO

Customers can start shopping from Whole Foods Market selection at www.primenow.com or by using the Prime Now app available on Android and iOS devices.

“We’re happy to bring our customers the convenience of free two-hour delivery through Prime Now and access to thousands of natural and organic groceries and locally sourced favorites,” said John Mackey, Whole Foods Market co-founder and CEO.

“Together, we have already lowered prices on many items, and this offering makes Prime customers’ lives even easier.”

Prime customers can shop thousands of items across fresh and organic produce, bakery, dairy, meat and seafood, floral and everyday staples from Whole Foods Market available for free two-hour delivery.

Select alcohol is also available for delivery to customers. Prime members receive two-hour delivery for free and ultra-fast delivery within one hour for $7.99 on orders of $35 or more.

Delivery from Whole Foods Market through Prime Now is available daily from 8 a.m. to 10 p.m.

Customers can visit www.primenow.com or download the Prime Now app to enter their zip code to see if they are in the delivery area.

As reported by Bloomberg, about 7 percent of U.S. households bought groceries online last year, according to NPD Group.

Read: Growing Ecommerce Grocery Channel Will Accelerate Adoption of Meal Kit Delivery Services

Most of those – about three-quarters – get their orders delivered to their door; the rest pick it up at the store. NPD Group said it expects online grocery shopping to grow quickly, especially among young adults, who are more comfortable shopping online. And grocery chains don’t want to miss out when that happens.

Walmart, the country’s largest grocer, is making it easier for customers to order groceries online and pick them up at the store.

Target bought grocery-delivery company Shipt late last year. Kroger, the largest traditional supermarket chain, has been promoting store pickup for online orders and doing trials of home delivery.

Amazon isn’t saying where delivery will expand, but its Prime Now service is in more than 30 cities, including Chicago, Milwaukee, and San Diego.

The announcement gives Amazon yet another way to get groceries to customer’s doorsteps.

Related: Amazon Reportedly Focusing on Expanding its Delivery Trial Offering Threatening FedEx & UPS

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Half of Millennial Shoppers are Better Connected than Retail Associates

Zebra Technologies Corporation, today revealed the results of its 2017 Global Shopper Study, the 10th annual survey analyzing shopper satisfaction and retail technology trends.

The body of research revealed that while 44 percent of surveyed shoppers are still not satisfied with staff availability and customer service, overall shopper satisfaction has significantly improved since the study’s inception a decade ago.

While four in 10 shoppers surveyed in Zebra’s tenth annual retail survey cited being better connected to consumer information than store associates, more than half believe store associates armed with the latest technology improve the overall shopping experience.

And although 44 percent of in-store and 53 percent of online shoppers remain dissatisfied with the returns/exchange process, 62 percent of those surveyed appreciated associates’ use of handheld mobile devices in-store.

Jeff Schmitz, senior vice president and chief marketing officer, Zebra

“Retailers have come a long way over the past decade to enhance the in-store shopping experience, but shopper expectations continue to rise at an exponential rate.”Jeff Schmitz, SVP and Chief Marketing Officer, Zebra

Key Tenth Annual Retail Survey Findings:

  • Rising shopper expectations continue to outpace retailer in-store technology investments as a majority of millennial shoppers perceive that they are more connected than store associates. When asked about how well-connected they are with consumer information, 53 percent of millennial shoppers believe they are better connected than store associates – compared to 32 percent of Gen X shoppers and 15 percent of boomer shoppers.
  • Shoppers want faster delivery, but many aren’t willing to pay for it.  Heightened customer expectations for delivery are transforming the retail landscape. While 66 percentof shoppers want next-day or same-day delivery and 37 percent prefer same-day or sooner, 27 percent would not want to pay for shipping at any speed.
  • Retail customers want a variety of fulfillment options. 80 percent of those surveyed purchase items in-store and either take them home or ship from store to home.  Shoppers are also taking advantage of other fulfillment options, such as buy online – ship to home (64 percent), buy online – pick up in-store (34 percent) and buy online- ship to alternative location (15 percent).
  • The use of tablets in stores is improving the shopper experience.  More than half of surveyed shoppers believe technology is improving the shopping experience with 57 percent specifically citing store associates using tablets.
  • Out-of-stocks continue to plague retailers. When shopping in-store, 70 percent of shoppers have left without purchasing what they were seeking. However, when it comes to out-of-stock issues, retailers can recover six in 10 incidents with discounts or alternative fulfillment options, such as ship to home.

Jeff Schmitz, Senior Vice President and Chief Marketing Officer, Zebra Technologies:

“The results of the 2017 Shopper Study indicate consumers around the world believe that retailers have come a long way over the past decade to enhance the in-store shopping experience, but shopper expectations continue to rise at an exponential rate. Retailers continue to invest in their physical stores; we see this with an increasing overall store count and growth in convenience and mass merchant retail.”

“Sales associates armed with the right technology tools are better equipped to serve customers and increase revenue by providing the visibility and actionable insight into product information, inventory and fulfillment options that bring the online experience into the physical store.”

Regional Findings

  • Fifty-eight percent of North American shoppers said they have “show-roomed,” or looked at items in a store and purchased them online.
  • In Europe and the Middle East, 64 percent of shoppers would be willing to purchase more merchandise if they received better customer service and 52 percent value retailers who use technology to make the shopping experience more efficient.
  • Nearly one-half (48 percent) of Latin American shoppers trust sharing personal data with retailers. Moreover, retailers rank low on the list of institutions that shoppers trust with personal data.
  • In Asia-Pacific, 32 percent of shoppers would prefer to go to a retail store to pick up items purchased online or through mobile channels.
  • More than half of shoppers in both Asia-Pacific and Europe are interested in Wi-Fi and location-based in-store services such as mobile coupons.

Survey Background and Methodology

Zebra’s 10th annual shopper study included nearly 7,500 shoppers from North America, Latin America, Asia-Pacific, Europe and the Middle East who were interviewed in September 2017 by online research partner Qualtrics.

Related: The Future is Now: The Tech Trends Reshaping Retail

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Robotic Automation to Supplant 800 Million Jobs Worldwide by 2030

A new study by the McKinsey Global Instituteestimates that between 400 million and 800 million of today’s jobs will be automated by 2030.

The research adds a fresh perspective to what is becoming an increasingly concerning picture of the future employment landscape.

“We’re all going to have to change and learn how to do new things over time,” institute partner Michael Chui told Bloomberg.

In the United States, it appears it’s the middle class that has the most to fear, with office administrators and construction equipment operators among those who may lose their jobs to technology or see their wages depressed to keep them competitive with robots and automated systems.

As many as 375 million workers around the world may need to switch occupational categories and learn new skills.

What the Future of Work Will Mean for Jobs, Skills, and Wages

The technology-driven world in which we live in is a world filled with promise but also challenges.

Cars that drive themselves, machines that read X-rays, and algorithms that respond to customer-service inquiries are all manifestations of powerful new forms of automation.

Yet even as these technologies increase productivity and improve our lives, their use will substitute for some work activities humans currently perform – a development that has sparked much public concern.

Building on their January 2017 report on automation, McKinsey Global Institute’s latest report, Jobs lost, jobs gained: Workforce transitions in a time of automation, assesses the number and types of jobs that might be created under different scenarios through 2030 and compares that to the jobs that could be lost to automation.

The results reveal a rich mosaic of potential shifts in occupations in the years ahead, with important implications for workforce skills and wages.

The key finding is that while there may be enough work to maintain full employment to 2030 under most scenarios, the transitions will be very challenging – matching or even exceeding the scale of shifts out of agriculture and manufacturing we have seen in the past.

  1. What impact will automation have on work?
  2. What are possible scenarios for employment growth?
  3. Will there be enough work in the future?
  4. What will automation mean for skills and wages?
  5. How do we manage the upcoming workforce transitions?

Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation

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Microsoft Reinvents its Supply Chain by Leveraging SAP Ariba & Intrigo Systems

Microsoft Corp. has one of the most complex supply chains in the world.

And to keep it humming and ensure supply keeps up with demand for its hottest products, the company is reinventing its supply chain.

In a newly released Webcast (watch the video above), the company discusses how it is teaming with SAP Ariba and Intrigo Systems to create a scalable, modern platform to support the efficient, cost-effective manufacturing of its most popular products, including the Xbox and Surface.

“At Microsoft, our mission is to empower every person and organization on the planet to achieve more. And our strategy to achieve this is to build best-in-class systems and platforms and productivity systems,” said Ali Khaki, Principal PM, Supply Chain Engineering, Microsoft.

“When we looked at our supply chain, it was clear we needed to build a flexible, scalable platform that could support the complexity of our hardware business.”

And it is using SAP Ariba solutions for direct spend to do it.

“The Ariba® Network is the backbone for Xbox and Surface line of products supply chain,” Khaki said.

Through the Ariba Network and the cloud-based applications delivered on it – including SAP Ariba Supply Chain Collaboration™, Microsoft has created a modern platform from which it can safely and easily collaborate with multiple tiers of contract manufacturers and suppliers across key supply chain planning and execution processes, including:

  • Sharing production forecasts, orders, quality, and inventory information.
  • Anticipating and resolving supply assurance problems.
  • Onboarding suppliers.

And the company is seeing results. Since implementing the solutions with Intrigo’s support, Microsoft has:

  • Enabled multi-tier planning and collaboration with contract manufacturers and suppliers.
  • Reduced the supplier commit process from three days to 30 minutes.
  • Cut the time it takes to onboarding for suppliers from four months to four days.
  • Standardized vendor engagement through B2B, flat files and web-user interface.

“It’s a very clear and transparent process because of all the communication that happens within the SAP Ariba system itself,” Khaki said.

“And it has allowed us to create a very positive user experience for everyone involved in it.”

To hear more from Khaki on Microsoft’s supply chain transformation, listen to the Webcast “Microsoft Re-invents Its Manufacturing Supply Chain” above (download slide deck).

To learn more about SAP Ariba’s direct spend solutions and the value they can deliver, visit www.ariba.com.

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How to Build a Supply Chain Champion Following Chicago Cubs Theo Epstein’s 5R Strategy

On November 2, 2016, the Chicago Cubs did the unthinkable:

They won the World Series after coming back from a 1-3 deficit to the Cleveland Indians.

For Cubs fans, the victory marked the end of a 108-year streak of competitive futility.

Although the Cubs game seven, extra-inning victory is inspirational, you may be wondering: “As a supply chain professional, why should I care?”

Answer: Because of Theo Epstein, the Cubs President of Baseball Operations, knows how to build a championship team, a task that is likely high on your to-do list.

Vitally, Epstein’s role in the Cubs turnaround wasn’t a fluke.

In 2004, Epstein, as Red Sox General Manager, helped Boston vanquish the Curse of the Bambino and end an 86-year title drought.

Deciphering how Theo Epstein took the Cubs, a perennial loser, to a World Series championship has been a hot topic in the sports world.

Based on our 20-plus years working with supply chain leaders, we argue that Theo Epstein’s job assembling a champion on the field is a model for the supply chain leader’s quest to build a winning supply chain.

Let’s take a closer look at how Epstein transformed the Cubs into champions.

His approach highlights five principles of supply chain design that we call the 5Rs (Figure 1). The 5Rs have enabled companies from Amazon to Zara to win on the world’s toughest playing field – today’s global marketplace.

Figure 1
The 5Rs of Supply Chain Excellence

Strategic Supply Chain Management: The Five Disciplines for Top Performance

Know the Rules and Break Them When Necessary

If you want to win on the baseball field – or in the marketplace – you need to know the rules of the game. The rules define not just your strategy and value-added capabilities, but also your team’s composition.

Rules, however, change and disrupt industries and dethrone champions. For proof, look no further than A&P, Compaq, and Pan Am. Thus, it’s not enough to know the rules; you also need to pay attention to how they are changing. Spotting inflection points before rivals – and responding effectively – can give you a competitive edge.

Andy Grove modeled this reality when he made the case for Intel to make the leap from RAM/DRAM to CPUs before the memory market crashed. Grove’s anticipation of a threat before it was widely discerned is a big reason you know the phrase “Intel Inside.”

Of course, sometimes the rules aren’t fair, which is a plus if they favor you and a travesty if they don’t. When you find your team disadvantaged, your job is to change the rules.

This is the scenario Billy Bean, general manager of the Oakland Athletics, faced in 2001. The A’s $40 million payroll couldn’t compete with the New York Yankees $115 million player budget. Not only did the Yankees beat the A’s in the divisional championship series but they signed the A’s Jason Giambi to a big-budget free agent contract.

To compete, Bean needed to build a different type of team. He stepped away from traditional approaches to player evaluation and embraced sabermetrics, a novel statistical approach that became known as “Moneyball.” His goal: Identify players undervalued by other teams. Bill Henry, the new owner of the Boston Red Sox, saw value in Bean’s approach and offered him the Sox’ GM job.

When Bean declined, Theo Epstein stepped in. He levered Boston’s big payroll with sabermetrics to assemble a team that won the World Series in 2004, followed by two more championships in 2007 and 2013.

Great companies do the same thing. They execute within the rules better than rivals, or they exploit opportunities to change the rules.

Search Amazon

Consider Amazon, the poster child for e-commerce. Launched in 1995 as the “Earth’s largest bookstore,” Amazon began life as a pure-play e-tailer, with no inventory or brick and mortar presence.

It acted as a broker, linking customers to publishers. Amazon went public in 1997 and immediately began to rewrite the rules of online retailing and expand its product line. At a time when other organizations were outsourcing fulfillment operations, Amazon invested in its own distribution network.

By 2016, Amazon operated 383 fulfillment centers worldwide, supporting sales of $136 billion. Amazon even began to build out an in-house network of trucks and planes to “own” the delivery experience all the way to the customer door.

Today, Amazon sports a market capitalization of $400 billion. Its allure is a willingness to push boundaries and redefines rules. Amazon made two-day “Prime” delivery an industry standard that customers were willing to subscribe to. Amazon also enabled eager consumers and intrigued investors to envision the day when drones, predictive shipping, and check-out free shopping will be common.

The result: Amazon is forecast to reach half a trillion in sales over the next decade. More amazing, Amazon achieved this unparalleled success without ever making a meaningful profit on operations. According to The Economist, 92% of Amazon’s value is due to profits that won’t be earned until after 2020. Amazon’s story stresses a point that you need to remember.

To build a winning team, you must change the competitive rules even as you execute the daylights out of existing rules. The remaining four Rs of supply chain design can help.

Assess Readiness; Your Own and That of Potential Partners

By winning the World Series, the Cubs proved their greatness. Nonetheless, you wouldn’t bet on the Cubs to win the Rugby World Cup. After all, the Cubs weren’t built to play rugby. Yet, many companies try to do the equivalent every day. They come to market with the wrong supply chain. How do smart managers get stuck in such a predicament? Two explanations persist.

Wrong focus. Great ideas spawn companies. But, source, make and deliver decisions are often an afterthought, following marketing, engineering or finance. No one asks whether, or how, SCM can confer a competitive edge. Market mediocrity is the result.

Poor scanning. Even cutting-edge supply chains can fall behind the obsolescence curve. You’ve read, for instance, about the woes of some high-profile brick-and-mortar retailers. As the Internet changed the rules of retail, they didn’t adapt. Now, they are dying. The readiness assessment is a key weapon in Theo Epstein’s arsenal. By conducting a two-step readiness assessment – the second R – you can avoid these losing outcomes.

Step 1 is an honest self-appraisal of the team’s current competencies. Simply put, ask: “Do we have the skills we need to play, and win, our industry’s competitive game?” If not, ask two questions:

1. Which skills are you missing?

2. What do the gaps look like?

By making capability gaps visible, you can prioritize your skill-acquisition efforts.

Step 2 is to assess potential partner competencies. Your job, like Epstein’s, is to close the gaps by building or buying the right capabilities.

Now, let’s take a peek into how Epstein leveraged the second R to turn the Cubs into champions.

The key to winning a baseball game is to score more runs than the other team. The emphasis on runs scored has always placed a premium on two player-evaluation metrics: Batting average and RBIs (runs batted in).

Sabermetrics argues you should set these metrics aside in favor of on-base percentage. After all, you can’t score unless you get on base, and it doesn’t matter whether you get on base via a hit or a walk. The logic of sabermetrics is simple: By using more-valid-but-less-used metrics, you can acquire the right skills at a lower price.

Of course, winning attracts benchmarking, and rivals quickly copied Epstein’s approach. Epstein’s response: Keep refining the readiness-assessment process.

Neuroscouting. Neuroscouting uses a computer simulation to make the connection between a player’s cognitive function (recognizing a pitch) and motor skills (swinging a bat). A player who picks up a pitch five feet out of the pitcher’s hand will get on base more frequently than a player who doesn’t read the pitch until 20 feet or 30 feet out. Neuroscouting helped Epstein identify Mookie Betts as a top prospect in the 2011 draft. Betts is now a rising star.

Wins above replacement (WAR). Epstein has grown fond of WAR, a metric that estimates how many wins a player contributes to above a replacement player at the same position. Going into the 2016 season, WAR indicated that the Cubs excelled in starting pitching, first base, and third base. But, right field was identified as a liability. To fill the gap, Epstein acquired Jason Heyward in free agency.

Predictive analytics. Epstein is now experimenting with simulations to predict how a given team composition will fare in each game throughout the season. Inputs can be quite detailed and include things like ballpark where the game is played, time of day and pitcher-versus-batter matchups.

Beyond closing capability gaps, readiness assessment serves another purpose. In 2011, as Epstein’s tenure with the team began, Cubs owner Tom Ricketts asked when the Cubs would be ready to compete for a championship.

Epstein’s response: The Cubs would get worse before things could get better. Building a strong farm system and young talent meant that the Cub faithful would need to be patient. Epstein’s plan, however, leveraged the “rules” of the collective bargaining agreement, one that allocated larger draft budgets to losing teams. Losing early to win later enabled the Cubs to acquire players like Kris Bryant and Kyle Schwarber, who were key contributors to the 2016 championship run.

The readiness assessment is a pivotal part of Zara’s story. Zara, like Amazon, is a rule breaker; its fast-fashion business model is truly game-changing. So too are the supply chain capabilities needed to make fast-fashion work. Compare the Zara way to Gap’s approach (see Table 1).

Table 1
Zara Has Built Unique Capabilities to Change the Rules

The backstory: Amancio Ortega, Zara’s founder, got his start in the apparel industry as a 14-year old errand boy. A decade later, Ortega began developing his own designs, reproducing popular styles, but with his own twists. He soon realized that if he could bring trendy designs to market quickly and inexpensively he could wow consumers. Ortega simply needed to convert the concept into capabilities. Readiness assessment provided Ortega the insight needed to build the capabilities that would fuel Zara’s fast-fashion strategy. Let’s highlight two points here.

Infrastructure. Capabilities derive from infrastructure. For instance, Zara brings its 30,000 distinct designs from concept to rack in only 14-24 days (a 10X advantage over rivals). To reliably hit this target, Zara sources over 50% of all items from local subcontractors in Spain (over 75% in Europe) and preps all product to be rack ready in its 400,000 square meter DC called the Cube. Zara’s infrastructure links supply to demand.

Decision processes. At Zara, decision makers evaluate every investment based on how it will enhance Zara’s capabilities. For instance, Xan Salgado Badas, Zara’s head of IT, stuck with an outdated, DOS-based point of sales system (POS) for years because newer systems didn’t offer any strategic capability upgrade. Yet, when Zara figured out how to use RFID to gain insight into fashion trends and hasten replenishment, it rolled out the technology at a scale and speed that startled rivals (in 2016, Zara bought 500 million RFID chips, 16% of that year’s total RFID sales).

Being fast and driving trends pays serious dividends. Customers visit Zara stores 17 times a year, compared to three times to five times for rivals. That’s because they know if a trendy new outfit sells out, it may not be back. In effect, Zara has turned customers into treasure hunters, transforming stockouts into a sales pitch.

Along the way, Zara became the world’s largest fashion retailer and Amancio Ortega the world’s second richest person. But, Zara’s team also knows that readiness assessment and capability development must be a lifestyle, not an event. If Zara isn’t always getting better, a rival like BooHoo or ASOS might make Zara’s version of fast-fashion obsolete. Just like the Cubs and Zara, you are only as good as you are ready.

Assemble the Right Players; Build or Buy Needed Competencies

Redefining rules and assessing readiness are tough tasks. But, the outputs – a capability-development matrix and a talent-acquisition map – are critical to devising a winning game plan.

Bringing all of the right pieces together and molding them into a champion is equally daunting. Emotional fortitude is needed. Executives like Theo Epstein, however, embrace the team-building challenge. Team ego results when you holistically progress through the remaining 3Rs – right players, right roles and right relationships. Let’s explore how Epstein brings these Rs together.

Through experience or intuition, Epstein knows the best players aren’t always the right players. Many so-called super teams never hoist the Commissioner’s Trophy at season’s end. So, what type of player does Epstein look for?

Talent is critical, but even more so, Epstein seeks a mix of athleticism and positional skill backed up by EQ and a team-first mindset. After all, when a crisis arises – and it will during the course of a 162-game regular season – team ego decides whether the team steps up or collapses.

The better question is, perhaps, how does Epstein put the right mix of skills on the field? Like you, Epstein has two options. He can build competencies or he can buy them. To field a consistent contender, he must do both exceptionally well. Figure 2 depicts Epstein’s method.

Figure 2
Assembling the Right Players

Phase 1: Long game. The core of an Epstein team emerges from the draft. Young talent like Javier Baez (2011) and Kris Bryant (2013) is identified and developed. The process takes time, but it provides a big bang for the buck. Baez and Bryant both made pivotal contributions to the Cubs’ World Series run. Of note, when Epstein arrived in 2011, he began to trade valuable players that didn’t fit his vision and culture, giving the Cubs more draft picks.

Phase 2: Close key gaps. Epstein opportunistically closes key skill gaps by acquiring proven talent via free agency or a well-timed trade. Consider Jake Arrieta, a starting pitcher acquired from the Baltimore Orioles just before the 2013 trading deadline. Arrieta won the 2015 NL Cy Young Award and was the ace of the Cubs’ 2016 pitching staff.

Phase 3: Win now. By July 25, 2016, the Cubs had the best record in MLB. But, by Epstein’s estimation, the Cubs still lacked a critical piece: a hard-throwing lefty closer. To bring Aroldis Chapman, the hardest thrower in baseball (105-MPH fastball), to Chicago, Epstein traded four up-and-coming prospects – a steep price Epstein was willing to pay to win it all in 2016.

One more point: Epstein knows that the concept of right “players” extends beyond the playing field. To help make things click, Epstein brought on Joe Maddon, former manager of the Tampa Bay Rays. Maddon’s keen sense of strategy and a sabermetrics-driven willingness to tweak the batting order and defensive alignment helped position the Cubs to win a league-leading 103 games.

Simply summarized, getting ready to compete means bringing the right players on board, whether drafting undervalued prospects, signing free agents, making pivotal trades or signing a manager whose true talents are being underutilized.

Apple has shown an uncanny ability to bring the right players together to develop and deliver hit products and services. Figure 3 shows how Apple uses Epstein’s playbook.

Figure3
Apple’s Path to Developing the HomePod

Phase 1 – Long Game: At the turn of the millennium, Apple began to invest in what has become the source of its success – software. The iTunes Music Store, paired with iOS, set in place the foundation for Apple’s ecosystem, which consists of over one billion active devices worldwide and includes services such as App Store, Apple Pay, Apple Music and iCloud. Apple touches its owners’ lives every day – and in an increasing variety of ways.

Phase 2 – Close key gaps: By buying Siri in 2010, Apple forged into both the search and mobile “assistant” markets. More recently, in 2014, Apple acquired Beats Electronics, quickly integrating Beats Music into its own streaming service, Apple Music. Pundits, nevertheless, questioned Beat’s $3 billion price tag. But, Apple appeared to have a compelling goal: To close gaps that powered Google Android’s foray into Apple’s turf.

Phase 3 – Win now: In August 2016, Apple quietly acquired Turi, an artificial intelligence startup, for $200 million. Less than a year later, on June 5, 2017, Apple introduced HomePod, a device designed to “reinvent music in our homes.” The Beats acquisition now made sense. But, that’s not all. HomePod is a home assistant – Apple’s answer to Amazon’s Echo and Google Home. Turi’s machine learning makes Siri smarter, giving Apple the win-now capability needed for HomePod to become the central nervous system for the IoT-enabled home, a nascent market with fantastic growth potential.

Apple is seldom first to market, but the design, user-friendly interface and massive ecosystem that support Apple products and services make it a game changer. The result: Apple’s market capitalization hit $800 billion in 2017 – 2X Amazon’s. Consider two facts: Despite owning only 30% of the mobile operating system market, Apple earned 90% of the industry’s 2015 profits. And Apple earns developer loyalty by delivering 75% more revenue vis-à-vis Google Play, making App Store the go-to place for the latest and greatest apps. Bringing the right players to the game has made Apple a perennial industry champion.

Put Players in the Right Roles; Shift As Needed

Getting the right players is just one step in the team-building process. Jim Collins described what comes next: “Get the right people on the bus, the wrong people off the bus, and the right people in the right seats.” Matching players to roles is critical. Yet, the way most companies do this won’t deliver a true – i.e., inimitable – competitive edge.

To be a supply chain champion, you have to think differently about how to mix and match key capabilities. With Epstein at the helm, the Cubs tinker incessantly with player roles. That’s one reason Epstein hired Maddon: His teams led the league in distinct batting lineups and in-game positional shifts every year from 2006 to 2014.

The goal: Tweak the lineup to improve the Cubs’ chance to win any given game. Imagine sending your catcher out to pitch. Maddon did just that, inserting David Ross to pitch against the Milwaukee Brewers. Ross had never pitched in the MLB, but he recorded a perfect inning. Maddon’s penchant for moving players around led the Cubs to acquire Ben Zobrist. Maddon called Zobrist a “super-U,” someone who can play multiple positions.

In fact, during his career, Zobrist has played every position except pitcher and catcher. Proactive role shifting made the Cubs improbable season possible.

Best Buy

In 2015, many pundits had already written Best Buy’s obituary, claiming the electronics retailer couldn’t survive Amazon’s assault and consumers’ affinity for “showrooming.”

Yet, Best Buy did survive, showing how role shifting can create a competitive edge even against Amazon.

How did Best Buy do it? Consider three pivot points that enabled Best Buy to become an experienced retailer.

Reduced costs. To contest showrooming, Best Buy began matching prices. To reduce costs and make price matching economically viable, Best Buy deepened collaborative relationships with suppliers, especially in the areas of merchandising, forecasting and replenishment.

Repurposed bricks. For brick-and-mortar retailers, Amazon’s onslaught turned what once was an asset into a liability. Yet by shipping online orders direct from local stores and encouraging in-store pickup of online orders, Best Buy can deliver with Amazon-like speed, turning its 1,600 physical stores back into an asset.

Reimagined roles. Clicks and mortar wasn’t Best Buy’s only proactive role shift. Best Buy invited top suppliers like Samsung, Apple, LG, Microsoft, Sony and Google to set up shops within its cavernous stores. Best Buy charges rent and benefits from high-margin sales of high-end appliances and electronics.

What’s in it for suppliers? The opportunity to create immersive customer experiences without the cost of owning stores. Google Guides, full-time Google staff, offer tutorials and tech classes, helping customers discover, play and have fun. Samsung Experience shops are located in every Best Buy store.

The result of role shifting: In 2017, Best Buy shares surged to an all-time high. However, as the Cubs know from first-hand experience, some role shifts backfire. Boeing discovered this the hard way with the launch of its vaunted 787 Dreamliner. Poorly conceived and managed shifts cost Boeing five years in first-mover advantage and, by some estimates, $20 billion in design, production and launch costs.

To avoid such misfires, you really do need to do the work entailed by all five Rs. Despite the risks, as Table 2 highlights, game changers from rivals’ strategic moves to disruptive technologies dictate that you begin to experiment with proactive role shifting.

Table 2
Forces Driving Role Shifting

The Future of the Supply Chain Workforce Will Be Determined By Technology Talent

Cultivate the Right Relationships; Build Identity and Trust

Having the right players in the right roles does guarantee that your team looks good on paper. Sadly, looking good on paper is no guarantee your team will win once the game begins. What separates paper tigers from competitive champions, both on the sporting field and in the boardroom? Champions possess chemistry; that is, a common vision backed by a willingness to work together to achieve strategic goals – even if someone has to play a less visible role.

Critically, chemistry derives from trust. To fully sense the value of trust, consider this key fact from the auto industry: The most trusted automakers are also the most profitable. Your takeaway: Ultimate success requires that you invest in a culture of trust.

Theo Epstein is a culture guy. Organizational culture, after all, endures beyond the departure of talent. So, what are the core tenets of an Epstein-inspired culture? For starters, Epstein believes people perform best, especially under pressure, when they are part of something bigger than themselves. He also believes that environment matters. That’s why the Cubs’ new $300 million stadium renovation included a round clubhouse – 60 feet, 6 inches in diameter (the exact distance from the pitcher’s mound to home plate). Epstein wanted to promote collaboration by putting everyone within eyesight of each other and encouraging serendipitous conversations. The space eliminated hierarchy, engendering camaraderie and team identity. David Ross, the Cubs catcher, described the design as, “a subliminal message they’re sending.”

Beyond facilities, Epstein cultivates “lever points”other people who help drive the culture. Epstein then steps back and lets them do some heavy lifting. Joe Maddon, the Cubs manager, is an ideal lever for an Epstein-built team. “Try not to suck,” a key Maddonism, communicates big-time expectations without big-time pressure. Madden helped nurture the Cubs culture: Trust each other; do the right things consistently, including stretching for better results; have fun, but hold each other accountable; expect greatness. Epstein and Maddon know that if you build the right culture, that comes crunch time, someone will step up.

And that’s exactly what happened in game seven of the World Series. After digging out of a 1-3 deficit and building a commanding three-run lead going into the bottom of the 8th inning, the Cubs did the unimaginable – they gave up the lead and gave away the momentum. The 103 wins didn’t matter anymore; the dream was slipping away. Then, it began to rain – and culture took over. As the grounds crew came on the field, the Cubs exited toward the locker room.

Jason Heyward impulsively called his teammates into a weight room for a player’s only meeting. Never the outspoken leader, and struggling at the plate throughout the playoffs, Heyward reminded his teammates just who the Cubs were. David Ross recounted Heyward’s message: “He just said: ‘We’re the best team in baseball for a reason. Continue to play our game, support one another. These are your brothers here, fight for your brothers, lift them up, continue to stay positive. We’ve been doing this all year so continue to be us.’”

What would’ve happened if Heyward hadn’t spoken up? The Cubs may still have won. But, Epstein knows that you leave less to chance when you invest in the right culture.

Honda

Honda is a Cubs type of culture warrior.

More reliant on suppliers than rival carmakers, Honda’s buyer-supplier culture is truly unique, even a little quirky. Honda treats strategic suppliers as an extension of Honda itself.

Simply put, Honda invests in supply partners as if it is buying their capacity and capabilities, not just their parts. By the way, 90% of Honda’s spend is with strategic partners.

To help these partners succeed, Honda sends engineering teams to work on-site at suppliers for three months – and as long as 24 months – at no cost to the supplier.

The goal: Help suppliers optimize manufacturing and business processes. A typical best practices (BP) improvement initiative improves quality by 30% and labor productivity by 50%. More importantly, under Honda’s coaching, suppliers develop critical skills. Honda, in turn, gains stronger supply partners. Cost savings are shared 50/50 with the supplier.

Honda’s investments aren’t limited to BP projects. Honda expects supply partners to participate in corporate training, senior-leader business reviews and new product and target costing programs.

You may be wondering why Honda invests so much in its suppliers instead of switching to more capable suppliers. Honda’s response: Other suppliers would have similar problems. The nuanced answer, however, runs deeper.

Like Epstein, Honda is playing the long game, building a trusted team that can compete the “Honda Way.” Identity is critical.

One result: Honda is the most trusted carmaker among suppliers. Almost 40 years after launching U.S. operations, nearly all of Honda’s original supply team remains intact. The trust also shows up in Honda’s profitability.

Despite Toyota’s superior scale – producing twice as many cars per year – Honda has consistently delivered higher profit margins.

General Motors

Now, let’s go back to the early 1990s. J. Ignacio Lopez, General Motor’s purchasing czar, tore up supplier contracts, putting everything out to bid.

By saving $4 billion dollars, Lopez saved GM from bankruptcy. But, Lopez alienated suppliers, solidifying a culture of mistrust.

Over a decade later, supplier resentment still ran hot. Suppliers scored GM a 114 on the 2005 Supplier Working Relations Index(the lowest score ever – 300 points behind Toyota’s 415).

The real cost: Suppliers were holding back on GM, dedicating their best engineers and sharing their latest technology with more trusted partners like Honda and Toyota.

The rise of autonomous vehicles, however, forced GM in 2015 to acknowledge an existential threat, that its future depended on supplier innovation.

Compelled to change, GM began offering longer-term contracts to urge suppliers to more openly share their best ideas. Two years later, GM’s 2017 WRI score reached its all-time high of 290, lagging behind only Toyota and Honda.

The Journey Continues

The Cubs faithful view Epstein as a miracle worker. In truth, Epstein simply embraced core tenets supply chain champions put to work every day as they design and manage world-class value-creation teams. What then is your key takeaway?

Epstein succeeded by executing each R as part of an integrated 5Rs strategy.

In Epstein’s words:

“Acquiring the talent is only half the battle. The other half of the Cubs’ rebuilding required the organization to establish a winning culture. This meant devising a ‘Cubs Way.’”

In our experience, putting all five pieces of a 5Rs strategy together is quite a feat. Even supply chain champions struggle to implement all five Rs.

But, Maddon offers a word of advice: “The process is fearless.”

If you continue to work the process, the 5Rs will help you break whatever supply chain curse you’re facing.

About the Authors
Stanley E. Fawcett, Ph.D., is the Goddard Professor of global supply chain management at the Goddard School of Business at Weber State University. He can be reached at stan.e.fawcett@gmail.com.

A. Michael Knemeyer, Ph.D., is a professor of logistics at Fisher College of Business at The Ohio State University. He can be reached at knemeyer.4@osu.edu.

Amydee M. Fawcett, Ph.D., is an assistant professor of supply chain management at the Goddard School of Business and Weber State University. She can be reached at amydeefawcett@weber.edu.

Sebastian Brockhaus, Ph.D., is an assistant professor of supply chain management at the Boler School of Business at John Carroll University. He can be reached at sbrockhaus@jcu.edu.

Image Credit: Dan Vasconcellos

Related: How The Chicago Cubs Baseball Team Brought Data-Driven Decision Making to Wrigley Field

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Managing Operational Performance in Volatile Times
As part of our continued efforts to help clients adapt and improve operations and achieve a competitive advantage, this paper examines trends in supply chain operational performance over the past 15 years. Download Now!


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Strategic Supply Chain Management: 5 Disciplines for Top Performance
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Related Video: 5 Core Supply Chain Management Attributes of Successful Companies

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Today’s Millennial Supply Chain Professionals

APICS, the professional association for supply chain management, has published the results of its Millennials in Supply Chain research report, conducted by Peerless Research Group in conjunction with Supply Chain Management Review(SCMR) and the American Productivity & Quality Center (APQC).

A survey carried out in April 2017 was designed to gain insight into millennials as a critical segment of the supply chain workforce.

The report finds that millennials are focused, engaged, enthused and committed to working in supply chain management, and reveals that supply chain represents a sought-after, dynamic and rewarding long-term career choice for professionals in their 20s and 30s.

“The results of the report are eye-opening, especially when compared to the more senior supply chain professionals in leadership positions, who were part of a previous study from APICS and SCMR in 2016,” said APICS CEO, Abe Eshkenazi, CSCP, CAE, CPA.

“We see that more millennials started their career in supply chain, are moving around less, are highly satisfied with their jobs and see more opportunities for advancement in the field.”

APICS CEO Abe Eshkenazi

“Despite some noted frustrations, millennials are continuous learners and fast movers who are eager to advance”APICS CEO Abe Eshkenazi

The report shows millennials have a diverse interest in activities that span the end-to-end supply chain. Notably, the area that holds most appeal, supply chain design, and planning, is a role that touches all areas of supply chain.

The millennials surveyed also said they find their careers personally rewarding. Eighty-one percent feel they can make a difference in the supply chain field, 87 percent believe working in the field will help with their personal growth and development, and 88 percent agree that there are opportunities for advancement within the field.

Diversity topped the list of what millennials consider most important about the field and the companies for which they work. Eighty-five percent noted that supply chain involves a diverse workforce and encompasses people of all types, which additional findings that more women are now entering the field also reflect.

Respondents were roughly two-thirds male (61 percent) and one-third female (39 percent), compared to the 2016 survey of senior supply chain leaders, in which 76 percent of respondents were men while only 24 percent were women.

However, just as earlier research of senior managers in 2016 showed a pay gap between males and females, there is a gender wage gap among millennials. Men and women start at roughly the same salary, but the disparity grows larger as they move up the career ladder.

This disparity is chief among complaints from millennials surveyed, along with frustration around the attitude towards millennials by older generations in their organizations and a disconnected feeling from the big picture or a lack of purpose in the workplace.

“Despite some noted frustrations, millennials are continuous learners and fast movers who are eager to advance,” Eshkenazi concluded.

“To address the ongoing skills gap, industry expectations, priorities and communication styles must adapt to and embrace the different needs of this younger generation. Millennials are growing and learning on the job in an era of lean, optimized, end-to-end supply chains and are critical to the ongoing transformation of the industry.”

SC24/7 Search Term: Millennials

Millennials Don’t Just “Fall Into” Supply Chain

This generation comes to the field with early and prolonged commitment

A generation ago – or even a decade or two ago – if you asked a group of students about their career goals, the field of supply chain management probably wouldn’t rank highly, if at all, among their responses. Most Gen X and baby boomer supply chain professionals didn’t plan for, prepare for, and intend to work in supply chain. It was a field they found themselves in, having landed there as they evolved from previous roles in engineering, finance, planning or management.

Millennials in Supply Chain research report

Download the Research Report: Millennials in Supply Chain

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Utilizing Logistics Technology to Manage & Exceed Customer Expectations

We started our seven blog series on Logistics, Tech in Logistics, beginning with a blog on Managing the Dynamic Environment.

This blog is the second in the series (see below) and covers another important aspect in the logistics space.

With most logistic influencers clamoring for attention – from globalization to competitive markets – one unlikely contender suddenly rose to prominence as being one of the most significant performance indicators and a key differentiator of every logistics provider.

This interesting influencer is the customer!

The position of end customer and customer-centric organizations has been steadily rising in the list of top 10 priorities for every logistics provider.

Managing customer expectations and nurturing lasting relationships with their customer base is fast becoming a core focus of this landscape ensuring a distinct competitive advantage.

Interestingly, with the customer rising in prominence, the complexities of the relationship are also becoming exceedingly complex and demanding.

Customers have smartly realized their power, as is evident from their ever-increasing expectations and demands from the logistics ecosystem. What are these demands?

Let’s take a look.

The Ever-Growing List of Customer Expectations

Transparency and visibility across the ecosystem: The ability to track consignments from the placement of the order right up to delivery in real time is a common request. Track-and-trace involves having real-time information at your fingertips of the current status of consignments to the immediate intimation of unanticipated delays.

Time is money: This phrase has incredible relevance in the logistics ecosystem, with timeliness becoming a primary indicator of Perfect Order and a strong logistic differentiator. Logistics service providers are hence looking for solutions that will help them work in a time-bound manner.

Seamless, end-to-end process: The expectation of a smooth process from order to delivery and invoicing has become the norm. Customers comprehend the complexities of the landscape, yet expect the provider to manage these intricacies in the background. The emphasis on seamless logistics is hence challenging the entire network.

Managing disruptions in real time: Customers expect a foolproof plan with zero deviation in implementation, but in reality, logistics providers have to constantly battle to stay on plan. The possibility of things going wrong is quite high – from poor weather and vehicle breakdown to poor road conditions and change in route plan. Handling such sudden disruptions is one of the toughest challenges of the landscape.

On-the-go: Mobility-first approaches across verticals have placed a lot of importance on anytime anywhere access. From access to information to carrying out simple to complex tasks seamlessly across multiple channels – from mobiles to desktops – has highlighted hurdles in terms of efficient integration, version control, and other challenges.

Logistics companies are hence forced to look at options that will help them deliver a top-notch performance and unmatched customer experience, without compromising on cost.

 

The Magic of Technology

Yes, the customer wish list is long, but with the magic lamp of technology at their service, logistics providers are effectively meeting most the customer expectations.

Let’s look at a few examples.

Mobile-first access to the logistics network: Comprehensive mobile strategies go a long way in enabling a transparent logistics network and providing simple app-based interfaces to interact easily with the system for any type of information anytime from anywhere. This advantage certainly makes a huge difference in a world where ease of multi channel access and security are critical in ensuring customer satisfaction. The advent of Bots in Logistics Industry has raised the bar even higher.

Visibility and real-time track-and-trace: Knowing the exact status of their consignments in real time with minimal effort is crucial in building the customer’s confidence. If this feature includes the option to drill down extensively to dig out further information (such as projected time of arrival, consignment and transit information) through simple user interfaces, then it further cements a strong customer-provider relationship.

Robust systems to manage issues before or as they occur: An ideal system is so well oiled that there would never be any disruptions. But the reality is far from desirable. The entire route from point of origin to the very last mile has innumerable chances of unexpected delays and deviations. A technology-enabled, intuitive, and cognitive system can integrate embedded intelligence and data analytics to overcome this hurdle. This system automatically highlights possibilities of deviations and delivers data-based insights that will help the providers take well-informed decisions to overcome the disruption.

End-to-end platforms enabling a seamlessly integrated process: A smoothly flowing process that integrates not only multiple stages but also all stakeholders of the landscape is a key demand of customers. This demand can only be achieved by a process that delivers an easy process from request for quote to delivery. Such a well-orchestrated system closes all possible loopholes within the system and delivers accurate, consistent, and version-free information to every stakeholder – especially the customer.

Simplifying invoicing process: What scares most customers is not just the transit complications but also the painfully long order placement and billing process. Technology solutions such as sign-on-glass and combined invoices go a long way in generating POD with zero delays and immediately triggering the invoicing process.

Feeding the on-demand requests: It’s the fast food generation – where every aspect of living must be completed in a snap. This burden on the logistics world can be overcome by “Uberization” of the logistics landscape. Customized, on-demand sharing of transportation options are the most trending approaches logistics providers use to meet such sudden customer demands.

These indicators are a clear reflection of the power of the customer in today’s logistics landscape. The robust weapon of technology is the only solution for logistics providers to meet the ever-changing demand of the customers. But technology has a crucial buddy that simplifies all the complexities of the landscape – Data!

In our blog post “The Value of Real-Time Data Collection” we look at the importance of data – especially real-time data for the logistics network – and the options available to logistics providers to leverage data and solve the pain points of the system.

Tech in Logistics Blog Series

  1. Managing the Dynamic Environment
  2. Exceeding Customer Expectations
  3. The Value of Real-Time Data Collection
  4. Predictive Analytics for Decision Making in Logistics Management
  5. Importance of Data Enabled Visibility in Logistics
  6. Where’s Your Shipment Right Now?
  7. Automation in Logistics: Ideal or Attainable?

White Paper

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Uberization of Logistics Has Arrived: Be Distinct or Extinct
In this white paper, we describe why logistics service providers need to deploy technology as a core competence and differentiator and with the use of technology how they can stay ahead of the competition; tackle Uberization and create value for their customers. Download Now!

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Real-Time Supply Chain Visibility & Connectivity

Through the rich integration of experienced supply chain professionals, world class technology, and customer insights, C.H. Robinson is reinventing global supply chains by making them more prescriptive, automated and efficient.

Navisphere Vision continues to advance the powerful and proven capabilities of C.H. Robinson’s proprietary Navisphere technology platform.

Microsoft, an innovator in fulfillment and logistics capabilities and a customer of C.H. Robinson’s TMC division, has been using Navisphere Vision since its alpha release in 2016.

“Navisphere Vision helps us understand the things that we couldn’t before. It provides the visualization that connects data and the real-time events that are happening within our supply chain,” said Alaina Hawkins, senior manager of global logistics at Microsoft.

Alaina Hawkins, senior manager of global logistics at Microsoft

“Navisphere Vision provides the visualization that connects data and the real-time events that are happening within our supply chain”Alaina Hawkins,
senior manager of global logistics at Microsoft

“Navisphere Vision helps us make decisions on a more precise, real-time level so we can address any challenges that might occur, react in a less randomized fashion, create predictability throughout our supply chain, and increase collaboration so we can deliver our products to customers on time. It’s tremendously powerful.”

In addition to providing real-time visibility down to an SKU level, Navisphere Vision delivers insights and impacts of potential disruptions from weather, traffic or current events, as well as predictive analytics to help shippers make better, faster decisions.

This next generation of real-time supply chain visibilityenables shippers to improve customer service and cost controls through the management of inventory in motion, proactive status updates, limiting disruptions and risk mitigation.

Shippers can gain a single view of all global inventory to support working capital needs and cash to cash cycle management. Access to real-time global visibility, combined with new supply chain insights, empowers shippers with new agility, accuracy and real-time decision-making to stay a step ahead of the competition.

“The industry has seen supply chain visibility tools before, but Navisphere Vision represents the next generation,” said Jordan Kass, president of TMC.

“Not only is it global, but Navisphere Vision goes far beyond visibility and helps our customers predict supply chain disruptions before they even occur.”

“This solution provides unique benefits for our customers. Its ability to serve all global regions across any transportation mode, as well as layering in potential disruptions, provides our customers with powerful data, insights, and opportunities to make changes quickly,” said Chad Lindbloom, chief information officer at C.H. Robinson.

“Navisphere Vision utilizes API technology to aggregate all other supply chain and information sources into one single location, giving our customers the most streamlined, real-time solution available. And it brings a new level of machine-learning and data science the supply chain industry hasn’t seen to date.”

Related: C.H. Robinson Improves Contract Carriers’ Access to its Technology Platform via Mobile App

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