By Ann Grackin

Right now you have to go look up these guys if you don’t know who they are, and no apologies to readers who don’t know. Not only are they considered great writers in the 20th century, but they offer a stark contrast and frame the decision that you have—right now—for the future of your company and career!

So, Wal-Mart, Carrefour, Home Depot, Lowe’s, Staples, etc make a few changes in their technologies, and we the suppliers are stuck once again being forced to comply. If that is your attitude, you might as well get out of the game now. OK, enough rambling here. Things are happening in Retail, once the backwater and now the leaders in technology innovation.

I talked to Al Haberman, of UCC fame, on the current emergence of RFID in the business climate. I told him that I was writing The Big Report and was looking for some guidance. This conversation quickly moved from RFID in retail into the heart of the matter. It is worth sharing his comments and points the way for those of you who actually want to win in business.

“This is not about ROI—it’s about the vision of what can happen to my business when all the assets are visible, all the time. The outcome is so revolutionary.” What to tell my readers? “They really have to think about where I want to take my business? We are moving into another universe, and for a while, you will have to operate in the old and the new. Think about your data, create that database of the new, based on your company vision—move beyond two-dimensional data—and thinking. And create that new universe. But you also have to think about how to implement it all.”.

In this climate, people are not focused on vision. “The vision thing is about how to stay alive! You only have two choices: Fold-in, that is reduce cost; or Fold-out, grow market share and revenue.” Or maybe try to do both like the leaders?

I thought StaplesLink.com is a great example of the Vision thing. They do and learn from their endeavors, rather than just putting the squeeze on all the players. Going after the perfect order drives customer loyalty as well as puts your suppliers on notice that things have got to improve. Those who have dealt with Staples over the years—as customer, supplier, etc., are generally pretty impressed with their accommodating culture—not wanting to leave their suppliers behind as they migrated to the leading US office supplies company. They ran voice of the customer sessions to understand customer issues and ensure that the needs of the customer were embedded in their thinking. But they also did their homework, understanding what drives costs and profits, looking at issues like delivery costs and working to get customers to bundle their needs so they would create a larger order, thus reducing the ratio of delivery costs to sales. And then offer methods and enticements to both customer and suppliers to move to the higher path.

Best Buy is working on both outbound and inbound strategies to create a highly responsive supply chain. Let’s look at their cross channel integration strategy. Sometimes you can’t figure out precisely the ROI, “but you know it’s better—more seamless, less moving parts, better for the customers”, said Chap Achen, Fulfillment Systems Manager for Best Buy, at a recent Yantra Day event. “Better because it’s easier and there are more options for the customer because the Web and store experience are as one. Retailers understand more and more that getting and keeping customers is about giving them options and a reason to come back or click again and again.”

Best Buy on the inbound side, actually thought it would be a good idea to let their carriers know what their plans were. Their i2 transportation project allowed them to do that and more—consolidating LtL shipments, saving money on overall transportation costs, better on-time delivery. And scaled for Christmas! Best Buy is not sitting on these accomplishments! They are on their way to implementing more SC technology projects.

Saks has been a leader in inventory management and replenishment. In a recent webcast with Logility, and a presentation at the Retail Systems Show, Saks pointed the way to a continuing zeal to ensure a complete merchandize picture—on the shelf, visible across stores etc., obviously leading to customer satisfaction and increased sales.

OK, and Wal-Mart. It is interesting to note the thinking small philosophy embedded in the store operations there. Tom Coughlin, President and CEO of Wal-Mart Store Division, recently discussed, at the stockholder meeting, how they continue to grow despite their huge size, “Store of the Community (program) which tailors the retail assortment, mechanizing and philanthropic efforts of each store to the needs of the community”…as well as “the Store within the Store program which encourages each department manager to act like an independent merchant”, allow targeting of each community and eventually each and every customer. Big well-maintained systems are backing up that philosophy.

And Amazon. Their on-line ordering and logistics system are so good that they now can host your retail business. They continued to invest—they had the vision thing—when others were pooh-poohing them. If you compare the ordering experience vs. say an Expedia.com it becomes clear who knows what they are doing and who does not. From placing an order, to tracking, to dealing with order cancellations, refunds, and returns, Amazon treats you like a customer—all on-line. Expedia can take your money, but they can’t handle changes, refunds, and complaints. It's on the phone or snail mail. They try like heck to avoid responding, too. It’s only one way in. They talk about partnerships, but cross channel integration (handling the dynamics of the customer) has not been achieved. Amazon, on the other hand, is adaptive and allows for human error. It is relentless in plugging loopholes, or you won’t work for Jeff Bezos much longer. This is about relentless investment in understanding and caring for the customer and putting that knowledge into the systems and processes—no excuses! It does take focus and investment in technology—but that is what on-line business is about.

Conclusion

It seems to us that the results are obvious. Al Haberman continues. “I keep talking to thinkers of the past who keep talking about the ROI thing. They don’t get it—this is about survival! Your business is the question, not tired thinking. Get your data right, yes. Manage your staff and hold them accountable for following through. I see too many firms getting rid of their people; well, who is going to understand the customer? You really have to think about how you are going to cross over to the new universe.”

But a lot of these companies feel like the big guys are pushing them again. “The real key is to change the focus—and that has to come from the CEO. You have to do what your customer wants. Sure, you are being hit over the head, but do it because you want to do it! And again, this is about staying alive!”

Having watched the rise and fall of companies—and nations—we have to learn some lessons from history, don’t we? Read Blood in the Streets by James Dale Davidson and Sir William Rees-Mogg. I read this book more than ten years ago and it is not stale. It discusses how disruptive technologies change the power structures of nations markets etc.

OK, now back to TS Eliot, the existentialist who thinks the world will end “with a whimper”. You can choose him or Jack London who, “would rather that my spark should burn in a brilliant blaze than be stifled by dry rot”!

I leave you with one final thought from Al Haberman. “ROI is for conservative fuddy-duddies. Vision is the ammunition of a leader!” Al must be a reader of Jack London!

 

 

©2003 ChainLink Research, Inc.