CEO ViewPoint: Supply Chain's Critical Role in an All-Channel World

CEO Viewpoint:
Supply Chain’s Critical Role in an All-Channel World
Final Presentation
2014

Copyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
Presentation Overview
Presenting the highlights of the CEO Survey assessing ‘Supply Chain’s Critical Role in
an All-Channel World’.
Approach and
Respondent Profile1
Challenges &
Priorities for Growth
2
Evolution of the Retail
Operating Model3
Innovations in the Retail
Operating Model
4

Key Takeaways
INSIGHTS FINDINGS
 Transformation to omni-channel is a major challenge for CEOs
 Top priorities for growth: Expansion into new markets & regions, opening more stores, and
expanding through M&As
 Top risks that keep CEOs awake at night:
 Increasing competitive threats
 Margin erosion and cost reduction
 Attracting and retaining customers
 50% of CEOs say supply chain is a strategic differentiator. However, on average, CEOs ranked
supply chain investment at the bottom of the stack
 Germany is the most confident of regions followed by South Africa and USA
 65% of retail execs who consider supply chain a top priority are very confident about revenue
growth over the next 3 years

Approach and Respondent Profile

Our Approach and Respondent
Profile
The aim of this study was to provide key insights from CEOs on their business priorities
and the role supply chain plays in evolving businesses to be nimble, flexible and agile
to address market realities and the Millennial generation of shoppers.
of CEOs who
are very confident of
revenue growth over
the next 3 years. This
is 52% for EMEA,
56% for Asia and 54%
for the Americas.
54% of
participants were from
top 1000 retailers
including
27 of the top 250
53% responses
were achieved in
PwC‟s global retail
CEO study.
409 CEOs from
targeted via an online
panel.
8 markets
retail
executives were
interviewed by Forbes
Insights.
18
Russia 28
USA 155 China 56
Canada 23 UK 68
Germany 47
South Africa 11 Australia 21

Some Big Name Participants
Highlighting the global reach of the study with some of the known big name retailers who
participated in this study.
USA
 Food Lion
 Mary Kay, Inc.
 Levi Strauss
 Target Corporation
 Macy‟s
 Defence Commissary
Agency
 UPS Store
Canada
 The Medicine Shoppe
 Mainly Mac
 PM Industries
UK
 ASOS
 Lauren Conrad
 Topshop
 Mace
China
 Walmart
 Carrefour
 Swarovski
Australia
 Rainfresh
 Nilfisk Alto

Challenges and Priorities for Growth

Copyright 2014 JDA Software Group, Inc. - CONFIDENTIALCopyright 2014 JDA Software Group, Inc. - CONFIDENTIAL
‘Soaring energy or raw materials’ was sighted as being extremely likely to occur at 57%. However,
organizations believe this will affect their organizations to a less extent.
Natural disaster disrupting
a major trading –
manufacturing hub
Lack of stability in capital
markets
Exchange rate
volatility
Reputational damage to
our brand
The rise of the multiple
channel environment
(multi/omni/all)
Increases in unexpected
regulatory requirements
Likelinesstooccur
57%
34%
25%
14%
43%
53%
41%
Soaring energy or raw
material costs
57%
Increasing competitiveness
with emerging markets
56%
Military tensions affecting
access to natural resources
28%
Business continuity issues
with trading partners
27%
Q2.1 : In your opinion, how likely do you think
the following external threats are to occur?
Base range: 399-405
Extentofaffectonorganization
Increases in unexpected
regulatory requirements
Increasing competitiveness
with emerging markets
Natural disaster disrupting
a major trading –
manufacturing hub
Military tensions affecting
access to natural resources
Lack of stability in capital
markets
Exchange rate
volatility
Reputational damage to
our brand
The rise of the multiple
channel environment
(multi/omni/all)
Soaring energy or raw
material costs
Business continuity issues
with trading partners
29%
22%
21%
32%
34%
31%
36%
35%
27%
26%
Q2.2: In your opinion, if the following external
threats happened in the next 12 months, to what
extent would your organization be affected?
Base range: 333 to 387
37% of the
top 250
see the rise
of the multiple
channel
environment
as likely to occur
External Threats

Technology, diversification, and maintaining status quo are all being explored
to mitigate potential external threats and will affect their organizations to a less
extent.
Opportunities to prepare for the
external threats
“Multi-channel is more
disruptive but improving our
use of technology will help
prepare for the challenge.”
Canada, NA
Q2.3: Please share your thoughts about what you consider are the best opportunities for your organization to prepare for these external threats.
Base: 348– only asked to those who indicated the thread was „likely to occur‟
“Produce more goods in the
USA vs. other countries.”
USA, Top 251-1000
“Specialized departments
with experienced individuals
will mitigate our risk, such
as our supply chain.”
USA, Top 251-1000

“Keep on the same path we
are on and 'hopefully' ride
any unexpected outcomes.
Situation too unpredictable
to forecast.”
UK, Outside Top 1000
extent.
external threats
“We will seek local talent in
specific markets. We have
invested heavily in systems
that facilitate cross-channel
deployment and execution.”
USA, Top 251-1000
“We should look at
diversifying our labour base
and outsource some of our
processes to cheaper
options abroad.”
South Africa, Outside
Top 1000

extent.
external threats
“We are delaying any new
expenditures with more than
3 year payback and looking
for acquisition opportunities.”
USA, Outside Top 1000
“Stay private and re-invest in
the company.”
USA, NA
“Leverage future alternative
resource providers, self
capitalization, and
diversification.”
USA, Top 251-1000

Internal Challenges
‘Declining customer base – losing market share’ has been identified as having the greatest
effect on organizations, however, they are less likely to occur compared to other challenges.
Lagging research and
development and innovation
Declining customer base –
Losing market share
Data security threats
Inability to finance growth
Operational capacity
Human capital strategy –
Workforce management -
Talent shortages
57%
21%
18%
17%
24%
25%
23%
Competitive Threats 41%
Cost reduction –
margin control
39%
Failing to keep pace with
technological advancements
20%
Failing to meet customer
expectations across all
channels (multi/omni/all)
19%
Q3.1: In your opinion, how likely do you think
the following internal challenges are to occur in
your organization?
Data security threats
Lagging research and
development and innovation
Operational capacity
Human capital strategy –
Workforce management -
Talent shortages
Declining customer base –
Losing market share
Cost reduction – margin control
Inability to finance growth
Failing to keep pace with
technological advancements
Competitive Threats
Failing to meet customer
expectations across all
channels (multi/omni/all)
27%
25%
25%
29%
32%
28%
37%
32%
27%
26%
Q3.2 In your opinion, if the following internal
challenges occurred in the next 12 months,
to what extent would your organization be
Affected? Base range: 401 to 405
41% of the
top 250
retailers see data
security threats
greatly affecting
their organization
11% of the
top 250
retailers see
human capital
strategy –
workforce
management -
talent shortages
as greatly affecting
their organization
Likelinesstooccur

Investing in employees and their development is a common theme in tackling
potential internal challenges.
internal challenges
“Increase automation and
invest in other efficiency
improvement areas.”
Q3.3 Please share your thoughts about what you consider are the best opportunities for your organization to prepare for these challenges.
Base: 278– only asked to those who indicated the thread was „likely to occur‟.
“Increase minimum wage;
optimize health care benefits
focusing on preventative
care.”
USA, Top 251-1000
“Competition is probably
going to happen but keeping
up and exceeding
expectations of our ranks of
customers will keep us in
the lead.”

internal challenges
To make sure we are
currently investing in those
employees working for us
today and tapping into their
passions, their talents and
performance.”
“We continue to engage
government to be able to
import specialised talent
where required.”
South Africa, Outside
Top 1000
“Our industry is changing
rapidly. Continuous
improvement in sourcing
and technology is on-going.”
Canada, NA
:Q3.3 Please share your thoughts about what you consider are the best opportunities for your organization to prepare for these challenges.
Base: 278– only asked to those who indicated the thread was „likely to occur‟.

internal challenges
“Our opportunity to prepare
is directly related to our
ability to control and reduce
our cost of operation.”
“In-house training and
development strategy,
strengthening, internal career
path mapping and
development.”
UK, NA
“Keeping pricing competitive
in the open market of our
products to mitigate
threats.”
Canada, Outside Top 1000
Q3.3 Please share your thoughts about what you consider are the best opportunities for your organization to prepare for these challenges.

Business priorities and capability
improvements
„Expansion into new regions/markets‟ came out top in terms of the Top Rank.
Timescales
48% 52%
39% 41%
32% 46%
47% 41%
51% 42%
43% 39%
27% 28%
45% 35%
33% 39%
12 Months 3 Years
Q4.1: Please consider the business priorities for your
organization and rank the top 3 from the following list.
Base: range: 58-209
Q4.2: Where are you prioritizing capability improvements for your organization (a) in the
next 12 months and (b) in the next 3 years? Base range: 108 to 200
65% of
Top 250
retailers are
prioritizing
expansion into
new markets in
the next 12 months
Expansion into new
regions / markets
Expansion
by opening
new stores
Expansion through
mergers and acquisition,
joint ventures or strategic
alliances
Investing in new product
technology
Up skilling your employees /Attracting
and retaining talent
Spending capital on creating new
customer experiences
Decrease our market footprint to focus on core offerings
Accelerating time to market and responsiveness
Build manufacturing and distribution capacity / supply chain
99
60
57
54
42
34
24
22
11

Evolution of the Retail Operating Model

It dilutes attention
from shareholder
metrics and
shareholder
concerns
6%
Priority of supply chain management
40
20
60
80
100
%
23% top
priority
51% high
priority, but
not the top
priority
19% medium
priority
6% low priority
Over half of respondents believe Supply Chain Management is a high priority,
but not the top priority for their organization. The main reason for this is that
30% indicated „it is in better shape than other areas of the business‟.
Not a top priority because…
*3% Otherr *3% Unsure *2% Preferred not to respond
30% of
Top 250
see it as a
top priority
It‟s in better shape
than other areas
of our business
30%
It would require
too much change
across our
business i.e.
retraining staff,
upgrading our
technology
19% Lack of financial
resources
available to invest
in this area
10%
Behaviour /
attitude / lack of
board sponsorship
13%
It is too tactical
14%

Supply chain maturity levels
Three-fifths of participating retailers describe their organization as being a level one or
two for supply chain maturity.
Level 1.
Functional Focus
Retailer has discrete
supply chain
processes and data
flows. Resources are
managed at
department level
and performance
managed at functional
level.
Retailer has a
companywide process
and data model which
is continuously
measured at the
company, process
and diagnostic levels.
Level 2.
Internal Integration
Retailer has strategic
partners throughout
the global supply
chain who collaborate
to an action plan,
enforce common
process and data
sharing and manage
performance.
Level 3.
External Integration
Retailer has
technology-enabled
solutions that support
a collaborative supply
chain strategy
resulting in real-time
planning, decision-
making and
execution of their
supply chain that
responds to customer
needs.
Level 4.
Cross-enterprise
collaboration and
optimization
Top 250: 15%
Top 251 to 1000: 25%
Outside top 1000: 24%
Top 250: 33%
Top 251 to 1000: 46%
Top 250: 7%
Top 251 to 1000: 8%
Top 250: 33%
Top 251 to 1000: 18%
Q7: Which of the following best describes your organization in relation to its supply chain management today?
Base: 404, Note: „Unsure‟ and „Prefer not to respond‟ was 10%
17%23% 37% 13%

Leveraging supply chain operations
Half of retailers believe supply chain is a strategic capability to be a low-cost provider,
is a competitive advantage in sourcing products, and is a strategic capability to
drive customer service.
Top 250: 38%
Top 251 to 1000: 58%
Top 250: 38%
Top 251 to 1000: 58%
Top 250: 63%
Top 251 to 1000: 55%
Top 250: 42%
Top 251 to 1000: 37%
Q8: How do you leverage supply chain operations across your organization?
Base: 117 to 189
50%
It is a strategic
capability to be a
low-cost provider
Top 250: 33%
Top 251 to 1000: 34%
80% of
Chinese retailers
50%
It is a competitive
advantage in
sourcing required
products
50%
It is a strategic
capability to drive
customer service
34%
It is a strategic and
competitive
differentiator for
flexibility
31%
It drives product
quality
61% of Cross
Enterprise Collaboration
and Optimization retailers

The role of supply chain
Only 15% of retailers strongly agree that their supply chain is sufficiently resilient to any
possible external threat.
Top 250: 22%
Top 251 to 1000: 19%
Top 250: 22%
Top 251 to 1000: 30%
Top 250: 33%
Top 251 to 1000: 29%
Top 250: 22%
Top 251 to 1000: 35%
Q10.1 Please consider each of the following statements and indicate your personnel level of agreement with each one
Note: Results presented are those retailers who selected „strongly agree‟
Base: 407 to 409
Increasing product
breadth and assortment
is critical for continued
revenue growth
Our supply chain is
sufficiently resilient to
any possible external
disruptions
Our supply chain operation
is a competitive
differentiator in the market
for our company
Investing heavily in supply
chain management solutions
is a critical area of our
financial investment for the
next five years
15% 25% 26% 24%

Areas supporting multi-channel
operations
45% of respondents consider ‘Planning’ to greatly support their multiple-channel
operations…and will affect their organizations to a less extent.
Production 43% 30%
Manufacturing 38% 29%
Planning 42% 45%
Sourcing 43% 39%
Merchandising 41% 37%
Logistics 37% 43%
Store Operations 39% 32%
Some extent Great extent
Levelofextent
68% of Chinese
retailers
believe
Merchandising
supports supply
chain to a
great extent
54% of Chinese
retailers believe
Store Operations
supports supply
chain to a great
extent
Q9: To what extent, if at all, do each of the following areas support your multiple-channel (multi/omni/all) operations?
Base range: 403-406

Innovations in the Retail Operating Model

Maximizing product availability
came out top in terms of the Top Rank, as
well as through the composite scoring.
Q12.1: Please consider the business priorities for your
organization and rank the top 3 from the following list.
Base range: 168-261
Improving
how we use
merchandising,
positioning
Increasing consumer choice
through combined in-store
and online selling
Offering different prices to
different customer segments
Effectively leverage promotions
to maximize margins
Ability to customize and personalize
the shopping experience
114
103
86
43
29
28
Most important actions to gain a
competitive advantage

Capability of organizations to
currently deliver
„Maximizing product availability, range and assortment across all channels‟ scores well with 29% of
respondents ‘strongly agreeing’ that they have the capabilities to deliver this.
Q9: To what extent, if at all, do each of the following areas support your multiple-channel (multi/omni/all) operations?
Base range: 403-406
4
6
5
13
7
7
1
1
1
1
20
19
21
17
20
18
43
42
39
49
45
45
24
26
21
24
23
28
Ability to customize and
personalize the shopping
experience
Effectively leverage
promotions to maximise
margins
Offer different prices
to different consumer
segments
Increasing consumer
choice through
combined in-store
and online selling
Improving how we use
merchandising, etc. to
offer the ultimate in
store experience
Maximising product
availability, range and
assortment across all
channels
Disagree Strongly Disagree Neither agree nor disagree Agree Strongly agree
1
Unsure
Prefer not to
respond
2 3
2 2
2 2
3 2
2 3
2 2

Retailing in 2020
Respondents believe ‘The use of ‘Big Data’ is extremely likely to occur by 2020 and that this will
have a great impact on their organization.
The pressure for cash flow, combined with
the need for speed, will cause many retailers
to consider on-shoring versus off-shoring to
fulfil customer expectations)
Shoppers will aggregate buying power into
buying groups, and retailers will respond
with teams dedicated to managing them and
be able to employ short-term promotions for
purchase advantage or resale
Benchmarks of global formats will spread
more rapidly, and retailers will adapt global
best practices swiftly to meet the needs of
their markets
Technology-enabled transparency will provide
shoppers with understanding of everything
from product origin to brand legitimacy
Technology-enabled, customer-centric
transparency will allow seamless checkout
Retailers will enter into pricing dialogues
with customers in the future
Shoppers will experience retailers as a single
brand consistently across all points of contact
57%
40%
39%
37%
45%
48%
49%
44%
The use of „Big Data‟ mining will mean
that retailers will be better prepared to
have pricing dialogues with their best shoppers
52%
The pressure for cash flow, combined with
the need for speed, will cause many retailers
to consider on-shoring versus off-shoring to
fulfil customer expectations)
Shoppers will aggregate buying power into
buying groups, and retailers will respond
with teams dedicated to managing them and
be able to employ short-term promotions for
Purchase advantage or resale
Benchmarks of global formats will spread
more rapidly, and retailers will adapt global
best practices swiftly to meet the needs of
their markets
Technology-enabled transparency will provide
shoppers with understanding of everything
from product origin to brand legitimacy
Technology-enabled, customer-centric
transparency will allow seamless checkout
Retailers will enter into pricing dialogues
with customers in the future
Shoppers will experience retailers as a single
brand consistently across all points of contact
57%
30%
26%
25%
26%
29%
31%
26%
The use of „Big Data‟ mining will mean
that retailers will be better prepared to
have pricing dialogues with their best shoppers
32%
Q14.2: In your opinion, if the following occurred by
2020, to what extent would your organization be affected?
Base range: 325-339
Q14.1: Please consider each of the following statements about
the potential future state of retailing, indicating your view on how
likely each are to occur by 2020.
Likelinesstooccur

future state of retailing
“Get smart on Big Data and
what it can do to give
customers the appearance
of customization without
actually doing it.”
USA, Top 250
Q14.3: Please share your thoughts about what you consider are the best opportunities for your organization to prepare for these future
opportunities.
“Tracking customer
purchases through data
mining.”
“Better educate
employees, understanding
policies.”
Using shopper/customer data and investing in technology are key ways to
prepare organizations for the future.

“These changes are
inevitable in Retail and
those who embrace the
changes forthcoming, as
our company is, are
positioned to thrive.”
“Having a powerful brand.
Ensuring our brand message
is consistent across omni-
channels.”
USA, Top 251-1000
“We have to expose
ourselves to overseas
competitors.”
USA, Top 250
opportunities.

“Technology and Big Data
analytics will play a huge
part of our business
strategy.”
USA, Top 251-1000
“We must be willing to invest
in the cutting-edge
technology that will allow us
to deliver the best possible
shopping experience.”
USA, Top 251-1000
“Continued quest for new
and appropriate interactions
with clients.”
opportunities.

CEOs anticipate by 2020 the shoppers and the shopping experience will be...
Shopper expectations in 2020
“The shopping experience
will be totally transparent.”
“Demand for higher quality at
a lower price point, available
from whichever platform they
choose to make use of.”
Australia, Outside
Top 1000
“Speed to market will
dominate.”
Australia, NA
Q15.1: How do you expect that shopper expectations will change for your business by 2020?
Q15.2: What role will retail operations play in supporting that?
Base: 352 - 357

extent.
“Synchronize sales between
online and offline.
Innovative payment
methods and one-stop
shopping”
China, Top 251-1000
“Retail sales staff will
become highly educated in
not only the product, but also
best practices in counselling
their customers.”
“Be able to adjust quickly.”
Base: 352 - 357

extent.
“The shopper will expect
more service.”
USA, Top 251-1000
“Quick online
shopping, brick-and-mortar
pickup, in-store mobile check
out.”
USA, NA
“Consumers will have the
ultimate power.”
USA, Top 251-1000
Base: 352 - 357

Profiling the retailers
Views were provided by more than 400 CEOs of large retail organizations across 8 countries.
Australia Canada China Germany Russia South Africa UK US TOTAL
Total Responses 21 23 56 47 28 11 68 155 409
Retail Sub-sector:
Apparel 0 0 0 3 1 1 4 11 20
Category Specialist 4 7 4 8 4 3 27 29 86
Clubs 1 1 1 1 1 0 1 6 12
Convenience 2 1 0 0 1 2 3 7 16
Department 1 0 32 1 1 0 3 9 47
Discounter 1 0 0 2 1 0 0 6 10
Drug 0 1 0 1 0 0 1 1 4
Mass 2 1 2 14 5 0 3 14 41
Non-Store Retail 3 8 2 6 10 0 10 14 53
Supercenter 0 1 10 2 3 0 2 11 29
Supermarket 1 1 5 1 0 4 3 10 25
Other 5 2 0 6 0 1 0 22 36
Q18: Please select which of the following best describes your business.
Base: 409
Note: ‘Unsure’, ‘Prefer not to respond’ and ‘Not answered’ – 30.

0
10
20
30
40
50
Sub-sector breakdown
Category Specialists represent more than one fifth of all responding retailers.
% Sub-sector
Q18: Please select which of the following best describes your business.
Base: 409
2% Wholesalers
1% Car dealerships
1% Cosmetics
1% Hardware
1% Footwear
21
13
11 10
7 6 5 4 3 3
1 2
7 7

Revenue profile (USD)
Nearly one fifth of responding retailers had revenues exceeding $1 billion.
Q20: Which of the following best describes the annual worldwide revenue of your entire organization in US Dollars?
Base: 409
Australia Canada China Germany Russia South Africa UK US TOTAL
Total Responses 21 23 56 47 28 11 68 155 409
Annual Revenue:
More than $5B 0 2 1 2 3 0 3 16 27
> $1B to $5B 0 0 6 6 0 0 10 27 49
> $500M to $1B 5 2 6 1 2 0 2 15 33
> $250M to $500M 0 2 37 18 17 2 6 24 106
> $100M to $250M 4 8 3 7 3 2 13 26 66
Less than $100M 8 8 3 9 3 5 19 37 92
Note: „Prefer not to respond‟ and „Not answered‟ – 36
Top 250 7%
251-1000 46%
Outside Top 1000 38%
Retailer tiers…
$50 million-
$100 million
6%
$15 million -
$50 million
6%
$5 million –
$15 million
10%
Less than $5
million
0%
Note: „Prefer not to respond‟ and „Not answered‟ – 9%
22
16
26
8 12
7 More than $5 billion
$1 billion -$5 billion
$500 million-$1 billion
$250 million-
$500 million
$100 million-
$250 million
Under $100
million

Retailer‟s years in business
Q17: How long has your organization been in business?
Base: 405
Nearly one-quarter of the participating retailers have been in business for over 30 years.
This is most prevalent with the Top 250 where two-thirds have been in business for over
30 years.
Under
10
Years
23%
11 to 20
Years
35%
21-30
Years
19%
30+
Years
23% Of the Top 251-
1000
retailers 49% have
been in business
for 11-20 years.
Of the Top 250
retailers 67% have
been in business
for more than 30
years.

Confidence in revenue growth
Q1: How confident are you about your organization‟s prospects for revenue growth…during
the next 12 months? …during the next 3 years?
Base range: *Canada – 23, USA – 149 to 151, UK – 66 to 68, Germany, 45 to 46, *South
Africa – 10 to 11, *Russia – 28, China – 55 to 56, *Australia – 21
Retailers in Germany are the most confident of revenue growth over the next 12 months
while retailers in South Africa and USA are the most confident over the next 3 years in
terms of those who are ‘very confident’.
of the Top 250
retailers are very
confident of revenue
growth over 3 years.
13%* 17%*
Canada
30% 47%
United Kingdom
27%* 60%*
South Africa
43% 50%
Russia
38% 57%
Australia
12 Months
3 Years
69%
44%* 60%
USA
54%* 58%*
Germany
38%* 55%
China

Reporting structures
Q11.1: Within your corporate structure, who do your organization‟s supply
chain executives report to? Note: Question is please select all that apply
Base: 408
Three-quarters of retailers indicated that the Supply Chain Executive reports directly
to the CEO.
COO Other
CFO
CIO
21%
CEO
74%
3%
CIO
13%
3%
Supply
Chain
Executive
of the Top 250 retailers are
very confident of revenue
growth over 3 years.
69% of German retailers
report directly to the CEO
96%
of the Top 250
retailers report directly
to the CEO
39%

CEO ViewPoint: Supply Chain's Critical Role in an All-Channel World

Recomendados

Recomendados

Más contenido relacionado

La actualidad más candente

La actualidad más candente (20)

Similar a CEO ViewPoint: Supply Chain's Critical Role in an All-Channel World

Similar a CEO ViewPoint: Supply Chain's Critical Role in an All-Channel World (20)

Más de JDA Software

Más de JDA Software (20)

Último

Último (20)

CEO ViewPoint: Supply Chain's Critical Role in an All-Channel World

Notas del editor