Current State of OmniChannel and Impact on the Supply Chain

How Does Omnichannel Impact
Supply Chain Operations?
August, 2016

Supply Chain Insights LLC Copyright © 2016, p. 2
Who Am I?
• Founder of Supply Chain Insights
• “LinkedIn Influencer”
• Guest blog for Forbes
• Author of 5 books: Bricks Matter (2012), Shaman’s Journal (2014),
Supply Chain Metrics That Matter (2014), Shaman’s Journal (2015),
Shaman’s Journal (2016)
• Partner at Altimeter Group (leader in open research)
• 7 years of Management Experience leading Analyst Teams at Gartner
and AMR Research
• 8 years Experience in Marketing and Selling Supply Chain Software at
Descartes Systems Group and Manugistics (now JDA)
• 15 Years Leading teams in Manufacturing and Distribution operations for
Clorox, Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and
Procter & Gamble.
Contact Information:
• Email: lora.cecere@supplychaininsights.com
• Blog: www.supplychainshaman.com (15,000 pageviews/month)
• Forbes: www.forbes.com/sites/loracecere
• Twitter: twitter.com/lcecere (7,700 followers)
• LinkedIn: www.linkedin.com/in/loracecere (112,000 followers)
• LinkedIn Influencer: www.linkedin.com/today/author/446631

Disclaimer: I am a Skeptic

A Social Scientist

A Fortune-teller of Sorts….

I Write for the Supply Chain Leader

Current State

Reflection

A Look at History

9 out of 10 Supply Chains are Stuck

The eCommerce Story

2006
2015
2006
2015
4
5
6
7
8
9
10
-0.09 -0.08 -0.07 -0.06 -0.05 -0.04 -0.03 -0.02 -0.01 0.00 0.01 0.02 0.03 0.04 0.05 0.06 0.07 0.08
InventoryTurns
Operating Margin
CVS Pharmacy Rite-Aid Pharmacy
Best Scenario
RAD
0.01, 5.70
CVS
0.06, 7.99
Average (Operating Margin, Inventory Turns)
Source: Supply Chain Insights LLC, Corporate Annual Reports 2006-2015 from YCharts
CVS and Rite-Aid
(2006 – 2015)

2009-2015

Historical Look at the
Value Chain

Who is Your Customer?
Start at
the
basket
Store needs
the product
Ship to
store
Sit in
warehouse
Ship to
warehouse
Make
Old View
New View

The Long Tail of the Supply Chain:
Growing Complexity

Bullwhip Effect

SHARED
VISION
+ SKILLS + INCENTIVE + RESOURCES + PLAN + LEADERSHIP = CHANGE
SKILLS + INCENTIVE + RESOURCES + PLAN = CONFUSION
SHARED
VISION
+ INCENTIVE + RESOURCES + PLAN + LEADERSHIP = ANXIETY
SHARED
VISION
+ SKILLS + INCENTIVE + RESOURCES + LEADERSHIP =
FALSE
STARTS
SHARED
VISION
+ SKILLS + INCENTIVE + PLAN + LEADERSHIP = FRUSTRATION
SHARED
VISION
+ SKILLS + RESOURCES + PLAN + LEADERSHIP =
GRADUAL
CHANGE
Source: J.P. Kotter
Collaboration: The Right Stuff?

Bar codes were first used at Marsh Supermarket in 1968

Process Shifts

First Moment of Truth
- choosing our brands
Second Moment of Truth
- using our brands
The Moments
of Truth
A.G. Lafley

Five Moments of Truth
The List:
• Digital
Recipe
• Digital
Coupons
• Online
Rating and
Reviews
The Basket:
• Shelf-sensing
• QR Codes
• In-store
coupons
• IP Address
Sensing
• Localized
assortment
The Check-
out:
• Downstream
Data
• Loyalty Data
Usage:
• Sentiment
Data
• Ratings
and
Reviews
Sustainable
Impact:
• Disposal
• Recycled
Content

Shape Demand
Sense Demand
Changes
Measure
Success
Manage
Bifurcated Trade
Build Value in
Demand
Relationships
Revenue Management

A Major Transformation
Picking the Each Rethinking Last
Mile Delivery
Mobile Proof of
Delivery
Endless Aisles

eCommerce Pure Plays

Retailer Online Store

Manufacturing Online Store

Click N’ Ship

Home Delivery

New Business Models

The Locker

Changing Role of the Store

• Freshness
• Quality
• Availability
• Assortment
• Competitive
Price
• Convenience
Shift in Power

Have we really delivered an
omnichannel experience?

Automation of the five moments of truth
in the purchase cycle through the use of
social, mobile, digital, and analytics
technologies.
Digital Path to Purchase

Rethinking Master Data
For OmniChannel

Master Data
B2C
B2B
Value Network
Your
Brand
To Drive Market Share with Top Customers there Is a
Need to Manage Master Data Outside the 4-Walls of the
Enterprise

Master Data
B2C
B2B
Value Network
Your
Brand
Item: GTIN is a globally unique
14-digit number used to identify
trade items, products, or
services.
Item: ERP Item Master
Effective Date
Weight/Volume
Dimensions
Selling Unit of Measure
Item: B2C website designation.
Item: Product Attributes
GMO, Nutrition,
Gluten-free, Portion Size

Five Moments of Truth
The List:
Item
GTIN
Attributes
The Basket:
PI
ATP
UA
The Check-
out:
EIN
UPC
Usage:
• Sentiment
Data
• Ratings
and
Reviews
Sustainable
Impact:
• Disposal
• Recycled
Content

Heightened Focus on Attributes
B2C
B2B
Value Network
Your
Brand
Attributes: Retail Attributes
Attributes: Product
Definition
Attributes: B2C Customer Attributes
Item: Product Attributes
GMO, Salt, Sugar,
Gluten-free, Portion Size

Supply Chains Don’t Play by the Rules
42
But,
what if
they
could?

Renewed Focus on Out of Stocks
B2C
B2B
Value Network
Your
Brand
Out of Stocks: Empty Shelf
(duration and quantity)
Out of Stocks:
Order Shortages
Out of Stocks. Items not available
ATP
Material Outages

Growth Through Test and Learn
B2C
B2B
Value Network
Your
Brand
Sales: Point of Sale data Harmonized with
Synchronized Data.
Sales: Shipments
Sales. Daily Sales Hourly
Material Usage

Rationalizing Assortment

Case Study: Internet of Things
Rethinking Supply
Chain Execution
Closed Loop
Replenishment

Listening
B2C
B2B
Value Network
Your
Brand
Retail Social Listening
Sentiment: Call Center
Sentiment. Rating and Reviews
Social Sentiment
Material Usage

Opportunity
at the Intersection
of the Social and Interest Graph(s)

Review Aggregation: Pros, cons and
best uses

Levi’s Uses the Like button on Facebook So
shoppers Can Rate New Product Launch

• Newell Rubbermaid
Listening: Newell Rubbermaid
#Future15SB @bwdumars

#Future15SB @bwdumars
Newell Rubbermaid

Listening: Lenovo

0
0
0
0
0
0
0
Canada
-Customer A calls about a blue screen on a Yoga
-Customer B posts on Facebook about his X220’s AC/DC adapter issues
Large Enterprise Client experiences 5 keyboard malfunctions in their latest
shipment. Complaints received through account executive
[Critical Situation]
Brazil
-Customer F submits a service from on
esupport.lenovo.com regarding
their W530 hard drive
Morocco
-Customers G & H comment on their
X220’s electrical issues on Twitter.com
-Customer I called about Yoga screen
issues
Australia
-Customer J write a review on
NewEgg.com about AC/DC adapter
issues on X220
-Customer K had an eChat with Lenovo
about Yoga screen issues
China
-Customer L wrote on Weibo about
Yoga screen issues
-Customer M calls about a Tablet 8
battery issues
Voice of Customer Comes in Many Forms
USA
-Customers C & D write X220 product
reviews on amazon.com and mention
issues with AC/DC adapters
-Customer E posts on
forums.lenovo.com that they are
experiencing blue screens on their Yoga

0
0
0
0
0
0
0
Lenovo
- 6 recorded issues about X220’s
AC/DC adapter
- 5 recorded issues about
keyboard issues on X1 Carbon
- 5 recoded issues about Yoga
screen
- 1 recorded issue about W530
hard-drive
- 1 recorded issue about Tablet 8
battery
One Voice – A Single View of Perceptual Quality

Wrap-up
• Omnichannel supply
chains are in
evolution
• Look at data
systems holistically
across the moments
of truth

About Lora Cecere
• Founder of Supply Chain Insights
• “LinkedIn Influencer”
• Guest blog for Forbes
• Author of 5 books: Bricks Matter (2012), Shaman’s Journal (2014),
Supply Chain Metrics That Matter (2014), Shaman’s Journal (2015),
Shaman’s Journal (2016)
• Partner at Altimeter Group (leader in open research)
• 7 years of Management Experience leading Analyst Teams at Gartner
and AMR Research
• 8 years Experience in Marketing and Selling Supply Chain Software at
Descartes Systems Group and Manugistics (now JDA)
• 15 Years Leading teams in Manufacturing and Distribution operations for
Clorox, Kraft/General Foods, Nestle/Dreyers Grand Ice Cream and
Procter & Gamble.
Contact Information:
• Email: lora.cecere@supplychaininsights.com
• Blog: www.supplychainshaman.com (15,000 pageviews/month)
• Forbes: www.forbes.com/sites/loracecere
• Twitter: twitter.com/lcecere (7,700 followers)
• LinkedIn: www.linkedin.com/in/loracecere (112,000 followers)
• LinkedIn Influencer: www.linkedin.com/today/author/446631

7 Classes
• Supply Chain Metrics
That Matter
• Building the Customer-
Centric Supply Chain
• The Market-Driven Value
Network Journey
• Making the Digital Pivot
• End-to-End Supply Chain
Orchestration
• Driving Improvement in
Decision Making Through
Supply Chain Planning
• Building Agility Through
Horizontal Processes

Current State of OmniChannel and Impact on the Supply Chain

Current State of OmniChannel and Impact on the Supply Chain

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