Supply chain experts share practices and predictions to improve retail operations.
After a two-year virtual hiatus, 10,000 founders, executives and investors from large retailers, branded manufacturers, startups and tech companies reunited at Shoptalk 2022 in Las Vegas from March 27-30. This year’s retail convention featured plenty of programming dedicated to supply chain and operations. “Not only is supply chain grabbing the news headlines, more surprisingly, consumers are talking about it, very actively. Simply put, if you are not leading in supply chain right now, you’re not going to win,” said Aimee Bayer-Thomas, chief supply chain officer of Ulta Beauty. So, how do you lead? Read on for the convention’s top takeaways.
1. Make inventory and labor more productive
Operations executives from Target to Tractor Supply talked about how they calibrate inventory across multiple nodes, from regional distribution centers to fast fulfillment centers to retail stores, in order to make sure it reaches consumers as quickly and cost-effectively as possible. That goes hand-in-hand with efficient labor, a mix of trained associates and increasing automation.
2. Automation continues to transform logistics
Lior Elazary, cofounder and CEO of InVia Robotics described his technology as “a buffer” between people and robots that enables warehouse associates to be productive instead of overworked. Meanwhile, Gatik cofounder and CEO Guatam Narang talked about revolutionizing middle-mile delivery with autonomous trucks. “It’s a good place to start because of fixed, repeatable routes that are shorter in nature,” he said of how his company helps retailers like Walmart.
3. Improve the delivery experience at every stage
For most retailers, delivery is the largest and fastest-growing expense. Last-mile and same-day delivery companies Uber, DoorDash, Shipt took to the stage to describe how they distinguish themselves among consumers, and while no one claimed to know what the future holds, it’s clear there is plenty of room for competition and improvement on speed, quality and cost.
4. Don’t build your own logistics infrastructure
American Eagle Outfitters made headlines after acquiring Quiet Logistics and Air Terra last year, signaling not only the value of fulfillment and delivery services, but also the trend towards sharing resources rather than competing for them.
“We thought about building our own. But the reality is, to do it ourselves would cost hundreds of millions of dollars, and we would always be subscale. We would never have the kind of efficiency, inventory productivity, cost advantages, and speed of a bigger network,” said American Eagle CEO Michael Rempell. Chief supply chain officer Shekar Natarajan declared, “Everyone has to realize, competing in supply chains is not an advantage. Supply chains at hyperscale are an advantage. The future is for supply chain is not more building more assets. It is utilizing assets better.”
5. Operations jobs are ready for their close-up
“Supply chain is not a back-office function. It’s a customer-facing function,” said American Eagle’s Rempell. “It was our fastest growing expense, and now it’s one that we’re leveraging. And it’s touching our consumers every day. Of course supply chain needs a seat at the table.”
6. Listen to your customers
Ulta Beauty’s Bayer-Thomas said that striving to understand customers’ needs prior to the pandemic – piloting ship-from-store, for example – made it possible to pivot when operations were forced into overdrive. “We continue to stay in tune so we can remain agile and evolve quickly when we need to, based on what our guests expect,” she said. In other words, test new models constantly, because they could be called upon to work at a moment’s notice.
7. Form partnership ecosystems
Even the most accomplished founders said they rely on experts outside their core competencies to help them serve customers better. “We shouldn’t be trying to do everything; what we need are the right partners,” said Gatik’s Narang. “It could be infrastructure for vehicle electrification, server maintenance, how to get trucks built faster. That’s the right way to go about it.” “If I can’t offer options or develop something on my own, then I have partners to help me,” said Letitia Webster, Tractor Supply’s SVP of omnichannel.
8. Back-end solutions are key to growth
“What we’ve seen with digitally native brands, especially those with plug-and-play front-end platforms, is that their back-end becomes complicated. Therefore, it’s difficult for them to scale into new channels. We give them the ability to start online but introduce them to wholesale, marketplaces and drop ship, and we make it more efficient,” said MasonHub founder and CEO Donny Salazar. “Because they don’t have the large tech teams we retailers used to have back in the day, it’s even more important to have a plug-and-play solution on the back-end.”