Why The Chief Supply Chain Officer Needs to Understand Customer Experience in Detail

 Thesis:  The Chief Supply Chain Officer (CSCO) needs to be very close to the Chief Customer Officer or whoever in the enterprise is responsible for the customer experience. 

Discussion: 

This article is for those who are working supply chain within a company that makes or sells things.  We know the 3PL world needs to have a customer experience strategy but what about the CSCO within a manufacturer or retailer?  Isn't their job to just reduce costs and become "efficient"?  NO!  For those who have read my writings over the last 5 years you know I believe the single biggest job of the CSCO is to drive revenue.  In this day and age you drive it through customer experience (CX) even more than through product.  

Let's look at the big advancements which have propelled massive sales growth for key players during the pandemic.  A few examples:

1. Buy on line and pick up in store
2. Buy on line and have curbside pick-up
3. Use your smartphone to activate and pay for fuel at key gas stations (I do this a lot at Shell).
4. Use of stores as micro fulfillment centers

I could go on and on but all of these are supply chain solutions, empowered by technology to drive customer experience.  Notice nothing in that list had anything to do with product but rather had to do with how a customer or consumer acquires the product.  If you are back in the supply chain don't think you are immune from this trend because your customer has the same needs as a consumer.  They want a frictionless experience to make their business more impactful to the consumer.  You can help them with that and that will endear you more to your customer, they will buy more and they will be more loyal.   So, a quick conclusion for CSCO's to take action in this space:

1. Get to know and partner with the person in your company who is in charge of the customer experience.  A lot of times this is in the sales or marketing area.}
   
2. If your company does not have a person who owns this then take extreme ownership and take charge of it. 
3. Ensure your supply chain strategy supports everything your company is promising in their go to market and customer experience plans.  Nothing is worse than a supply chain strategy which is different than the go to market strategy. 
4. Consistently come back to the customer experience and use data such as net promoter scores (NPS) to determine if your supply chain is meeting the customer expectations.  

The customer and the consumer have the power.  You will differentiate yourself and your company if your supply chain focuses on the customer experience and "wow'ing" them each and every day. 

Post Script:  I think of this today and had to write about it industry lost a legend this week:  Tony Hsieh.  Tony founded Zappos and with it founded a company which was legendary for differentiating itself through customer experience.  How do you differentiate the selling of shoes?  Through Customer Experience! He built the company from nothing and sold it to Amazon for over $1bl.  We should all focus on CX like Tony did. 

 Rest in Peace, Tony Hsieh.  

By Charlie Llewellin from Austin, USA - tony hsieh, ceo, zappos.comUploaded by Edward, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=97091081

There is No "Fast Following" in Today's Technology

There have been a lot of supply chain learnings as a result of the COVID-19 environment and there is nothing more important than the lesson of technology.  Technology has separated the haves and have nots in just about every industry.  Those companies which have been able to adapt are thriving even in this stressful time.  Those who did not have the core technology available, or have been unwilling to invest in the technology, have suffered and many have filed bankruptcy. 

As if to prove this case, look at a 4  industries and you will see they have come down to duopolies or maybe three to 5 companies which own the industry.  Think of this:

1. Home Improvement - Two huge players in Home Depot and Lowes
2. General Store Retail - Target and Walmart
3. E-Commerce - Amazon and Wayfair
4. Pure Technology - Apple, Google (Alphabet), Facebook (Advertising). 

You can go on with this but the point I am making is the companies which invested in technology early have thrived and are so far ahead of most of their competitors it is very likely those competitors cannot catch up.  Technology does a few things for these companies:

1. It makes them infinitely scalable.  Meaning they can scale to huge sizes and add little to no cost to the company.  Their cost per unit decreases dramatically as they grow.  
2. It allows them to be incredibly flexible and resilient.  Think of Walmart and their now infamous scale with pick up grocery business.  Walmart e-commerce business is up 97% YoY.  This would not even be possible without the underlying technology already in place. There are very few companies in the world which could handle a 97% increase YoY and have any reasonable chance of still functioning.  
3. It makes the customer experience far better because the technology allows you to customize the experience to the person.  You don't need to "group" people but rather, through the technology, you can customize the experience.  Someone wants to come into the store, you have a solution for that.  Someone wants curbside pickup, you have a solution for that. Someone wants it brought to their home, you have a solution for that.  Someone wants the products delivered to the trunk of their car (specific models allow Amazon to open the trunk of your car and put product in it), you have a solution for that.  
4. Because the technology is cloud based and built on the cloud it allows for the ability to grow dramatically very quickly.  Think about this:  In December of 2019, Zoom hosted 10 million daily meeting calls.  By April, they were up to 300 million per day.  

Virtually all of this are supply chain solutions which have made these companies leaders in their industry.  So, what lessons have we learned?

1. Technology allows companies to become dominant in their industry. 
2. Technology allows scale
3. Technology allows companies to be resilient in the face of adversity;  It actually allows those companies to thrive. 

And finally, there is no "fast following".  Walmart, because of its resources, has been able to catch up to Amazon but this is a rare example - in fact it may be the only example.  Those who get behind, will be behind forever and, ultimately, will be left behind.

The Final 3 Feet Have Become The Most Important in The Supply Chain

We have talked about "the final 3 feet" before which is defined as the leg of the supply chain where product is brought from the back room to the shelves.  However, in this COVID-19 world, the final 3 feet have really become the final 5 feet as there is a building expectation that the store will bring the product to the car and put it in the trunk for your.  People do not necessarily want to go in the store.  My thesis is the stores which do this really well will win and they will beat Amazon.

So, I have done some of my own research as I have not been in a store for at least 1 month yet I have bought many things.  I have used either Amazon or I have used the buy on-line / curbside pick-up process and I can emphatically say that when the latter is done right, it is by far the best experience. The inverse is true however.  When it is done wrong it is such a pain and so frustrating I just will never go back.  Here are the elements of a great curbside pick-up process (This is NOT buy on line, pick up in store - BOPIS as I do not go into the store.  This is Buy On-Line, Deliver to my Car).  

1. A seamless web presence which allows me to buy what is in inventory at the local store.  Take payment so there is a complete touchless process when I arrive at the store. 
2. An alert process which tells me when the order is ready. 
3. A tracking method, using my cell phone, which tells you when I am at the store and in the parking spot. 
4. A well established location to park - good signage - easy to find. 
5. A numbering system on the parking location to make it easy to find me. 
6. A "through the window" confirmation process (Show ID, Scan email etc.)
7. Associates put in the trunk. 
8. Associates need to be the best customer service people and need to be in full PPE (Mask and gloves).  

While many stores have done a good job at this, I have yet to be in one which does it all extremely well.  Even the big box home stores have yet to tie all the inventory into the order system (if the store buys locally it is not in the web site) meaning I have to order some on line and some I call in. 

They almost all fail at the last two which is great customer service at the car.  Many stores (including the big ones) have sent people to my car without any PPE and they have leaned over to ask me a question.  The entire purpose of this drill is lost when that happens. 

Surprisingly, the most sophisticated has been Shell gas station.  Here, of course, the issue is not going into a store but it is the extensive interaction you have to have with a dirty pump and they have eliminated virtually all of it.  Using the Shell app on my phone I follow the process below. 

1. Open the Shell app and it knows I am at the station.  It asks me what pump number I am at. 
2. It then asks me how much gas I want (From a fixed dollar amount to a "fill up). 
3. I use Apple Pay on my phone to pay (Completely eliminates the "skimming" threat which is where a lot of credit card fraud occurs).
4. The app activates the pump and all I have to do is put the nozzle in the car and select gas type.  

They have solved a lot of issues by doing this and one at least (the skimming) was a pre-COVID 19 issue. 

The lesson here is for all retailers:

1. Invest heavily in the final 3-5 feet of your supply / value chain.  The rule used to be your mission was to get people through the threshold of the store.  But now a huge amount of customers will not want to cross the threshold no matter what.
   
   
2. Technology is your friend - Use it aggressively and substitute in-store upgrades with technology upgrades. 
   
   
3. Always think seamless.  If there is a spot the consumer is interrupted in this process fix it with technology. 
   
   
4. Train your associates to forget their political views.  Give the customers what they want and they want to feel safe.  Masks, gloves and touchless processes do this. 
   
   
5. Take mobile payments.  It is almost silly in this day and age that we, as a society,  are not close to 100% pay by smart phone / mobile payment.  Everything should be paid this way.  

Technology is the "great equalizer" for the locally owned and operated stores.  If they embrace it and invest in it, the will beat Amazon.  Remember, Amazon can replicate just about everything except the things I described above.  GO AFTER WHAT THEY CANNOT DO!

Have Clicks and Bricks Won The Game over Pure E-Commerce

First, I will give you my hypothesis answer which is "Yes" it has.  Of course, I have been wrong before and will be wrong again but this would be my position going into the discussion.  Because of COVID19 we have learned the proper mix of "I need go to the store" with "I can wait to get it delivered". So, yes, my answer is an resounding "Yes".

I see this for three main reasons and in this posting I am going use Amazon as the proxy for e-commerce since it is so dominant in that space.  A little background on how this idea started developing.  I tweeted the following:

"A casualty of #Covid19 in the Supply chain is going to be #Amazon. With elongated delivery times, missed deliveries and massive counterfeiting, @amazon has become useless. #Bricksandclicks with in-store pick up, curbside car loading and local delivery has won the day.

— 10xLogisticsExperts (@Logisticsexpert) April 11, 2020"

The next morning I opened the Wall Street Journal to an article (Posted at midnight and my tweet was at 10:40pm) titled  "Will We Forgive Amazon When This is Over"  by Christopher Mims (@Mims, Christopher.mims@wsj.com) (May be Paywall).  The theme is the same:  At precisely the moment we needed Amazon the most, the model failed and it failed big.  There are a couple of key areas where it failed and only one could really have been an "unknown unknown":

1. Merchandising and Inventory:  This is the big "unknown unknown" and we cannot hold Amazon or anyone fully responsible for this as no one could have seen the massive whipsaw / bullwhip which occurred with certain products.  We essentially had a "run on the bank" and ran out.
   
   However, the "bricks" portion was able to respond much faster through limiting amount someone can buy, "senior hours" and other tactics (Not the least of which is just public shame if you are walking out with cases of toilet paper).  Amazon just could not get ahead of this and still to this day are not ahead.  They essentially have shut down all other "non essential" product lines yet I can still get all that stuff through either BOPIS (Buy on line pick up in store) or just in store at the bricks.
   
2. No Customer Loyalty:  The big question for the e-commerce providers such as Amazon will be whether they invest a lot into their networks to support a crisis like this or do they chalk it up to a "once in a lifetime" crisis and assume everything goes back to normal.  I think it will not go back to normal and the pure e-commerce players will lose customers and not gain them. 
   
   Take the Amazon Prime program for example.  Many hundreds of thousands have paid for years into that program.  Yes, you get free delivery but it also is somewhat of a loyalty program as well.  As soon as the crisis hit, prime customers were thrown to the curb.  By doing that, many prime customers are asking themselves "What am I paying for" and now that they have had the experience of "bricks and clicks", these customers may never come back.  I would imagine Amazon will see a decrease in both Prime customers and customers overall.
   
3. The Technology Just Did Not Work:  This led to a massively poor customer experience that did not have to be.  In fact, prior to COVID19 most discussions I have been in have always started with, "If Amazon can do... (Kind of like, "If they can put a man on the moon why can't....)".  This will no longer be the case.  No one will want to replicate this.  I think most give them a pass on the inventory issues but why is their website so screwed up?  Why do I have to click 4 times before I find out either the product is out of stock, it is reserved for first responders or the delivery will be two months from now (Why would they even allow it to be displayed)?
   
   The purchase experience has been awful.  The great technology has gone haywire and their "hands off the steering wheel" AI systems failed at precisely the time they were needed.  I found websites of other "off line" stores to be far more helpful, far more accurate and far more useful.  Amazon is going to have reevaluate this entire problem.  Their technology just does not appear to be much better.
   
4. Counterfeiting:  One item the "bricks" stores have is brand reputation.  Nothing makes it into a Home Depot, Lowes, Target, or Wal-Mart store without it being properly vetted to safety, service and functionality.  The item has to perform as specified.  Yes, there will be some warranty claims but not complete failure.  The "E-Commerce" world, led by Amazon, has had this "endless aisle" approach and they purposefully do very little vetting.  They claim they are a "platform" not a store (Although I think this is mostly "lawyer speak" so they can defend in lawsuits).  This has led to massive counterfeits, items which are displayed but never fulfilled, , items which say they will be fulfilled but it may be 2 months from now etc. 
   
   What is worse is the e-commerce players want the "wisdom of the crowd" to sort through it all, figure it out with "star ratings" (Which are easily manipulated by the very people doing the counterfeiting) and then report them.  The e-commerce people want the buyer to be their merchandiser as well and not pay us.  Bad form.  

For all these reasons, I believe pure e-commerce will lose business and it will take them a long time to get it back.  The "old guard" businesses with store fronts, reputations and really good technology have won this round and a big round it was (and still is)!

Long term readers of mine will not be surprised by this as I wrote two posts a while ago about how the bricks and mortar should win because they can do everything Amazon can do and Amazon cannot do everything they do.  I welcomed WalMart up from their long slumber (June 26, 2017) when they finally committed heavily to e-commerce.  I then wrote a post on June 3, 2018 titled: Convinced Even More That Wal-Mart Should Be The Winner Against Amazon.  

The Final Three Feet is Really Really Important (As We Are Re-Learning)

Back in April 2, 2013 I wrote a blog post entitled, "Is the 'Final Three Feet' The Most Important Logistics Leg" and it was created after I saw so many empty shelves at a Wal-Mart and I saw how they were restocking in an almost haphazard and unplanned way.  Of course anyone in retail knows an empty shelf facing translates into a lost sale.  It is very simple.  Keep the shelves stocked.

A simple idea but not quite as simple in practice.  You still see empty shelves in the day, you see aisles blocked because people are restocking during peak shopping times and you see trash (Broken down boxes) etc. cluttering the store.  All of these are signs the store has put no planning into how to stock shelves.

Store Shelves Being Stocked
During Prime Shopping Time

 

 

Now with the COVID-19 issues we are finding stores are relearning these lessons all over again.  It took weeks for stores to figure out how to adjust hours to ensure shelves were stocked.  What difference does it make that you are open 24 hours if by the 8th hour of being open your shelves are bare?  Too much time was lost in this and they should have read my posting.  The final three feet needs to be engineered just like the final mile and just like the DC to Store network. 

I will say one of the most sophisticated processes I have seen is at Home Depot.  At Home Depot, carts are built at the RDC (Large cross dock) which tell the store exactly what aisle and location on the planograph those products go. Yes, it takes more at the RDC but it makes stocking shelves in the store much simpler.  This ensures a few things:

1. The store associates can help customers and not stock shelves.
2. The cart is there, shelves are stocked and it is gone.  Out of the way of the customers. 
3. Minimizes complex training on the store floor.

The basic theory is push the work and the complexity back to the DC so the store is able to sell.  Which, after all, is what it is there for.  

Time for a Supply Chain Reserve Corps

As I am sure every supply chain professional and logistician is doing now, I am spending quite a bit of time thinking about the overall supply chain in the United States and wondering if it is truly set up to service the Country in a time of national emergency.  We heard the Governor of NY today in his press conference say that the states are basically bidding against each other to get needed (and scarce) health care supplies.  Rather than going where they are most needed they appear to be going to the highest bidder.

We have also heard the President tell the states this is substantially a state problem and the feds are there to help and backstop.  Finally, we are hearing about the shear lack of ventilators and hospital beds when (just a few weeks ago it was "should") a pandemic hit the United States.  All of this makes me wonder if this is truly the best way to deal with a national emergency.


By now many of you have also seen the incredible Ted talk Bill Gates gave back in 2015 where he essentially predicted this COVID-19 outbreak.  While not predicting this one in particular, Mr. Gates did say something like this would happen.  I highly encourage you to watch this:

Here are some key points from the talk (March of 2015):

1. The next big crisis will be from "microbes" not "missiles".
    
2. We have insulated ourselves from huge war catastrophes (i.e. a nuclear war or another world war) because we have spent a trillion dollars plus on national defense and the infrastructure required to defend the United States.
3. We have a military which can scale up dramatically in a short time to fight or deter a war.
4. We should model our fight against microbes after the structure of the military.  You have a permanent "active" force and you have a large "reserve" force which can be called up and which actively practices, trains. and stays functional. 

When I saw him say this I was absolutely floored.  When I was in the Army in Germany we used to practice going to our "General Defensive Position (GDP)" and we would periodically go visit the warehouses set up all over Europe with stockpiles of tanks, trucks etc.  We would start them up, move them, practice deploying them etc. and we would do that in conjunction with our reserve forces.  We called it "REFORGER" which stood for "Return of Forces to Germany".  It was all a preparation for scaling up the military in Germany to over 1 million soldiers if the war started.  Similiar exercises were done in Korea and other places.

So, the question I am thinking about now is if it is time to have a "Reserve Supply Chain Force"?  This would be something you would sign up for just like the military reserves.  You would have a role / rank, you would go and practice once a month on the weekend, you would do a 2 week summer training and you would be available to be called up if the government activated the reserves.  We would have needs for coordination with civilian industry, you would run a huge reserve of trucks, trailers and drivers and you would work for a leader of this organization.

If your civilian job was in an "Essential industry or company" you may get activated but stay embedded in that company to coordinate all the work.

There are a lot of details to work out but perhaps we need this force that can work in the complex civilian world of supply chain and tie it to the needs of a pandemic so we can scale up the supply chain and distribution / logistics network very quickly.  What would this accomplish:

1. It would allow us to scale up almost instantaneously.  Get the expertise in place, get the trucks / trailers along with drivers and immediately establish the infrastructure for leadership.
2. It would prioritize the loading of the nation's supply chain after huge "air in the pipe" is created (Think the run on TP).  This could be done in conjunction with FEMA.
3. It would allow us to train so we are ready right away.  By being trained we don't take months to just figure out "how things work".
4. Finally, it would establish a professional "corps" which is qualified, ready and willing to get called up as needed. 

In the end, we have the model on how to build an infrastructure to fight a huge event which comes up on us like a black swan.  The model is the military and the reserves.  We should follow it.  Perhaps CSCMP can help with this and build out the model.  

Extreme Ownership in Supply Chain Management

I think it is well known that the supply chain area becomes somewhat of a hub for the corporation.  Just about every activity either flows into or flows out of the supply chain area.  Great ideas turn into products through the supply chain; Great sales of products cause great products to flow out of the supply chain and into the customer's hands.  Through the S&OP (Sales and operations planning) process, just about all planning activities move through the supply chain. 

This is why Extreme Ownership is so critical for the supply chain manager.  There is a saying in the safety world:  "You see it, you own it" and that is true for the supply chain manager.  You see the issue, you own the issue and since you are going to see just about all the issues you have to take ownership to get those issues solved.  Product defects?  You will see it in inflated returns - You see it, you own it!  Inventory problems (Too little, not enough) the distribution center manager will see that in his/her distribution center - You see it, you own it!

These ideas are built from a fantastic book called: "Extreme Ownership: How US Navy Seals LEAD and WIN by Jocko Willink and Leif Babin.  This book is written for all leaders but especially for the supply chain leader.  We see it all and therefore we have to own it.

While there are many types of leaders I think one large macro category could be that there are two types:  Victim and Owner.  The victim is the one who lists off all the things that have happened to him or her and therefore that is whey they cannot get their job done.  If only forecasts were better!!  If only we made products which cubed better... If only.... .Well, you get the picture.  This person sits back and plays the "if only" game as a complainer, not a participant.

The Owner (in the way of Extreme Ownership) sees the issues and regardless of origin takes ownership.  Rather than play the "if only" game as a spectator the Extreme Owner takes action to solve the issue(s).  If only forecasts were better! - Action: I am going to meet with the head of planning to discuss how I can give an early warning indicator to things which are not selling (Planning is in supply chain but the early warning indicator may come from outside the planning department).  If only products cubed better! - Action: I am going to participate further upstream in product development to educate others on the costs of not cubing properly and how we may be able to meet all the customer needs and ensure a cost efficient way to cube transportation conveyances (Design for Logistics).

My advice here is to take ownership and move out of of your "sphere of influence" and into your "sphere of concern" (Covey).  Take action, own the issue and work with your other partners across the company to bring to a resolution. 

After reading this book and contemplating for over 1 year (Read it last year), I really have concluded this separates out the great from the good.  The great take extreme ownership, the others observe and say "If only...".