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Author's profile photo Randy Evins

Customer Centric Supply Chain (No…..really?)

Sometime in the not too distant future:

As Ms. Shopper walks through the parking lot of her preferred local grocery store her phone fires off her favorite ring tone notifying her that there is a message waiting .She retrieves the phone from her bag and finds that the stores loyalty program she has signed up for has discovered she has arrived at the store. Part of the sign up was the option to use her phones GPS systems to find her when she appears to be near a store. She also signed up for push offers so along with the welcome she is also receiving offers and deals that the system has found for her.

She created a shopping list on line that is now sorted by the store layout so the system already knows where everything is and begins to walk her through the store. She has opted in to allow the meat guys to pick out her meat for her (she really has no idea what “good” meat looks like). She does know her produce so she did not opt in for the produce selection option and will pick the produce last.

As she walks the floor the system guides her and as she approaches certain products that she has shown a propensity to purchase she is given notifications of “deals” or offers that suppliers have agreed to with the category managers. The system delivers coupons that make sense to her so she never has to worry about missing that killer deal. She marvels at how this store always seems to be in stock on the products she wants, not to mention the products that the system has recommended to her. Seems that this store, compared to some of the other places she shops, is clean, well run and a pleasure to be in.

As she completes her shopping trip and heads for the register to check out the store manager approaches her, calls her by her name and hands her a $10 coupon that she can apply to this order and thanks her for her loyalty. She leaves the store wondering why she would ever shop anywhere else.

Earlier in the day:

That same store manager is walking the store and his mobile device (take your pick) sends him a buzz. He pulls the device and finds the exception is a potential out of stock. His system has been monitoring the point of sale data and has found an ad item that is selling way beyond expectations.

Those expectations are set by the system based on normal movement plus the lift that the category managers have determined. That “lift” is based on the systems analysis of past promotions and the convergence of retail and consumer intent to purchase, the combination of art and science if you will. In this case the actual consumer reaction has greatly exceeded expectations and the system while resetting the sales forecast has noticed that if no action is taken at this store there will be an out of stock.

The store manager sends a workflow from his device to his stock clerk to do a check of the product location to verify what the system thinks is real and to put in motion the out of stock resolution process. The clerk executes the workflow and kicks off the OSR process (what would a good process be without a 3 letter acronym).

Because this is a system that thinks end to end it has already started preparations for the OSR process. It determines that the quickest way to bring the product to this store is to source it from a local store and not from the warehouse. Fortunately this company had developed a customer centric attitude and included the supply chain in its transformation. The company determined, while not necessarily the most “efficient” way, that having smaller vehicles strategically placed throughout the network would enable the stores to be more nimble and in most cases much more reactive to the real demand signals, their shoppers. It determined that, in its pursuit of its shoppers loyalty, it was much more important to turn an out of stock into a satisfied customer than to sacrifice that service at the altar of efficiencies and cost effective supply chains.

The system has determined that a store a couple of miles away has enough safety stock to afford sending enough inventory to the out of stock store to get it by until its next delivery. That next order by the way has been adjusted to reflect the new adjusted forecast. The driver and sending store are notified of the pending transfer and when the receiving store executes the work flow the OSR process kicks in and the transfer is executed flawlessly, completely eliminating the potential out of stock and making sure the shelf is stocked when Ms. Shopper shows up several hours later. 

Fantasy? Not really……this is an example of what can be accomplished TODAY! It’s an example of what a real time customer focused supply chain can accomplish. Can you pull it off with existing legacy applications or best of breed point solutions?

  1. Maybe….maybe not. Point solutions by their very nature are designed to optimize very specific business processes and while they do a good job of that they just don’t / can’t think beyond what they do for a living. Ask your “traditional” WMS or Trans solutions to include the store or customer in the way they process data and the answer will not be what you need to pull off a customer focused supply chain. 

SAP on the other hand, by its very nature, thinks end to end. We offer a platform if you will that brings world class process specific capabilities to both the Trans and WMS worlds along with the ability to extend the process (the scorecard if you will) across the entire supply chain. From the vendor through to the shopper, the SAP platform enables thought provoking process change that can virtually alter the entire way companies THINK about the supply chain let alone execute like never before.

How? The combination of the platform, world class capabilities in the execution focused Trans and WMS world, and real time planning solutions like Precision Retailing, FNR(forecasting and Replenishment &PMR(Promotion Management for Retail) brings end to end capabilities that have never existed before. When you add the amazing speed of HANA and the integrated analytics of SAP Business Objects for incredible visualizations you truly have the ability to create a real customer centric supply chain.

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