Steve is right about “find something else you can offer that Amazon can’t yet.” Too many retailers get caught up in the massive PR wave that Amazon creates. Don’t give in to the desire to mimic. Instead, do what you can do best that is different from Amazon. Today many retailers would say that is personalized services. Make sure your deliveries happen when you tell your customers they will. Make sure your pickup orders are there when promised. These little things will win incrementally. But don’t lose sight of the need to have and continually improve your operational capabilities.

Amazon’s highly automated supply chain is designed to deliver single items to single shoppers. Brick-and-mortar retailers’ supply chains are designed to deliver PALLETS to stores where unpaid stock-pickers, aka shoppers, pick and pay for the merchandise.

Although I have repeatedly brought up this hard and driving fact of the battle between brick-and-mortar and online, I have yet to see even a single comment on this definitive fact.

Once a retailer has spent the marketing dollars to bring in a customer, there is nothing worse than not then having the product a customer wants. Without the supply chain humming along almost flawlessly, there’s no point in attracting customers.

In 2017, there is no excuse for even the smallest company not to have total supply chain visibility from the point of manufacture to the point of sale and beyond. This technology has been developed, proven and implemented since the 1980s. The cost of this technology has been reduced to the point that even a mom-and-pop store can afford it.

The issue with most retailers today is believing what the data tells them, trusting the data and not bypassing the system. This is what leads to corruption of the data and making bad decisions from bad data.

With or without supply chain visibility or upgrades, focusing on a great customer engagement is key to competing today. It is no longer a retailer-centric world. E-commerce has created a customer-centric retail environment. Amazon has created a bond through the Prime ecosystem that is very difficult for others to compete with. Innovation and personalization are necessary today to compete.

I have been spending a lot of time going deep on supply chain management via MIT’s SCM micromasters program. I get it, it’s hard. However, I think retailers need to rethink level of service to meet today’s supply chain management challenges, and then address the upstream constraints.

Level of service (LOS) is typically determined by a supply node’s proximity to demand; that being customers, stores or other third-parties. Given the numerous fulfillment choices customers have/want today, retailers should not look to build a network which seeks to satisfy all of the possibilities on their own. Retailers should look to co-op networks and forge deeper relationships with transportation and logistics firms, up to and including Amazon.

Think about how you can extract out complexity in your network and bring in outside perspective to help. Not only could you find new ways of delivering unexpected LOS, but you also could realize new competitive advantage and/or new market opportunities. Focusing on LOS focuses you on the customer.

Supply chain urgency is a great response to retailers’ hand-wringing over Amazon. Many analysts and retail industry commentators (fellow BrainTrust panelists included) would conclude that Amazon is less a retail company, and more a fulfillment company.
Supply chain urgency couldn’t be more urgent right now. As others have noted, marketing is just half the problem that retailers are facing today. Having the right products available at the right time seems to be the most fundamental thing for retailers to focus on.

It’s a bit unnerving about how many retailers are still operating their (in most cases, global) supply chains very much the same way they did more than twenty years ago, in the infancy of EDI, etc. There are still far too many organizations manually entering purchase orders, for example. There are also still far too many overstocks and out-of-stocks at store level and online today. There is literally no need for this. This is all about visibility. Retailers must get maniacal in getting “hyper-local” insights to all aspects of their inventory: Suppliers’ contract management, demand forecasting, impending local weather, news, sports and even social media chatter in order to eliminate anything less than complete inventory optimization. Today, this takes true machine learning and artificial intelligence to get more and more accurate demand forecasts that help ensure supply chain effectiveness.

The fundamental truth about retail is that it is a consignment business and as such, supply chain challenges are amplified. Retailers, via category merchants, agree to purchase products, manufacturers are then expected to deliver palettes of inventory to a distribution center loading dock — expecting the retailer to distribute, proactively market, merchandise and sell these products — all for fees on top of the agreed margin. And yet the manufacturers are expected to manage their own stocking and inventory counts, all the while carrying the inventory on their books! If the products don’t sell, the manufacturer is expected to take it back or it ends up in a clearance bin — further undermining the brand. Manufacturers and retailers alike should simply acknowledge the true retail business model — those products are consigned inventory and unless it sells, it’ll come back (maybe not physically but certainly financially!). Being digital allows the manufacturer to think differently, take risks and take control of their own brand. This means thinking differently — utilizing available technology (RFID!) to implement business… Read more »

Some retailers may still be in denial about the urgency here, but it might already be too late for them. Even smaller retailers are already taking the steps they need in order to compete with companies like Amazon over the next few years.

Look, full disclosure: I’m the Founder and CEO of a company that digitizes the supply chain. I don’t know if there’s a way to say this without it coming across like a sales pitch, but it’s something I honestly believe to be true.

Companies can deliver stronger value to their customers through the supply chain, and they can create smarter end-to-end shipping experiences just like Amazon, but they have to leverage the power of information. Automation and visibility are the keys here, and they’re possible, but only if we start digitizing the supply chain. That means replacing legacy technology like EDI and rate bureaus with modern solutions like APIs.