Fixing the supply chain with data analytics

Eyefortransport’s new white paper looks at why data and analytics are critical from the frontline of the 3rd Annual D3 Retail Supply Chain Summit: New York

This is an excerpt from the upgrading supply chain for omnichannel retail white paper. Click here to download it now!

The future comes closer when the present system fails. And the most important messenger of failure is the customer. If the customer complains it means that the supply chain has failed to deliver, and failure to deliver on service commitments can have a negative ripple effect on the brand. As Craig Jones, Vice President, Supply Chain, at ALDO Group, put it: “Here’s the rule of thumb: You upset onecustomer and they tell ten other customers.”

Jared Mellin, Vice President of Operations at Peloton Cycles, said that the consumer is in a very strong position today because of social media. “Now customers have such a big microphone through social media and other channels that any customer experience can have sea level visibility and that is going to trump a lot of other channels of feedback.” Jones said his company takes social media very seriously. “We monitor social media daily, by the hour, and if there’s a certain trend or a certain message that’s not helping the brand, we act on it quite quickly. You’ve got to be agile.” Failure in the on-demand environment inspires innovation, and it moved Verizon to find new ways of mining and leveraging data.

“Our multi-echelon inventory planning was failing,” said Anne Robinson, Executive Director of Global Supply Chain Strategy, Analytics and Systems. “We were getting inventory that was stranded and inventory that was stocked out. If you walked into a Verizon store and you wanted the latest and greatest iPhone or Android device and it wasn’t there, we had a high probability of losing you as a customer.” The constraint on the fix, as is usually the case, was cost. “Our working capital is key,
so we need to keep that as small as possible,” she said. “We needed to make sure that we’re able to respond to that expectation of instant gratification that all of us want. How do we do that in a way that makes sense for our organization so that we’re effectively delivering on the expectations of our customers while managing that working capital?”

Her solution was data analytics. “We started building a dedicated planning analytics function” Robinson explained. “Through conversations our manager for this realized that some of our assumptions about how long it takes to get the product from the distribution center to the store were not accurate, that there was a great variability between days of the week, there was a great variability between some of the stores. So, we started to try predicting the lead time per store, per day of the week, per SKU. Now we have a model that’s looking at every single product that’s coming into the store, the day of the week, the store level for that individual product on the day of the week, and it’s all coming together, it’s starting to make sense. We are really tailoring our analytics to the expected behavior of our customer at that location.”

Inventory levels improved, Robinson said, as did customer service. But the innovation did not cease there, and involved a constructive use of social media. “The next piece in the journey was understanding our customer profile even further,” she said. “That allowed us to go into the stores and say what subset of inventories should really be in here. Let’s start understanding our customer expectations, let’s start looking at those social channels, where are people talking about what, let’s start talking about SKU optimization as it relates to those stores.” As she summarized it, “Big data is important, the averages and the trends, but analytics applied intelligently can make small data big as well”.

This is an excerpt from the upgrading supply chain for omnichannel retail white paper. Click here to download it now!

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