GROCERY SUPPLY CHAIN MANAGEMENT AND TRANSFORMATION

Grocers have two supply chains that are challenged by omnichannel--store and e-commerce--that demands high customer service. It requires Supply Chain transformation.

GROCERY SUPPLY CHAINS

--Comments to Challenge the Status Quo--

Grocery chains across the world have common issues with what is happening to their industry. Against that, there seems to be a common fear of change--better the devil you know--especially against investors. Then there is the question of how to change--since there are no quick fix, easy answers that many seek.

The challenge being faced has its roots with Amazon.  Amazon did not create e-commerce. What they did was build a Blue Ocean strategy that used it to redefine retailing and to redefine supply chain management (SCM).  They created and met customer expectations with order delivery velocity.  They weaponized SCM and elevated it to strategic.  

Here are three comments--and they revolve around grocery supply chain management.  First, grocers have two supply chains that hopefully come together at the store level. One supply chain is under the control of the grocer and runs through their end-to-end SCM operation.  The other is managed by suppliers-—a type of third party in the supply chain--who stock/restock shelves with their products. 

Adding complexity to this supply chain structure is the need to successfully drive performance across channels.  It is no longer just about stores and inventory.  It is about customers and how to serve them both in-store and online.  And that requires supply chains with end-to-end velocity to be responsive.

Second, e-commerce has highlighted a flaw in that design and operation. Namely, the two supply chains are not coordinated and managed together as one supply chain with two origins.  This compounds problems with omnichannel customer service.  It shows with stock outs--a customer service failure.  These failures reflect on Perfect Order performance, both with customer orders and with store restock.  Online now brings grocery supply chains into the omnichannel reality using what is now an outdated supply chain management. 

Three involves how well the C-suite understands supply chain management and its operations.  That brings us to the new reality of doing business where customers have the power.  They need to start to transform. Omnichannel success is driven by supply chain management.  It is now strategic.  And it is now about speed, the new competition.

Grocers, if there are supply chain issues, then have to define the problem before a solution can be defined.  This requires starting  with an assessment of their present dual supply chains and they perform.  

The new selling reality is about velocity--end-to-end supply chain velocity that drives inventory velocity required for order delivery/restock velocity.  This is a mandatory part of customer expectations.  Speed is the competition when it comes to customer focus and customer satisfaction in all channels.  Slow and steady does not win the race.

Executives must understand that the times they are a changin. It is about transformation and creating robust omnichannel approaches that recognize each channel's success is driven by supply chain management.  The alternative may be to watch their futures in rear-view mirrors.  Delay, playing it too safe, is not an option.