Latest / The Retail Podcast / How Best Buy’s Supply Chain Chief Sees AI Transforming Retail - Mark Irvin with NRF’s Jill Dvorak & Alex Rezvan

Transcript

How Best Buy’s Supply Chain Chief Sees AI Transforming Retail - Mark Irvin with NRF’s Jill Dvorak & Alex Rezvan · The Retail Podcast

• 0:09
  All right. Well, Alex, I'm so happy to be
• 0:12
  with you today. We're here at NRF Europe.
• 0:14
  It is our inaugural show here in Europe, and it has been
• 0:18
  fantastic. I'm joined today by a good
• 0:21
  friend and an incredible leader, Mark Irvin, who's the chief
• 0:25
  supply chain officer of Best Buy.
• 0:26
  Best Buy is an electronics company headquartered in the US,
• 0:30
  $42 billion in sale. And we'd like to talk to Mark a
• 0:34
  little bit about what's coming in the future.
• 0:36
  What are you thinking? There's a lot of uncertainty.
• 0:39
  Can you walk us through some of the, you know, the upcoming
• 0:42
  plans? And we're going into holidays,
• 0:43
  so. I would say it's interesting.
• 0:45
  There's key skills you have to have nowadays and I would tell
• 0:48
  you #1 whether it's supply chains or it's professionals
• 0:51
  across industries, we're focused on upskilling our teams.
• 0:55
  So you sure aren't they are ready for technology revolution.
• 0:58
  As if I already occur. I always go back and I try to
• 1:01
  try to associate key milestones that happened that transformed
• 1:05
  the workplace. And you think about it sounds
• 1:07
  like it's crazy now when the advent of the Internet, it took
• 1:11
  maybe five years, 10 years, people really be able to get the
• 1:14
  juice out of what just happened. This natural revolution isn't
• 1:18
  going to be there for many are predicting.
• 1:20
  This is going to move incredibly fast because it's going to have
• 1:23
  AI. It's going to change how people
• 1:25
  actually have to learn and unlearn how they did their jobs.
• 1:28
  So number one, you got to upscale your people to have this
• 1:31
  symbiotic relation technology. I think all of us are on a path.
• 1:35
  I told you before, I've got multiple relationships going
• 1:38
  across multiple different companies.
• 1:39
  Yeah, like supply chain professionals, unless you're a
• 1:42
  direct competitor, we don't view you that way.
• 1:45
  You view you as a source of learning and we share back and
• 1:48
  forth. And so if you think #1 you got
• 1:50
  to get your teams ready for it. Yep.
• 1:51
  So that they don't keep doing fins at the way that they always
• 1:54
  did it. Now, why is this critical to the
• 1:56
  supply chain? Things got a more ability
• 1:58
  fashion. I like to say it this way,
• 2:00
  Supply chains have to be more intelligent than they've ever
• 2:03
  been before. They have to be faster and more
• 2:05
  nimble. Now think about some of the
• 2:07
  disruptions we faced in the fast advantages now will be IT's that
• 2:12
  harness technology to not only predict but also prevent the
• 2:17
  impact of those things that will happen in street.
• 2:19
  So I think about AI and the use of AI in optimising our
• 2:23
  networks. I also think about it in
• 2:25
  predicting what is going to happen.
• 2:27
  It could be the Suez Canal, it could be the Panama Canal, could
• 2:31
  be weather pattern like today. We react to some of those things
• 2:34
  in the future. That's not going to be the case
• 2:36
  in the future. Just give this, you probably
• 2:39
  know this already, people are already talking about shopping
• 2:41
  agents. I think about it for your
• 2:43
  jacket, you might just take a picture of that and then engage
• 2:47
  your agents to go out and find something like that, something
• 2:51
  you want to wear with that. Yeah.
• 2:52
  Think about that in technology. Yeah.
• 2:54
  And then think about the impact that I don't have it ready to
• 2:57
  go. You've got an agent shopping for
• 2:58
  you and I'm out of stock. Yeah.
• 3:00
  You're going to lose that sale. Yep.
• 3:02
  The other thing that's going to happen is far more
• 3:04
  personalization. I'm going to have to know you.
• 3:06
  I'm not to anticipate what you're looking for.
• 3:08
  I'm have to also provide you the recommendation.
• 3:11
  Back that up. You've got to have a nimble
• 3:13
  supply chain. You can integrate data and
• 3:15
  technology, not just about a marketplace and by you, that's
• 3:19
  the future. You got to get people ready for
• 3:21
  it. I love that I I find it
• 3:22
  fascinating in terms of the way that you, if we look at the
• 3:25
  journey that the customers been on where they wait, where you
• 3:28
  have these massive catalogues right off product, yes, and now
• 3:33
  that product, sorry, that catalogue is being condensed to
• 3:36
  an e-commerce site. And now you, you're talking
• 3:39
  about how this future view has to look at not only know this,
• 3:44
  all this all seeing, all knowing catalogue.
• 3:46
  It knows you, it understands you, it fills you.
• 3:50
  Where are the first steps towards that?
• 3:52
  And, and I'll give you a choice. Do you look at it as, for
• 3:55
  example, quick commerce where you know people are going to
• 3:58
  want something in 15 minutes? You talked about your already
• 4:02
  phenomenal delivery. Yes, but what I'm curious about
• 4:05
  is what's going to drive behaviour.
• 4:07
  See, I think, you know, it's interesting today when we do
• 4:09
  that. Yeah, today we're more market
• 4:12
  based. It's good to remember the future
• 4:14
  is going to be more personalised a year.
• 4:16
  Yeah. And if you think about it, I
• 4:17
  have a lot of information about it you shared a lot with.
• 4:20
  So you may have signed up for Best Buy's Total Tech for where
• 4:22
  you can get your devices liking about things repaired and
• 4:25
  replaced as a part of that Total Tech experience.
• 4:27
  So I know some of the things about you.
• 4:29
  I know the gadgets that you have.
• 4:31
  Yeah, I can actually make recommendations to you.
• 4:33
  Yeah. And I think in the future, I'm
• 4:35
  not making those recommendations.
• 4:38
  You're going to either get your own agent.
• 4:40
  Yeah, that will be freelance a little bit and go out and find
• 4:43
  something else. Yeah.
• 4:44
  And I think the competitive angle for all of us is to take
• 4:49
  people we know about should be far more personalised and
• 4:51
  actually sell real power pursuit.
• 4:53
  I can't help myself, I have to jump in.
• 4:55
  So if you've bought all your tech at Best Buy and then you
• 4:58
  come to buy very similar tech, wouldn't it be amazing if Best
• 5:02
  Buy then said, hey, I see you're buying some tech, would you like
• 5:05
  to resell, refurbish, recycle this technology?
• 5:09
  We'll take care of it. Yeah.
• 5:11
  If you think about you, if you walk in our stores, number one,
• 5:14
  you've already downloaded our app.
• 5:16
  Yeah, You've already bought things on us.
• 5:18
  Yeah. Wouldn't you expect me to know,
• 5:19
  hey, you bought this from Best Buy and had not thought about
• 5:23
  what would really unlock that technology, some additional
• 5:26
  things that you could have? Yeah, I think the regeneration
• 5:29
  is going to be more old. Yeah, I think this year, Right.
• 5:32
  But honestly, there's an open 100%.
• 5:33
  They might have felt a sense of, wait a minute, he know too much
• 5:36
  about that. Yeah.
• 5:37
  But I think people want to move faster.
• 5:39
  They want to have greater international technology, and
• 5:42
  they want to have answers to problems at a rate that maybe
• 5:44
  ever see or fall. Yeah.
• 5:46
  We used to experiment with things in the past.
• 5:48
  Yeah, today. I don't know what it's right
• 5:50
  now. One thing solved.
• 5:51
  I want answers. I want to move fast.
• 5:53
  My time is so valuable. I've got, I'm going to be
• 5:55
  conscious of your tie. I'm a CEO.
• 5:58
  We have a limited budget. You like all of my execs are
• 6:01
  saying we need to invest in this, right?
• 6:04
  I know AI is going to be above it, but what I'm curious of is
• 6:08
  actually more of a if there is something that you see that's
• 6:11
  worth that investment, how do you bring it to love for the for
• 6:14
  the execs? You need to say it this way, and
• 6:16
  I love the question because you're right.
• 6:18
  If you go back and you look at this just say blockchee, if you
• 6:21
  look at the fervour they create that's created by many of these
• 6:24
  introductions on new things, I think people actually at times
• 6:27
  miss it because they then try to solve for a wide variety of
• 6:32
  problems. And I don't think that's not the
• 6:34
  approach we're taking. We're taking an approach that
• 6:36
  says, wait a minute, what are the biggest things we're facing
• 6:39
  that impact our customers and impact the flow of merchandise?
• 6:43
  Why you take those things and you use them as proof points.
• 6:46
  Once you can proof point AI in the application divide and drive
• 6:49
  real results, then you can create this path and pipeline
• 6:53
  for future investments. So the bet we're taking now is
• 6:56
  this is the first thing you're going to go after and we're
• 6:58
  going to demonstrate to the customers and to the
• 7:00
  organisation that it was a valuable intentional benefits in
• 7:04
  that backfishing. You've got some important idea
• 7:07
  that's super but. I know I see those of us.
• 7:09
  I have one more question. Let's go.
• 7:12
  Here's the other one. We got this with you.
• 7:14
  Remember I always use these partnerships, which means I'm
• 7:17
  not going to do it all by myself.
• 7:18
  Yeah, of cool. And I'm talking to people across
• 7:20
  multiple supply chain teams and I'm asking them what do you do?
• 7:24
  I think all of us are after the Holy Grail.
• 7:27
  Yeah. The positioning of inventory to
• 7:29
  minimise touches, to minimise inventory investment and to
• 7:33
  maximise the customers. Customised curtains, if you can
• 7:36
  find that and I think AI has an application for it and we're
• 7:40
  looking at the the addition way. Yeah.
• 7:42
  I mean, my final question was going to actually be about
• 7:45
  inventory and how close do you need to be the customer?
• 7:48
  Because in the US that's a big, such a like, I don't know, it's
• 7:52
  been the battlefield, right? Who's like, I'm only a mile from
• 7:55
  the customer. I'm only, you know, my depot is
• 7:57
  85. So like we pick in store.
• 7:59
  I'm just curious when you look to the future, because right now
• 8:02
  there's some trends and I, and I don't know which rates going to
• 8:05
  go up there. And the trend is I, I minimise
• 8:08
  my footprints and go more, you know, deeper and wider century,
• 8:12
  like have a, like an experiential store, but I may
• 8:16
  get rid of some of my out of town stores because I'm going to
• 8:19
  invest more in these. And in the UK, it's happening a
• 8:24
  lot in Europe, somebody where the footprint decreases a little
• 8:26
  bit. But then, you know, you end up
• 8:28
  with these sort of flagship stores that are experiential
• 8:32
  sensors. I'm just.
• 8:34
  Curious when you? Look at inventory.
• 8:36
  How are you looking on that? Are you looking at it as a, you
• 8:39
  know, yeah. Yeah, I think about that too.
• 8:42
  That's great. A great question #1 there's what
• 8:44
  are you trying to do as a customer?
• 8:45
  Yeah, so there's the customer that's a distressed customer
• 8:48
  that needs something right now. And there's also this out
• 8:51
  somewhere that's doing remodelled.
• 8:53
  It doesn't need something like now they actually need to know
• 8:56
  that is my remodelling or my refurbishing of my kitchen is
• 8:59
  completed. I get to pick what I want and
• 9:02
  it's going to be in there when it's time.
• 9:04
  So you've got two different customers.
• 9:06
  That customer has different approaches.
• 9:07
  So number one thing about vendor direct fulfilment, can I have
• 9:11
  such partnerships with my vendors upstream that I can
• 9:14
  deliver that remodel experience in a timely way?
• 9:18
  I guess what that does that brings down the majority of guys
• 9:22
  speak to you about. It also gives me more
• 9:25
  capabilities to buy the wire variety of part merchandise.
• 9:29
  So I think we've tried to build our supply tease.
• 9:31
  We upstream DC's, we got in market DC's and you've got cross
• 9:36
  docks. And So what we're finding is
• 9:39
  that the customer actually wants a lot of health.
• 9:41
  You know, picking an appliance is not easy.
• 9:43
  I don't know if you've ever done this before.
• 9:44
  I've done it where you do the measurements.
• 9:46
  Yeah, Yeah. You don't calculate the doors.
• 9:48
  You didn't get it right. Yeah, well.
• 9:50
  Around swing open, right? Now somebody's delivered
• 9:54
  something to your home, they unboxed it and won't fit.
• 9:57
  Yeah. And so how do you use technology
• 9:59
  to help you with that? How do you scan that with your
• 10:02
  phone? How do you make sure that the
• 10:04
  first time you make a decision is the right width and wide
• 10:07
  enough? Yeah, this is where AI can play
• 10:09
  a part. This is where our Geek Squad
• 10:11
  agents can be incredibly healthy in space.
• 10:14
  Oh, I see your geeks goes to that.
• 10:15
  Level at all they will go to that level, no doubt you're
• 10:17
  sitting down with the geeks. What we will say take a picture
• 10:20
  of that area. We can lose the technology to
• 10:22
  take measures and help you do that installation.
• 10:25
  OK. That's where all of those things
• 10:26
  are a part of this process. That's fantastic.
• 10:28
  So I don't think it's just minimising any too brief.
• 10:31
  Yeah, I the key thing is positioning inventory the right
• 10:34
  places based on the history of market demand and what are you
• 10:38
  trying to do? And I distressed what kind of of
• 10:42
  appliance would I want to purchase?
• 10:44
  Yeah. Am I much more unique than that?
• 10:47
  And that's well, if you ever been in back in the Best Buy or
• 10:49
  I love Bobby Best Buy, the range of what you would get
• 10:52
  absolutely, whether it's a Thermidor, a Viking or it's even
• 10:56
  our own brand of a Siggy. All of those ranges of
• 10:59
  possibilities in new position and based on history and domain
• 11:03
  would you might be. I love that.
• 11:04
  So it's. Amazing, isn't it?
• 11:06
  Thank you so much for giving up. That's.
• 11:08
  What I know and I love this technology, it's the best See
• 11:13
  the head move. I didn't see it move you've.
• 11:15
  Not been moving. That much during?
• 11:18
  I think he bought it at. Best Buy 10 but we in New York.
• 11:21
  He's old, states there. He sure will be, but I'm always
• 11:24
  there, OK? He's always there.
• 11:26
  I know we'll get him back. We got honoured a couple years
• 11:29
  ago for all of his work.