Latest / Speaking of Supply Chain / Fast and Free Is Over So What Wins Now
Transcript
- 0:00Speaker 1: If you really want to get ahead, you need to
- 0:01Speaker 1: invest in humans, like there's only a few of us
- 0:04Speaker 1: that really know how to do this with our hands,
- 0:06Speaker 1: So you need to find a partner that can do it,
- 0:08Speaker 1: that is specialized in this thing. Or you need to
- 0:10Speaker 1: be able to spend way more money than you're comfortable
- 0:12Speaker 1: on human beings that know this world better.
- 0:15Speaker 2: Because you will not get ahead.
- 0:16Speaker 1: You won't be able to differentiate yourself if you are
- 0:19Speaker 1: doing what everyone else is doing. That's just definitionally false.
- 0:26Speaker 3: Hello and welcome to Speaking of Supply Chain, where Mebok
- 0:29Speaker 3: experts from around the world unpack real stories, strategies, insights
- 0:33Speaker 3: and innovations shaping the future of supply chain. I'm your host,
- 0:36Speaker 3: Ellen Wood, joining you from my home office during this
- 0:41Speaker 3: snow Apocalypse twenty twenty six. The era of D two
- 0:45Speaker 3: C as an advantage is over. It's now table stakes.
- 0:49Speaker 3: Customers expect fast, free and seamless, and they expect it
- 0:53Speaker 3: everywhere every time. For retailers, that's putting a new strain
- 0:57Speaker 3: on legacy networks that weren't designed for the kind of demand.
- 1:01Speaker 3: Joining me for today's discussion are Julian Asorio, head of
- 1:04Speaker 3: Retail Fashion and apparel distribution business unit here at Mebak
- 1:08Speaker 3: and Rob Han, the COO of Pattern. Welcome, gentlemen, thanks
- 1:13Speaker 3: for ever, Thank you great to have you here today.
- 1:17Speaker 3: So let's start with the basic one. Julian, in your view,
- 1:21Speaker 3: what are the new D two C table stacks in
- 1:25Speaker 3: twenty twenty six?
- 1:26Speaker 4: I believe the fast and free is no longer a
- 1:30Speaker 4: differentiator in North America anymore. It is it is the minimum, right.
- 1:37Speaker 4: I see what's separating leaders now and in twenty twenty six,
- 1:42Speaker 4: Just to answer your question, is going to be about
- 1:44Speaker 4: reliability and transparency. So retailers and company needs to focus
- 1:51Speaker 4: more on balancing inventory margin and incorporating risk management and
- 2:00Speaker 4: flexibility in twenty twenty six when they're planning about fulfillment
- 2:05Speaker 4: and delivery times and promise to other clients.
- 2:08Speaker 3: It has gotten that complicated. Rob, what do you see.
- 2:11Speaker 1: Over the last few years, We've seen such an explosion
- 2:13Speaker 1: of options for consumers, right, which is one thing that
- 2:18Speaker 1: is really quite different and it has you know, obviously
- 2:21Speaker 1: marketing implications like front end how do you meet those
- 2:23Speaker 1: consumers where they are? And those actually are driven most
- 2:26Speaker 1: about the capabilities on the supply chain side, and so
- 2:29Speaker 1: as you get complexities of agentic commerce, and you get
- 2:33Speaker 1: marketplaces continuing to grow and new areas. I think one
- 2:37Speaker 1: of the biggest things is how do you get flexibility
- 2:41Speaker 1: and not get locked into any one solution.
- 2:46Speaker 2: For your supply chain?
- 2:47Speaker 1: Right like it is, it's critical to make sure that
- 2:49Speaker 1: you can meet that customer wherever they are. And that
- 2:51Speaker 1: means if you need to use FBA, you got to
- 2:52Speaker 1: use FBA and you got to be excellent with that.
- 2:54Speaker 1: If it's FBT for someone on TikTok, you got to
- 2:56Speaker 1: be able to crush that. If it's retail, then you
- 2:58Speaker 1: got to be able to do that. And so having
- 3:01Speaker 1: a flexible solution is just as important as a precise solution,
- 3:05Speaker 1: and I think that is becoming more and more evident
- 3:08Speaker 1: as some of that choice is exploded for consumers, and
- 3:11Speaker 1: I think that becomes more in focus. Even when you
- 3:13Speaker 1: think about something like agentic or AI commerce, it is
- 3:17Speaker 1: the complexity continues to increase in the supply chain is
- 3:20Speaker 1: not getting easier for brands to navigate, but it is.
- 3:24Speaker 2: It's the world we live in.
- 3:25Speaker 3: Absolutely, Yeah. That resiliency to shift quickly when a change
- 3:29Speaker 3: happens is almost just the standard. Now you have to
- 3:32Speaker 3: be able to shift because it's going to change in
- 3:35Speaker 3: the next moment. So what are some of these or
- 3:38Speaker 3: what have you seen in some of these top performing retailers.
- 3:42Speaker 3: They're evolving their fulfillment strategies they're in order to meet
- 3:46Speaker 3: these customers where they are and where are others falling short?
- 3:50Speaker 3: Is it just not having that flexibility or is there
- 3:54Speaker 3: anything else that's driving that?
- 3:56Speaker 1: Yeah, I mean if we was like we talk about
- 3:59Speaker 1: this for a lot more than we have here, but
- 4:02Speaker 1: if we focus on I mean, Amazon is a big
- 4:04Speaker 1: one in the US, So like, let's take a look
- 4:05Speaker 1: at what Amazon is actually doing. I mean they've changed.
- 4:08Speaker 1: It's all about like placement is key, and within Amazon,
- 4:12Speaker 1: what placement released defined is right? How quickly can you
- 4:15Speaker 1: get like what percentage of your inventory Amazon for like
- 4:20Speaker 1: all sellers including Amazon on inventory? How much same day
- 4:24Speaker 1: and next day delivery can we get right? Because you
- 4:26Speaker 1: see a conversion increase and ad effectiveness increase as you
- 4:29Speaker 1: go from second day to one day, one day to
- 4:31Speaker 1: same day delivery? So how can you get there? Amazon's
- 4:34Speaker 1: network has exploded so much over the past decade. I
- 4:38Speaker 1: was there for eight years.
- 4:39Speaker 2: I saw that.
- 4:40Speaker 1: I think I went there when they were like eight
- 4:42Speaker 1: fulfillment centers and now there's like two hundred and fifty plus.
- 4:45Speaker 1: And so as that explodes, how do you make sure
- 4:47Speaker 1: you get that selection close to the consumer? And so
- 4:51Speaker 1: Amazon has changed a bunch, like look what they've done
- 4:53Speaker 1: with their They have a two tiered, two tiered in
- 4:56Speaker 1: inbound crosstock network now, which increases complexity enormously. Right, You're
- 5:00Speaker 1: not sending to one place anymore. You're sending to potentially
- 5:03Speaker 1: dozens of places, a minimum of five, but potentially a
- 5:06Speaker 1: lot more than that.
- 5:07Speaker 2: And so that is all about placement.
- 5:09Speaker 1: Which is a good it's a good thing, right, it's
- 5:11Speaker 1: better for brands, it's better for the consumer, and it's
- 5:13Speaker 1: better for rescale. It's better for all three. But getting
- 5:16Speaker 1: there is extraordinarily hard. So I think getting the fast
- 5:19Speaker 1: and free there's a scale of fast and free, right,
- 5:23Speaker 1: Like if you're on your own Shopify site, for example,
- 5:25Speaker 1: a consumer doesn't need quite as fast normally, right, they've
- 5:28Speaker 1: already chosen you. It's a you're solving a different problem
- 5:32Speaker 1: on a marketplace, though, it's all about that speed, and
- 5:35Speaker 1: so how do you how do you balance that out?
- 5:37Speaker 1: But I think that's what marketplaces are doing. For example,
- 5:40Speaker 1: you're seeing this with TikTok making a major push into
- 5:44Speaker 1: having speed and reliability. You're seeing Amazon continue to make
- 5:48Speaker 1: it more complex and they're not trying to make it harder.
- 5:52Speaker 1: They're trying to solve the end problem, which is getting
- 5:54Speaker 1: as close to end consumers as possible, and that complexity
- 5:58Speaker 1: lands on brands. So I think, really, what the biggest
- 6:01Speaker 1: strategy is, like how it's an inventory management strategy, It's
- 6:04Speaker 1: how do you have the best inventory pools? How do
- 6:06Speaker 1: you reduce down speed? Here's what I'll end up saying.
- 6:09Speaker 1: Forecasting is wrong every single time, literally.
- 6:12Speaker 2: Every single time.
- 6:13Speaker 1: So speed speed solves a lot of problems, right, like
- 6:17Speaker 1: the combination of a forecast being wrong in a very
- 6:19Speaker 1: slow supply chain. Those things can't live together because of
- 6:22Speaker 1: forecast is always wrong. Speed matters more than ever today
- 6:26Speaker 1: it is super critical getting into a marketplace, getting it
- 6:28Speaker 1: to a consumer, refilling inventory pools close to consumers. That
- 6:33Speaker 1: flexibility that's required has never been more complex. And I
- 6:36Speaker 1: think the retailers that have one and they're going to
- 6:38Speaker 1: win twenty twenty six and beyond, have that understanding. And
- 6:41Speaker 1: they've from the very beginning of the entire supply chain
- 6:45Speaker 1: are understanding that they need to change the way they think,
- 6:48Speaker 1: both on the brand side and on the retailer side.
- 6:51Speaker 3: And Jillian, what are you seeing from the network standpoint
- 6:55Speaker 3: as well as you know, trying to maneuver within those constraints.
- 6:59Speaker 4: Yeah, I can see the best fulfillment networks are blended
- 7:05Speaker 4: and a lot of those are really also focusing on
- 7:09Speaker 4: the returns side of the business. So leading retailers right
- 7:13Speaker 4: now are using dynamic fulfillment logic deciding basically in real time,
- 7:19Speaker 4: where to ship, where to place their inventory, where do
- 7:23Speaker 4: they have labor availability, where from which fulfillment center or
- 7:30Speaker 4: distribution center they can fulfill in a more productive manner
- 7:34Speaker 4: so their end to end cost to serve is cheaper
- 7:38Speaker 4: while scifying the clients expectations on service. Right, So, I
- 7:44Speaker 4: see best fulfillment networks being more dynamic now with a
- 7:49Speaker 4: different and more options and more opportunities to provide and
- 7:58Speaker 4: match their services through some keeping regional carriers, crowdsource delivery,
- 8:04Speaker 4: ship to store, pickup, fulfilled from stores, some some different
- 8:08Speaker 4: strategies that help, as I mentioned, balance their costs and
- 8:12Speaker 4: being able to offer the right service to the right
- 8:15Speaker 4: client for the right products. Right, Also networks that are
- 8:20Speaker 4: that are able to absorb disruptions like weather events. We
- 8:25Speaker 4: we had that issue, you know, right in the last
- 8:28Speaker 4: week and continue to be in North America. Right. UPS
- 8:31Speaker 4: is adjusting, EDEK's adjusting. All the companies are figuring out
- 8:35Speaker 4: our you know, kicking off or dusting off their their
- 8:40Speaker 4: plans and their continguency plants across the network. So networks
- 8:44Speaker 4: need to be able to absorb somehow that type of
- 8:48Speaker 4: disruptions as well as demand spikes without without breaking without
- 8:53Speaker 4: you know, and without breaking their pockets as well. I
- 8:56Speaker 4: see some retailers falling behind because they're still focusing on
- 9:03Speaker 4: what was mentioned before by rob is chasing Amazon, right,
- 9:07Speaker 4: they continue to chase Amazon. They continue to offer a
- 9:10Speaker 4: blanket you know, next day delivery, and they're trying to
- 9:15Speaker 4: squeeze in their D to SEE fulfillment and delivery process
- 9:21Speaker 4: in the traditional legacy DC operations using the same tools,
- 9:26Speaker 4: using the same carriers, using the same technology, and for
- 9:30Speaker 4: that reason, they're not able to properly understand their cost
- 9:34Speaker 4: to serve and the implications of trying to squeeze in
- 9:38Speaker 4: D to SEE in the regular wholesale retail networks. Those
- 9:45Speaker 4: companies falling behind in that sense. They really need to
- 9:48Speaker 4: see things in a different way, and they need to
- 9:51Speaker 4: make sure they ship the product from the right places
- 9:54Speaker 4: with the right capabilities, so they can you know, understand
- 9:58Speaker 4: their costs and service implications and being able to ultimately
- 10:01Speaker 4: provide great service to the clients or great experience to
- 10:04Speaker 4: the clients.
- 10:05Speaker 1: I actually, I firmly I actually gave a talk at
- 10:08Speaker 1: like a conference last year about specialization. In specialization win right,
- 10:13Speaker 1: we went from like there was only retail, right, there's
- 10:15Speaker 1: no e commerce, and then it was like you got
- 10:18Speaker 1: these really specialized e commerce because you have these traditional
- 10:21Speaker 1: one hundred year old retailers right that do the retail repunishment,
- 10:24Speaker 1: they do the pallets in cases really well. E commerce happened.
- 10:27Speaker 1: They went to specialization, right, whereas like you have e commerce,
- 10:31Speaker 1: then you've got retailers or i'm sorry, traditional like three pls.
- 10:34Speaker 1: And then the traditional three pls were like, oh, we
- 10:36Speaker 1: can do e commerce, but they did it really poorly.
- 10:38Speaker 1: And then this specialized D two C were like, oh
- 10:41Speaker 1: we can do B to B and they do it poorly.
- 10:43Speaker 1: And like, I think the reality is, I don't think
- 10:45Speaker 1: we should lean away. I think actually the specialists win, right,
- 10:48Speaker 1: Like I don't do B to B at all. I
- 10:49Speaker 1: do marketplace replenishment better than anyone in the world. I
- 10:52Speaker 1: do great D two C fulfillment for example, and like
- 10:55Speaker 1: I unapologetically don't do B to B. Like, find somebody
- 10:58Speaker 1: that's been doing it for one hundred years, They're going
- 10:59Speaker 1: to do a great for you like that. Store all
- 11:01Speaker 1: your inventory there and think of me as a forward
- 11:03Speaker 1: deployment inventory. I just I think Julia hit the nail
- 11:07Speaker 1: on the head. Specialization wins here, and it is something
- 11:10Speaker 1: that we are like brands are struggling to get behind
- 11:13Speaker 1: because it's so traditionally like the supply chains the other way.
- 11:17Speaker 1: But I actually think that it is where we are headed.
- 11:20Speaker 1: One thousand percent is like, don't try to be the
- 11:23Speaker 1: jack of all trades, like work with the best at
- 11:26Speaker 1: that thing. Because the distance between the average D two
- 11:28Speaker 1: C three pl and the top like we are way
- 11:31Speaker 1: way way above the average. So there's still it's not
- 11:35Speaker 1: logistics and fulfillment for e commerce has not commoditized yet.
- 11:38Speaker 1: We've got tons of time until that's true. Specialization wins.
- 11:42Speaker 3: Okay, So within that specialization, where do you see some
- 11:45Speaker 3: of those centralized versus store based models. Really, you know,
- 11:50Speaker 3: capturing that audience and being that special snowflake in that
- 11:55Speaker 3: special situation, especially during peak pit commands. We just came
- 11:59Speaker 3: out of the holidays. You know, if they have a
- 12:01Speaker 3: new product launch, you know, where are they going to
- 12:05Speaker 3: find that niche?
- 12:07Speaker 1: I think the reality is that it's an unpopular answer,
- 12:12Speaker 1: but it is. It depends actually, like it really depends
- 12:15Speaker 1: on what you're going to do. What I will say is,
- 12:18Speaker 1: no one needs to be in like fifty five warehouses.
- 12:20Speaker 1: If you're not doing like an Amazon, right, Amazon is
- 12:22Speaker 1: solving a different problem.
- 12:23Speaker 2: Don't try. Don't try to solve the Amazon problem.
- 12:26Speaker 1: But like, if it's a new launch, for example, the
- 12:29Speaker 1: simply put uh is thinking about it from a network perspective.
- 12:33Speaker 1: If you are in a multi noode network, the higher
- 12:37Speaker 1: the complexity and the higher the variability, the fewer number
- 12:40Speaker 1: of buildings you should be in. Right, you have to
- 12:42Speaker 1: be able to try that off because you were going
- 12:43Speaker 1: to get your inventory in the wrong place. So if launch,
- 12:46Speaker 1: for example, like don't put yourself in ten buildings or
- 12:49Speaker 1: three buildings or five buildings.
- 12:51Speaker 2: It depends.
- 12:51Speaker 1: Sometimes it's the answer is three, sometimes it's five. But
- 12:54Speaker 1: like most people don't know the answer to that ahead
- 12:57Speaker 1: of time. So if you don't have information, the lesson
- 13:00Speaker 1: in formation you have, the let the more consolidated you
- 13:02Speaker 1: should be within your network. Like that is a general truth,
- 13:06Speaker 1: because otherwise you'll be like, Oh, I think that New
- 13:08Speaker 1: York will sell more, and then New York doesn't. You
- 13:11Speaker 1: don't sign enough and you put stuff an l and
- 13:13Speaker 1: then you're shipping across the country. So slower you're in,
- 13:15Speaker 1: you've cost your costs increase by forty percent, and it's
- 13:19Speaker 1: a bad consumer experience. So variability and flexibility have gone
- 13:24Speaker 1: up as requirements, and that actually means that unless you're
- 13:27Speaker 1: dealing with a marketplace like the number of buildings you're
- 13:30Speaker 1: in might actually go down. Inventory pooling is more important
- 13:33Speaker 1: than than spreading out and being into and spreading yourself
- 13:37Speaker 1: out too much.
- 13:38Speaker 3: And Julian, you had mentioned returns management a little bit earlier.
- 13:41Speaker 3: So where do you feel like that fits into this
- 13:44Speaker 3: equation and does is it flexible? Does it tip the
- 13:47Speaker 3: scale towards one model or the other?
- 13:50Speaker 4: So let me let me provide my three points on
- 13:54Speaker 4: the previous answer about centralization or not so very similar
- 13:58Speaker 4: to Roup's point, centralized disease when at scale, you know
- 14:05Speaker 4: when to provide a stability during pig seasons. You know
- 14:08Speaker 4: they can handle volume seurchs, they can handle throughput. By
- 14:12Speaker 4: implementing automation, they can have multiple carriers and line hold
- 14:16Speaker 4: strategies that it can use more efficiently through holidays or
- 14:20Speaker 4: major launches. Right, So I see centralized disease playing very
- 14:24Speaker 4: well on that space. Store based fulfillment wins when you
- 14:27Speaker 4: need speed and regional responsiveness when your demand is not
- 14:31Speaker 4: that stable, when you don't have huge volumes to be fulfilled,
- 14:36Speaker 4: you know, across your country, so last mild proximities and
- 14:40Speaker 4: the options and absorbing some of the geographical demand spikes. Right.
- 14:46Speaker 4: You see, of course in US, in Canada and North
- 14:49Speaker 4: America overall, some areas you know, they don't sell the
- 14:52Speaker 4: same you know, winter jackets as much as the other
- 14:56Speaker 4: areas because of weather differences. So optimizing the based or
- 15:00Speaker 4: fulfillment operations in that sense can be also very good.
- 15:05Speaker 4: And then the last point is about the orchestration. To
- 15:09Speaker 4: Rope's point, it also depends depends on your strategy, your product,
- 15:13Speaker 4: your presence is geography, but it's more about having the
- 15:18Speaker 4: proper tools and the proper data to make decisions so
- 15:22Speaker 4: they can orchestrate and plan for how to manage the
- 15:27Speaker 4: fulfillment operations rather than being a choice and being firefighting
- 15:32Speaker 4: all the time. So those are my three points in
- 15:35Speaker 4: regards to that. What is really the swing factor here
- 15:40Speaker 4: is the returns to my point before, So you can
- 15:43Speaker 4: have some similar fulfillment strategies and similar fulfillment operations across US,
- 15:49Speaker 4: but what really makes the big difference is the returns.
- 15:53Speaker 4: I believe that a store based and centralization after is
- 15:59Speaker 4: the way to go. So the clients need to have
- 16:01Speaker 4: the ability to go back to the stores and do
- 16:04Speaker 4: simple returns of the stores. A store should have the
- 16:08Speaker 4: capability to put that product back in their own inventories
- 16:13Speaker 4: if possible, and if not, they need to go to
- 16:15Speaker 4: a centralized d C where the overall networking distribution can
- 16:19Speaker 4: deal with those volumes. But it doesn't make sense for
- 16:22Speaker 4: companies to you know, return products to multiple disease. Leave
- 16:27Speaker 4: those products there, They're going to be hanging around for
- 16:32Speaker 4: months and years and then they go through liquidation and
- 16:34Speaker 4: there is a lot of inventory carrying costs in that sense,
- 16:38Speaker 4: and they're not able to run to turn the product property.
- 16:41Speaker 4: So the store base return approach is very, very important
- 16:48Speaker 4: and it's been playing a great effect to retailers in
- 16:53Speaker 4: US in the last you know, five years.
- 16:56Speaker 3: All Right, So we've talked a lot about, you know, how,
- 17:00Speaker 3: how this model should be designed and executed, but it's
- 17:06Speaker 3: in that execution where we're actually talking about the automation
- 17:10Speaker 3: and making sure that it's even possible. So it's not
- 17:15Speaker 3: about robotics for robotics sake. I know, we get into
- 17:19Speaker 3: a lot of discussions about the automated fulfilled solutions and
- 17:25Speaker 3: people like modernized, modernized, modernized. You know, you have to
- 17:27Speaker 3: be able to automate this process because labor is expensive,
- 17:30Speaker 3: labor is mercurial. It's going to change if we have
- 17:35Speaker 3: this automated. It's it's so much easier. But it's a tool.
- 17:39Speaker 3: It's it's not just robotics to spend millions of dollars
- 17:43Speaker 3: on an automated solution, and so as the retailers are
- 17:47Speaker 3: grappling with cost, speed, the complexity that you guys are
- 17:53Speaker 3: bringing to this conversation, it's not just a tool to
- 17:57Speaker 3: do things faster. It's a strict hegic decision in order
- 18:02Speaker 3: to implement any of these types of things. As you
- 18:05Speaker 3: pointed out both of you, the Amazon model isn't something
- 18:08Speaker 3: that retailers should be aspiring to and it's not feasible
- 18:12Speaker 3: for most of them. Bottom line, they just can't do it.
- 18:15Speaker 3: So what types of automation are actually helpful for delivering
- 18:20Speaker 3: some of this impact and flexibility that the two of
- 18:23Speaker 3: you are, you know, commenting on, and how much of
- 18:27Speaker 3: it is hype or.
- 18:29Speaker 4: Help I hate to respond with the typical consultant answer,
- 18:33Speaker 4: which is it depends on mind or Rob already said
- 18:35Speaker 4: it before me, which is great. So basically, how I define,
- 18:42Speaker 4: you know, the best automation or what kind of automation
- 18:46Speaker 4: to our clients is the best is I define it
- 18:48Speaker 4: as an automation works when he's boring, when he's faced,
- 18:53Speaker 4: and when he's tied to the network, and it's when
- 18:56Speaker 4: he's not a hype. Right. So people believe in throughout
- 19:00Speaker 4: the last you know, many years, last ten years, people
- 19:03Speaker 4: believe that they can compete if they get to the
- 19:06Speaker 4: Amazon level of automations. And the truth is that most
- 19:10Speaker 4: North American retailers, mid sized retailers, they can get a
- 19:14Speaker 4: lot more value from targeted automation. And that's where my
- 19:19Speaker 4: advice always comes to our clients. Let's focus on what
- 19:23Speaker 4: can be more impactful to you that is modular and
- 19:28Speaker 4: that can scale up in the future. Goods to person systems,
- 19:32Speaker 4: automated sortation depending on the operations, right, smart foot walls
- 19:36Speaker 4: or better systems orchestrations like warehouse Management Systems and WUSS
- 19:41Speaker 4: and WCASS. Right, there is some numbers out there. They
- 19:46Speaker 4: show that automation and fulfilming models work when they're focused
- 19:52Speaker 4: on alleviating pain points for the organization in their end
- 19:57Speaker 4: to end fulfillment process and being able to tackle the
- 20:01Speaker 4: variability of the operations, whether whether it is demand, whether
- 20:06Speaker 4: you know whatever, whatever is creating uh spikes in their
- 20:10Speaker 4: in their operations is what they need to tackle. So
- 20:13Speaker 4: let's not focus on the flashy, you know, automation. Let's
- 20:17Speaker 4: focus on adopting and understanding where the automation needs to
- 20:20Speaker 4: be or at the most most of the value and
- 20:23Speaker 4: being able to scale up from that.
- 20:25Speaker 3: And Rob being from Amazon, I'm sure you have some
- 20:28Speaker 3: some very strong opinions on this.
- 20:30Speaker 1: Yeah, I mean this is where I've spent a ton
- 20:32Speaker 1: in my career. Right, So, like I was in robotics
- 20:35Speaker 1: at Amazon, and I've spent a lot of time focusing
- 20:39Speaker 1: on like, you know, how do you remove decision points?
- 20:42Speaker 1: How do you remove touches like and that that's actually
- 20:45Speaker 1: the problem you're trying to solve, it's not how do
- 20:48Speaker 1: I implement robotics?
- 20:50Speaker 2: That sometimes is the right answer.
- 20:52Speaker 1: And for Amazon, actually, I mean one of the things
- 20:54Speaker 1: when people talk about like robots and Amazon, the problem
- 20:56Speaker 1: that Amazon was solving the robotics was not was actually
- 21:00Speaker 1: like density. They were trying to get more inventory into
- 21:04Speaker 1: the buildings because it was a speed problem, so they're
- 21:07Speaker 1: trying to get it closer to consumers. And so therefore,
- 21:09Speaker 1: if you look at like keepa Robotics, like what is
- 21:12Speaker 1: it twenty twelve, we had acquired keepa Robotics, which became
- 21:17Speaker 1: Amazon Robotics. Right, I learned one of the first robotic
- 21:20Speaker 1: fulfillment centers. It was like super cool, incredibly hard, really
- 21:23Speaker 1: interesting problem to solve. But it's actually not as much
- 21:27Speaker 1: about replacing like it actually happened. It was about storage.
- 21:30Speaker 1: It's like how do you get more into the same
- 21:32Speaker 1: building and that allows transportation cost savings and also faster delivery.
- 21:40Speaker 1: So like it wasn't like the problem that they were
- 21:42Speaker 1: solving was not fancy to Julian's point, it wasn't cute,
- 21:46Speaker 1: it wasn't interesting, it was impactful. And so for us,
- 21:50Speaker 1: like in my entire career, there's a phrase that I
- 21:52Speaker 1: used in my teams all the time, like we do
- 21:54Speaker 1: not give ourselves permission to do interesting things. We only
- 21:57Speaker 1: do impactful things. And those impactful things sometimes are interesting,
- 22:00Speaker 1: which is fun. We get to build some really interesting stuff,
- 22:03Speaker 1: but it has to be impactful. I think there's three
- 22:05Speaker 1: kind of there's three things like and some of it
- 22:07Speaker 1: is quite boring. To Dueling's point, you have processes, You've
- 22:10Speaker 1: got automation, you've got robotics. There are three separate things, right,
- 22:14Speaker 1: So processes could be like I need to move this
- 22:16Speaker 1: table from here to over there, and I will remove
- 22:18Speaker 1: a touch, because the point is removing touches increases your quality,
- 22:22Speaker 1: increases your speed, decreases your cost. So remember the problem
- 22:26Speaker 1: you're solving, and solve that problem. Right, So process is
- 22:28Speaker 1: actually quite powerful. That requires expertise, that requires understanding of
- 22:32Speaker 1: your processes, and like that actually is if you can
- 22:35Speaker 1: build processes that are repeatable and scalable, then you can
- 22:38Speaker 1: automate those processes. You can't jump straight to automation, or robotics,
- 22:41Speaker 1: and assume that it's going to solve the foundational problem.
- 22:45Speaker 1: Figure out what process you need to have and to
- 22:46Speaker 1: eliminate actual problems throughout and touches. For examples, like if
- 22:50Speaker 1: you stop touching stuff, your speed will improve, your quality
- 22:54Speaker 1: will improve, and your cost will go down. Just stop
- 22:56Speaker 1: touching stuff. So focus on your processes and then you
- 22:58Speaker 1: figure out if the right solution is automation. And I
- 23:01Speaker 1: define robotic versus automation as robotic being something that requires
- 23:05Speaker 1: more variability and automation being something that's more repeatable, Like
- 23:09Speaker 1: you don't need a robotic solution for a sort for example.
- 23:12Speaker 2: Like it's well defined.
- 23:14Speaker 1: We've got dozens of different sort of types out there,
- 23:16Speaker 1: for example, that can use this. So I think for
- 23:19Speaker 1: everyone to figure out where am I on that scale
- 23:23Speaker 1: from just like move the table through, I really need
- 23:25Speaker 1: a very high intensity of robotic solution. Most people are
- 23:30Speaker 1: not anywhere close to that other end of the spectrum.
- 23:32Speaker 1: The vast majority of people out in the world need
- 23:34Speaker 1: to focus on processes and software can do the vast
- 23:37Speaker 1: majority of what most brands need versus hardware. And that's
- 23:43Speaker 1: a person who spent tens and hundreds of millions of
- 23:45Speaker 1: dollars on hardware in my career. But like, you need
- 23:48Speaker 1: a lot more scale than you think you need before
- 23:51Speaker 1: you need to spend tens of millions of dollars on hardware.
- 23:53Speaker 2: You can do a lot.
- 23:54Speaker 1: With good humans, good processes, and good software, all right.
- 23:58Speaker 3: Well, And that's one thing though, that we've always said
- 24:02Speaker 3: at Meebok is if you have to, you have to
- 24:05Speaker 3: address the process first, because if you automate a bad process,
- 24:08Speaker 3: you're just going to be doing the bad process faster.
- 24:11Speaker 3: It's not going to actually solve the problem. And so
- 24:15Speaker 3: I guess you know, we've talked a little bit here
- 24:18Speaker 3: in the past few minutes about you know, making sure
- 24:20Speaker 3: that those processes are right to begin with and identifying
- 24:22Speaker 3: that that initial problem that you're trying to solve with
- 24:26Speaker 3: whatever automation or robotics or software. So, how should a
- 24:31Speaker 3: mid sized retailer, not the Amazons, they've got their they've
- 24:36Speaker 3: got their their flagship, uh, you know, the five star program,
- 24:40Speaker 3: but the smaller ones, the smaller retailers, how do they
- 24:44Speaker 3: stay competitive and keep up with the rest of the
- 24:48Speaker 3: market that is solving these problems very quickly with automated solutions.
- 24:53Speaker 3: Is it just a matter of you know, having that
- 24:56Speaker 3: that deep core understanding of your business and your intentions
- 25:00Speaker 3: and your goals, or is there something else that they
- 25:03Speaker 3: can be looking externally and saying, yes, we do this,
- 25:05Speaker 3: saying let's let's copy this, this proven process.
- 25:10Speaker 4: I believe Rob already touched a little bit into into
- 25:14Speaker 4: that point before he stole a bit of a bit
- 25:17Speaker 4: of my thunder there. So the the the right place
- 25:21Speaker 4: to start is, of course, it's not copying Amazon. Right
- 25:25Speaker 4: is getting very clear on what is the problem they're
- 25:29Speaker 4: trying to solve and understanding the cost to serve. Those
- 25:33Speaker 4: are the two main areas that I always focus on,
- 25:36Speaker 4: what is it that you're trying to fix and understanding
- 25:39Speaker 4: very clearly how much is costing you to serve your clients.
- 25:43Speaker 4: Right is beginning to understand where labor, save service failures,
- 25:49Speaker 4: return processes, touches, and inventory fragmentation are within their within
- 25:53Speaker 4: their network. Right I seen companies or I wouldn't recommend
- 25:58Speaker 4: companies to jump to automation right away without being able
- 26:03Speaker 4: to fix or understand or fix their current problems that
- 26:08Speaker 4: don't probably need automation to or in some cases they do,
- 26:12Speaker 4: for example, basic things like inventory allocation, right, inventory allocation strategies,
- 26:18Speaker 4: slotting right, understanding their proper segregation of their products, clients
- 26:23Speaker 4: and their inventory, how do they manage their order logic? Right?
- 26:28Speaker 4: Those are foundational matters that with minimal investment they can
- 26:33Speaker 4: gain some efficiencies. So I'll start from there, you know,
- 26:36Speaker 4: understanding and fixing the foundational and the basics, then moving
- 26:42Speaker 4: into targeted automation. Once they understand the problem, when they
- 26:47Speaker 4: understand their cost they know their main pain points. They
- 26:52Speaker 4: know what part of the network and the process is
- 26:56Speaker 4: costing the most. So now let's focus on finding the
- 26:59Speaker 4: right amation to solve for that specific problem.
- 27:02Speaker 3: Right.
- 27:02Speaker 4: And the third point is once you go through the foundational,
- 27:06Speaker 4: you go through targeted automation to fix the problems you
- 27:10Speaker 4: already know, then move in to designed for flexibility and scalability.
- 27:16Speaker 4: Those will be my three points to highlight for mid
- 27:21Speaker 4: size retailers when looking into implementation of automation in the future.
- 27:26Speaker 1: Okay, I've got two things that I'll say on this.
- 27:29Speaker 4: One.
- 27:29Speaker 1: One is a very practical it's a tactical one. You know,
- 27:34Speaker 1: I came in a pattern three and a half years
- 27:35Speaker 1: ago and we've built all of our own software and
- 27:38Speaker 1: I'll come back to that in a second. So if
- 27:40Speaker 1: designed your own hardware, we have built all of our
- 27:44Speaker 1: own software. And one of the major reasons that is
- 27:48Speaker 1: is because Ellen, you asked the question you asked, you
- 27:51Speaker 1: said two things, and I think they're important to differentiate.
- 27:55Speaker 1: One was how do I get ahead? In the same
- 27:57Speaker 1: sense as you said, how do I get ahead?
- 27:58Speaker 2: And how do I keep up? And the reality but
- 28:02Speaker 2: those are two real things.
- 28:03Speaker 1: You're right, If you want to keep up, then use
- 28:05Speaker 1: the software that's out there and the processes that are
- 28:07Speaker 1: out there. Right, there's only so many good WMSs out
- 28:10Speaker 1: in the world, and they're only solving so many problems.
- 28:12Speaker 1: And so if you actually want to keep up, use
- 28:15Speaker 1: the best of those, pay for them, make it work.
- 28:18Speaker 1: If you want to get ahead, then you need to
- 28:19Speaker 1: really break the thinking. And so this is my more
- 28:21Speaker 1: practical one is like I use flow based systems like exclusively.
- 28:27Speaker 2: Right.
- 28:27Speaker 1: So if you go into these old warehouses, they're batchy based, right,
- 28:30Speaker 1: So they come in they have to be stowed, for example,
- 28:32Speaker 1: put into the racks, taken back out, and processed. That
- 28:35Speaker 1: is where old softwares work. You need to remove touches,
- 28:38Speaker 1: you need to increase your speed, and so I would
- 28:41Speaker 1: encourage all these people to understand how do you implement
- 28:43Speaker 1: and how can you think about flow based systems better
- 28:46Speaker 1: decision points earlier in the processes. That is how you
- 28:50Speaker 1: can set up You can't execute fungible inventory if you
- 28:55Speaker 1: don't have flow based systems which can dynamically do what
- 28:58Speaker 1: you need to do. Otherwise you're gonna be touching stuff
- 29:01Speaker 1: a ton. It's going to be too slow and you're
- 29:02Speaker 1: not going to be able to do it. So if
- 29:04Speaker 1: you want to keep up with everybody else, then make
- 29:06Speaker 1: sure you choose the right WMS, make sure you are
- 29:08Speaker 1: as a vision as possible. You need great operators. If
- 29:11Speaker 1: you really want to get ahead, you need to invest
- 29:13Speaker 1: in humans, like there's only a few of us that
- 29:15Speaker 1: really know how to do this with our hands, So
- 29:17Speaker 1: you need to find a partner that can do it,
- 29:19Speaker 1: that is specialized in this thing. Or you need to
- 29:21Speaker 1: be able to spend way more money than you're comfortable
- 29:23Speaker 1: on human beings that know this world better.
- 29:27Speaker 2: Because it is you will not get ahead.
- 29:29Speaker 1: You won't be able to differentiate yourself if you are
- 29:32Speaker 1: doing what everyone else is doing. That's just definitionally false.
- 29:36Speaker 1: So how do you get to something that is more dynamic,
- 29:39Speaker 1: more flexible. You got to break the mold a bit.
- 29:42Speaker 3: All right. So coming into our final discussion point, what
- 29:46Speaker 3: is the one fulfillment myth that you think retail leaders
- 29:50Speaker 3: need to let go of before they get really into
- 29:54Speaker 3: twenty twenty six And what's a truth you think they
- 29:57Speaker 3: should build into their strategy instead.
- 30:00Speaker 1: Yeah, this is it's fun because I mean I'm not
- 30:03Speaker 1: a consultant. I'm an operator, right, So this is I
- 30:05Speaker 1: get to talk with tons of brands very much on
- 30:07Speaker 1: like the you know, if you would like services side,
- 30:10Speaker 1: And it's an interesting thing to watch how brands optimize
- 30:12Speaker 1: for things that I think are generally not just not
- 30:15Speaker 1: the right not the right thing, and I think a
- 30:18Speaker 1: lot of people are concerned about they focus on one piece.
- 30:22Speaker 2: So for example, the marketplaces.
- 30:24Speaker 1: For example, you're like, oh, I want to reduce down
- 30:26Speaker 1: how much how many different places I'm shipping too, because
- 30:29Speaker 1: that will reduce that transportation cost. But now I'm doing
- 30:31Speaker 1: larger batches. And now what they don't think about is
- 30:34Speaker 1: I'm spending more in inventory because I'm it takes longer
- 30:39Speaker 1: to get in because I'm doing LTL instead of full truckload.
- 30:42Speaker 2: And now I have not only.
- 30:43Speaker 1: To take longer, so I'm tying out more cash, but
- 30:45Speaker 1: then I'm pushing more into Amazon if my lead time increases,
- 30:48Speaker 1: so I'm spending more on storage fees, and that doesn't
- 30:52Speaker 1: it's a different bucket. So, like the point like you
- 30:54Speaker 1: really need to think about this as a total cost problem,
- 30:57Speaker 1: and brands struggle with with that problem. So I come
- 31:00Speaker 1: back to something I kind of open up with and
- 31:02Speaker 1: like speed is more critical than precision, more than ever.
- 31:06Speaker 1: Like then that's true to end the end consumer, but
- 31:08Speaker 1: that is also true into marketplaces some brands that are
- 31:11Speaker 1: really really big on Amazon for example, or Walmart or TikTok,
- 31:15Speaker 1: getting that that piece is more critical than ever. So
- 31:18Speaker 1: it's been an I mean, it is fun to be
- 31:21Speaker 1: able to have these conversations with brands all the time
- 31:24Speaker 1: like this. We're actually we have a we put on
- 31:28Speaker 1: our own conference here in Salt Lake City. It's May
- 31:29Speaker 1: twenty to twenty first it's here. It's called Accelerate. Actually,
- 31:32Speaker 1: I think we've got a discount code supply Chain thirty.
- 31:35Speaker 1: It's a thirty percent off come to accelerate. This is
- 31:37Speaker 1: what we talk about. We come we talk about these
- 31:39Speaker 1: kind of problems all the time with supply chain people,
- 31:42Speaker 1: marketing people, if you are on marketplaces, we're doing e commerce,
- 31:46Speaker 1: is what we end up talking about. But the thing
- 31:50Speaker 1: that I would end up saying here at the end
- 31:52Speaker 1: of the day is speed is more critical than ever.
- 31:56Speaker 1: I'll say, like a fifteenth time, it is something that
- 31:58Speaker 1: you cannot sleep on. Is really what will define the
- 32:03Speaker 1: way that we move forward as as a as a
- 32:06Speaker 1: retail group, like it is going to be more and
- 32:08Speaker 1: more important, which means you need to have supply chain
- 32:10Speaker 1: capabilities that can keep up otherwise you will get left
- 32:13Speaker 1: in the dust.
- 32:14Speaker 3: Absolutely. All right, Julian, what are your thoughts.
- 32:17Speaker 4: I'm gonna have to go a little bit against Rob's
- 32:20Speaker 4: point there. Yes, speed, speed is great. I think the
- 32:27Speaker 4: myth is that retailers need to let go of that
- 32:32Speaker 4: concept that faster fulfillment is always or equal better fulfillment. Right, So,
- 32:38Speaker 4: for many years, as you mentioned in multiple times, the
- 32:43Speaker 4: industry has been chasing next day, same day, two hours
- 32:46Speaker 4: delivery without really understanding their cost, the complexity, the operational
- 32:51Speaker 4: risk to do so right in North America demands the
- 32:55Speaker 4: mindset is you know, that specific mindset has overextended the networks,
- 33:01Speaker 4: has been increasing the pastel cost. There is labels trained.
- 33:06Speaker 4: You know, there is a lot of impact on pig
- 33:09Speaker 4: performance because the companies are only or they've been looking
- 33:13Speaker 4: only about speed and how to gain that speed without
- 33:16Speaker 4: understanding the fulfillment strategy and how the network and to
- 33:22Speaker 4: end and the distribution is aligned to that strategy. And
- 33:25Speaker 4: usually they're on opposite sides. So that's why my first
- 33:29Speaker 4: point is not that speed is not important. Speed needs
- 33:34Speaker 4: to be considered, but it doesn't mean it's better. And
- 33:37Speaker 4: when we talk about you know, better fulfillment, that is
- 33:40Speaker 4: looking after end to end client experience or customer experience.
- 33:46Speaker 4: The winning for filming strategies nowadays or in the future
- 33:49Speaker 4: will be those that will they can balance trade offs
- 33:53Speaker 4: and intentional segmentation. What I mean by that is not
- 33:57Speaker 4: every customer wants the same things at the same right.
- 34:01Speaker 4: So the main point is that we need to design
- 34:04Speaker 4: networks that can differentiate between service levels by customer, by product,
- 34:09Speaker 4: by geography, and being able to implement that through aligning inventory,
- 34:15Speaker 4: automation and last mild choice choices. Accordingly, right, as I
- 34:19Speaker 4: mentioned before, you can use ups edics, you know, crowdsource
- 34:23Speaker 4: deliveries and other methods to deliver. On top of that,
- 34:26Speaker 4: they need to use data to be able to orchestrate
- 34:29Speaker 4: and balance service profitability and resilience in real time. And
- 34:36Speaker 4: then last last point here is the retailers or companies
- 34:41Speaker 4: that will win in the futures are those that are
- 34:44Speaker 4: being able to flex without breaking right, that they can
- 34:48Speaker 4: implement the proper automation, that they can embrace optionality, that
- 34:53Speaker 4: they can implement potentially multiple fulfillment models within the same
- 34:57Speaker 4: network to accommodate to the strategy and in customer demand,
- 35:01Speaker 4: that can handle the spikes of volumes and label volativity
- 35:06Speaker 4: and carrier disruption. Right, So it's not only about speed.
- 35:10Speaker 4: There's more about speed and in order to make fulfillment
- 35:15Speaker 4: networks better and protecting client experience really quick.
- 35:20Speaker 1: Jullian, I do I think it's worth the clarification. I
- 35:22Speaker 1: actually don't think we're on opposite sides of this. I
- 35:25Speaker 1: did not clarify very well, but I think it's worth
- 35:26Speaker 1: actually mentioning. Right, there's first mile, there's middle mile, and
- 35:30Speaker 1: there's final mile. On the final mile, I couldn't agree
- 35:32Speaker 1: with you more like we are exactly on the same side,
- 35:35Speaker 1: Like don't compete with the Amazon meet your customer or
- 35:37Speaker 1: they are understand what speed is required. I do think
- 35:40Speaker 1: the middle mile as is where speed matters the most,
- 35:43Speaker 1: and that's where most of my my focus was the
- 35:48Speaker 1: file because the complexity of the number of places, the
- 35:52Speaker 1: number of inventory pools, and the number of destinations that
- 35:55Speaker 1: our supply chains need to be able to support the
- 35:57Speaker 1: middle mile speed, because it's the forecaster gonna be more
- 36:00Speaker 1: dynamic than ever, the speed in the middle mile is
- 36:03Speaker 1: more critical than ever.
- 36:04Speaker 2: Like the final mile.
- 36:05Speaker 1: You and I we do not disagree in anyway everything
- 36:08Speaker 1: you said I agree with one hundred percent. But middle mile,
- 36:10Speaker 1: which I think is less sexy than the final mile,
- 36:13Speaker 1: but I think just as important, if not more important,
- 36:16Speaker 1: in a world where we have inventory in so many places,
- 36:19Speaker 1: in such a decentralized consumer experience, that is where the
- 36:23Speaker 1: differentiation actually lands. And it's less visible, less sexy, but
- 36:27Speaker 1: it's just as interesting if you actually break it down.
- 36:31Speaker 2: So I think we're actually alive in the just.
- 36:35Speaker 1: Me feel better for nothing else, we're on the same page.
- 36:39Speaker 3: Well, thank you gentlemen for joining me today to talk
- 36:43Speaker 3: about this topic, and thank you to our listeners for
- 36:46Speaker 3: tuning into speaking of supply chain. That discount code that
- 36:50Speaker 3: Rob mentioned will be available in the description if you
- 36:53Speaker 3: want to check out that user conference in Salt Lake City.
- 36:58Speaker 3: It is felt Lake City, correct, it is yeph Okay, good,
- 37:01Speaker 3: I got it right. You know, all the snow is here,
- 37:05Speaker 3: so I don't know what's going to be happening in
- 37:08Speaker 3: May in Utah. It's not going to be snow. Sorry,
- 37:11Speaker 3: we took it all.
- 37:12Speaker 1: Yeah, you stole it. Here's some snow on the mountain. Still,
- 37:15Speaker 1: it's quite beautiful, but hopefully not actively snowing a bunch
- 37:18Speaker 1: in the city.
- 37:19Speaker 2: We should be good by then, exactly.
- 37:22Speaker 3: All right, So thank you to our listeners for tuning
- 37:25Speaker 3: into Speaking in Supply Chain. If this conversation sparked a
- 37:28Speaker 3: new idea or touched on a challenge that you're navigating it,
- 37:31Speaker 3: we'd love to hear from you. There are links in
- 37:33Speaker 3: the episode description for you to join the conversation online.
- 37:36Speaker 3: Be sure to follow us on your favorite podcast apps
- 37:38Speaker 3: so you don't miss out on hearing how global design
- 37:41Speaker 3: meets execution.
- 37:48Speaker 5: You've been listening to Speaking of Supply Chain, a me
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- 37:59Speaker 5: keep delivering the latest in supply chain information. Thanks for listening,
- 38:03Speaker 5: until next time.