Of all the recurring themes at Groceryshop 2022, an unlikely candidate for the most prevalent was also the least glamorous. We’re talking about organizational structure, a topic raised by numerous speakers at the technology focused event. This was the case even when the agenda description seemed unrelated, underscoring the point that structure is the great enabler of technology driven strategy.
It was a point made by Joel Warady, president of Catalina Snacks, during a session on innovative merchandising strategies with Parag Shah, vice president of omnichannel merchandising, center store, The GIANT Company.
“We would love to see retailers act faster. The world is moving a lot quicker, and retailers are challenged by how they can move faster,” Warady said. “We live in an age of instant gratification that requires retailers simplify things. They have to think about organizational design.”
He suggested organizations create a new C-level role of chief listening officer to monitor dynamic consumer behaviors and adjust merchandising accordingly.
Process Improvement Matters
Structure and decision-making processes were also an issue raised by leading bakery ingredients manufacturer Dawn Foods during a session on building the grocery supply chain of the future.
“Now is a good time to invest in the technology around supply chain,” said Charles Blevins, vice president of sales, inventory and operations planning and replenishment at Dawn Foods. Because the company was hit hard during the pandemic by a variety of stressors, it led to the development of new processes to increase the frequency of demand and supply matching.
For example, Blevins described weekly sales and operations execution (S&OE) meetings and monthly sales, inventory, operation planning (SIOP) meetings. The S&OE process, along with a commitment of resources, helps the company address issues so they so they don’t creep into the monthly SIOP process, according to Blevins.
“We have more than 40 people who are involved in demand planning at Dawn,” Blevins said, describing a cross-functional approach.
Because data supply chains have become as important as physical supply chains, increased cross-functional collaboration is needed to get more value out of demand planning, according to Brian Houck, partner, US Supply Chain Leader, PwC.
“We are in the golden age of supply chain. We are no longer viewed as a cost center. We are viewed as a growth enabler,” Houck said during the session with Blevins.
The firm’s quarterly C-suite survey recently showed that 53% of executives say supply chain investments are going to be significant going forward.
“On one hand, we need to fundamentally rethink the way we operate supply chains to respond to demand. On the other hand, there is an intense amount of pressure put on us every day responding to issues,” Houck said.
How Hormel Does It
So prevalent was the issue of supply chain and organizational structure at Groceryshop that it was the focus of an entire keynote session by PJ Connor, president of consumer products sales at Hormel Foods. Beginning Oct. 31, Hormel is shifting to a new organizational structure with three operating segments – retail, foodservice and international – to reflect changes in the company’s portfolio.
One of the biggest changes is in the retail segment where seven teams are being combined into one to eliminate duplication of effort and dig deeper on insights.
“There is a lot of change management that goes on with a re-org of this magnitude,” Connor said.
Ultimately, the new operating model and a center of excellence called Brand Fuel that is focused on innovation, insights and technology, will enable Hormel to be an indispensable strategic partner to retailers, according to Connor.
Grocery Without Compromise
Kroger is executing an e-commerce strategy based on a philosophy of not forcing customers to make compromises. The retailer’s CIO Yael Cosset explained what that means during a session titled, “Innovations in Fulfillment, Pickup and Delivery.”
He described how during the pandemic shoppers were willing to make compromises because of the unique circumstances. Customers would settle for the next day with delivery, but the growth of convenience has been substantial in 2022.
“The willingness of customers to compromise on timing and compromise on what they get and how they get it has gone away,” Cosset said.
The desire to remove the need to compromise underpins Kroger’s blended approach to grocery fulfillment that relies on stores and an expanding network of highly automated fulfillment centers developed in partnership with U.K. retailer Ocado.
“The biggest trap for the industry is to decide that one method is sufficient. That is why we have focused on balancing the two assets to drive a superior experience for our customers,” Cosset said.
The company is also focused on the aggressive use of data, so customers don’t have to compromise. Cosset said 97% of Kroger’s transactions are tied to a household, which he said gives the company a broad and precise understanding of what matters to customers. For example, Kroger executed two trillion personalized recommendations in 2021 and during the first quarter it saw customers use 750 million digital coupons.
“The key is how do we bring real time data to and real time science, and all of the signals to life to optimize the entire business – marketing, merchandising, store teams, supply chains – to deliver an amazing experience to our customers,” Cosset said.
How effective Kroger is in the usage of data in the future will be the difference between good and amazing, according to Cosset.
Parting Shot and Perspective
The Groceryshop experience, the 200 speaker sessions and thousands of conversations that happened on the show floor, was summed up nicely by Lauren Weiner, managing director and partner, Boston Consulting Group.
“What we’ve heard is AI is going to fundamentally change every aspect of the grocery experience,” Weiner said.
She won’t get much of an argument on that point, but technology only gets a company as far as its organizational structure permits.
(PS: Groceryshop may be over, but conversations around innovation and AI continue. If you missed the SymphonyAI team at the show but want to learn more about how AI is transforming grocery, please connect with one of our solutions experts.)