Interview by Symphony RetailAI’s Paul Hoffman with Ed Wong, SVP Supply Chain and CIO, Smart & Final who presented at the Xcelerate Retail Forum 2017.
What’s the biggest change impacting supply chain in the grocery industry?
The main external factor is the changing consumer. Specific to supply chain, it’s about how the supply chain, both from a technology and business process perspective, is aligned to respond to the changing end consumer – one who is very demanding due to the internet giving them so much power relative to product information, competitive shopping and even expectations of service. In the front end, we have a massive amount of data and data analytics that are needed to continually meet the demanding customer. The front-end component of the customer interaction quickly ended up having a lot of implications for supply chain, particularly in the areas of fulfillment, inventory availability and speed – also the last mile around the quality of service. So, all these changes in the landscape demand a hefty dose of technology enablement along with a willingness to make business process changes – and ultimately – on a broader scale, realigning the organization to be extremely customer focused in delivering on expectations that are always rising.
It’s interesting to consider impacts on the supply chain as the average person tends to think that the customer-centric revolution is about the front-end, the smartphone, mobility etc. We don’t consider how pervasive the impact is throughout the organization.
Yes, if you look at retail, it used to be a very product-centric industry, particularly if you think of the department stores and how retail was 15 – 20 years ago. Now we’re in the era of the consumer with smartphones and the internet, which has provided them new capabilities. We talk about being more customer driven, so at least in terms of sequencing, products have become secondary because you must know customer preferences before you decide what type of assortment you build.
Internally, merchandising used to be about the merchant “prince” and “princesses,” and then it moved to an emphasis on CMOs because of customer engagement resulting from the internet, online shopping and digital. Now, it’s in the third era where we’re talking about the fulfillment of a promise. So, you may have the right interaction in which the marketing team is out there providing the digital footprint and experience, and you may have the merchant team providing the right product aligned with pricing and branding, but now it’s getting into supply chain—from the planning aspects of inventory to the fulfillment of logistics execution. It’s kind of an interesting lifecycle that the industry is going through, particularly for us from a grocery perspective. Many grocery retailers are still in “testing mode” and there’s a lot of hoopla about the last mile from a delivery perspective. It’s interesting how it’s going through the full cycle of the major operating components of a retail company.
What do you think is the next big thing in supply chain?
I believe it’s about data analytics and how organizations must operationalize their data. We’re picking up a lot of information – all the talk about big data, etc. There’s a lot of investment in tech companies like IBM Watson trying to figure out what to do with unstructured data (social forum chats, etc.) and converging those points of insight into something actionable. So, I think the technology components exist. But it’s always the case that operationalization is somewhat behind and there isn’t a very straight path in terms of what to do with such an immense amount of data. I think, in terms of supply chain, there’s a lot of analytic insight for planning and execution – things like network analysis and capacity planning to truck optimization, and managing cube. When you get into the supply chain area, it’s all about linking planning with execution, and the ability to operationalize data and insights becomes much more important. How do we make that a realization? I think this is the next very interesting thing, if not the next BIG thing.
Extending analytics and operationalizing across all the points of supply chain seems extremely complicated these days in terms of sourcing from different parts of the world, supply /demand, volatility and that sort of thing.
Making technology into some sort of operational component tends to be prevalent in supply chain. For example, with transportation optimization, we’ve got Google Maps and traffic patterns, and we consolidate them into a transportation management application. We can produce an optimized truck delivery route that would have parameters to lower fuel costs and improve the speed and timing of deliveries. So, that’s one aspect of leveraging data into something very operational.
When you apply that same concept and ask “OK, now that we have a wealth of consumer data, unstructured data and customer preferences – implicit or explicit – how do we aggregate all of that and drive it more toward how supply chain operations can leverage it?” This is what I mean by operationalizing the data and insight, and it’s something that still requires a lot of discussions.
Why did you participate in Xcelerate?
I’ve been in retail for a long time; I find it to be very community driven. And I have always found a lot of value in hearing other retailers share experiences that they’ve gone through. There may be similarities in experiences or you’ll pick up a different dimension and expand your awareness. I think it’s great to share experiences so that others may benefit, as I have at other conferences.
For those who didn’t attend Xcelerate, please mention what you covered.
Primarily, it was about our story of how Smart & Final responds to a lot of external changes in the retail industry that I alluded to earlier. I covered how our effort ties in with Symphony GOLD, now the Retail Solutions Division of Symphony RetailAI, which has a lot to do with technology upgrades and refreshes. I walked through the story about the context that drove us to start the initiative, and then the selection process we’d gone through, the criteria around how we decided to partner with Symphony GOLD and how, upon implementation, we navigated through a few key idiosyncrasies. We’re in the middle of upgrading to GOLD v5.10 and so I shared a few key points of our journey now. Also, as this is phase one of a three-phase technology initiative that involves Symphony GOLD, I talked about scope and key benefits we hope to achieve going forward.
Learn more about Xcelerate Retail Forum.