DC Velocity - March 2020

ABefore we get into the kind of challenges they are facing, I think it is important to level-set on what we mean by
“flexibility” because I think everybody has a different view.

So, when I say “flexibility,” especially with regard to our omnichannel retail partners, I would say they are looking for both peak flexibility within the seasonal year-over-year look and for flexibility in terms of business-dynamic changes. So, what happens if they add a new business unit or want to take on a different kind of distribution node? I think it is flexibility to do both of those things.

But to answer your direct question in terms of challenges, I would say there are two buckets that I’d put them in. There is a strategic look on it, but also an operational look. From an operational perspective, it is always a question of automation versus labor and what is that right mix and balance. So, I think the big challenges our executives are facing are related to questions like: How do I support peak? And how do I design a site that has the right labor/automation mix to support both peak and non-peak times?

I have a strong apparel and footwear background. So, from a more strategic view, I would say the customers we are working with are really focused on this seamless omnichannel experience. I think everybody that is out there wants to delight their customers with a seamless experience. I would say that is a big challenge that they’re working to address.

Then I would say the last challenge, from a strategic point of view, is a strategic alignment with their executive teams. It’s really a matter of telling the story of what it means for the company as a whole if I add these distribution capabilities and if I can service my customers faster. Telling that story strategically and how it aligns with their goals is a big challenge that we work through.

QYou just gave some good guidance on some starting points, but what are some of the concrete steps you’d
recommend to the typical customer?

AWe like to start with what we call a “value assessment.” Think of this as an entry point to what a business case
could be. If you work through these distribution initiatives
or add in certain capabilities, it is a good introductory
step to get a lot of key stakeholders aligned early on in the
process before you go down the line of working with a
company like Fortna for six or nine months—however long
one of these design engagements lasts. What are the goals?
What are the capabilities? You should really test the whole
value of what these new capabilities could [bring to] your
organization.

Then once we have a design and a plan in place, we do a rigorous sensitivity-type analysis to understand it. What happens if, let’s say, e-commerce volume actually goes down and then traditional retail becomes more popular? What if the channel mix changes or you add a new channel?

We feel that running those sensitivities on
the design is a really important step toward
overcoming a lot of those challenges.

Q It seems for a number of years now, so much thematically has been about how much is changing and the accelerated pace of change. Is it time for logistics and supply chain executives to recognize the reality that change is the new normal?

AI would agree that we live in times of change. I think customers are driving that change. I think they continually want to be challenged, delighted, and excited about the experience that brands are bringing them. I don’t think that will be going away anytime soon.

QSupply chain executives may recognize that they need to be doing all of these things, but they often don’t know where to begin. How do they start down that path? AThe advice I would give them would be to start with alignment within your organization. I do think what makes or breaks a lot of projects are considerations like: Does it meet your corporate goals? Have your key stakeholders—like your finance team, your merchandising team, and all the other teams who are involved—bought in to where they see that the supply chain can bring them value and bring them to the future?