I recently had the privilege of moderating a virtual Leaders in Action (LIA) event on the theme of customer-driven business transformation, co-hosted by Lowe’s EVP Supply Chain, Don Frieson.
A wide-ranging group of COOs and CSCOs from large global companies joined this interactive event to hear Lowe’s story and to share perspectives with peers on how to build agile/adaptable supply chains and organizations that can quickly pivot at the speed of today’s customers, markets and world events.
Beyond the fascinating roundtable discussion that followed, the Lowe’s story was simply impressive. It runs nearly 2,000 home improvement stores in North America and over the course of a single year, Don’s team executed a transformation roadmap that was originally planned for two to three years. They delivered new omnichannel customer services: curbside pick-up, store locker pick-up and 60% of online orders fulfilled through stores at a six times faster rate than the previous SLA. The team also reengineered Lowe’s hub-and-spoke distribution model to allow for capabilities such as next-day delivery of appliance orders through fulfillment centers, which is faster and more efficient than using its brick-and-mortar store network. New technologies underpinned most of the new capabilities such as improved end-to-end inventory visibility and geofencing in stores to recognize when customers arrive to pick up online orders.
Behind the tremendous change manifested in stores, and the supply and distribution networks behind them, Don and team put a strong focus on people and organizational capabilities. Many of the most significant changes were made in the early waves of the pandemic. Safety and support for families was paramount. Don also focused on shifting the culture to quickly test, learn and pivot when introducing new capabilities. “Fail fast” is now a part of Lowe’s supply chain cultural DNA. Don, a management-by-walking-around type by nature, adapted and learned to coach and recognize accomplishments virtually through town halls and skip-level meetings.
What Did We Learn?
Here are some key takeaways from the group sharing and discussion at this LIA event:
- We began with an acknowledgement that every industry represented on the call, whether business-to-business or business-to-consumer, faces dramatic shifts in how customers want solutions designed, delivered, supported and offered for sale.
- Some high-tech and apparel retailers are leveraging micro-hubs for faster fulfillment to large population centers. Placing stock in smaller storage spaces, closer to the final point of consumption, allows for greater delivery speed. Risk of slow-moving and obsolete (SLOB) inventory is offset by more sophisticated demand sensing and inventory planning capabilities.
- A fast-growing retailer uses a multi-faceted approach when partnering with suppliers to avoid service challenges, including more frequent collaborative planning discussions (from a few times a year to weekly) and extending its logistics partner capabilities for inbound freight, so vendors can focus on manufacturing.
- Some retail and consumer product companies are using or exploring the use of non-traditional forms of logistics such as self-chartered ocean freight and transcontinental (e.g., China-to-Europe) rail lines to avoid bottlenecks in the marketplace.
- Data quality remains a key challenge to implementing new digital capabilities, including advanced analytics. A high-tech company thinks of its data as an asset, just like inventory. It tracks the percentage of its data housed in a common data lake, as well as the overall level of data quality. Priority for which data domains move next into the data lake is based on use cases (e.g., this year a key priority was Tier 1-4 supplier visibility).
- Acquiring and retaining the right talent is another critical success factor for pulling off large-scale transformations. Work location flexibility is a new differentiator in the employee value proposition. One company allows all employees to work 50% remote and, with permission from a direct manager, some can work up to 100% remote. Another company, employing a large number of frontline warehouse workers, is offering more flexible use of unpaid days off and more novel work schedules.
It was inspiring to hear the level of conversation and passion for these topics across the supply chain community. We’re very much looking forward to the next gathering of this esteemed group, in November, to explore the challenges, opportunities and best practices for orchestrating broad-scale outcomes through ecosystems.
VP Distinguished Advisor
Gartner Supply Chain