EMBRACE SUPPLY CHAIN INNOVATION, BUT DON’T NEGLECT THE FUNDAMENTALS

For many organizations, the tools are running faster than their readiness to use them. They still need to connect the dots and learn how to apply the information to their business. Otherwise, you have a fancy tool kit that can’t help you serve your customers the way you want.

Kevin Kryscio
Senior Director, Supply Chain Distribution & Logistics, Ace Hardware, Section 4
After 93 years in business, Ace Hardware has developed considerable supply chain expertise. Every year we move more than 115,000 unique SKUs worth billions of dollars across 14 warehouses and into 4,300 independent retail stores in the U.S. alone. We spend an immense amount of time communicating with our vendors and co-op members to improve our processes and deliver outstanding customer service. And we’re excited about the new opportunities technology is making possible.
Yet for all its promise, technology is just a tool. It doesn’t mean we can neglect the fundamentals of supply chain management.

Yet for all its promise, technology is just a tool. It doesn’t mean we can neglect the fundamentals of supply chain management. Only then can technology take you to the next step in evolving your supply chain. Technology or not, you still need to master the same elements: lifecycle management, inventory strategies, on-time delivery, timing, sequencing, and capacity. In today’s environment, that’d be difficult without technology, but still necessary.

Thankfully, technology extends our expertise and helps us provide the best service we can to our stores and their customers. A good example is preparing for bad weather, which is a critical factor in the hardware business and for Ace retailers. A hurricane, a snowstorm, or a flood can drive urgent needs with little notice. Thousands of local customers might need a generator, wet/dry vacuum, batteries, and flashlights on very short notice.

Big data and machine learning can help us meet those needs by analyzing historical weather patterns and sales trends to prepare and ship the appropriate inventory in advance of a big storm. We can do much more powerful simulations and network studies, which help us pre-position inventory and integrate more closely with our suppliers.

Technology extends our expertise and helps us provide the best service we can to our stores and their customers.

And since big storms might only come every few years, technology helps preserve all that knowledge, even if the person who managed through the last storm has moved to a new job. After the storm has passed it is critical to delineate storm-related demand from base demand to enable a solid forecasting process, and a challenging task to accomplish without technology.

We can also use data to provide more flexible product offerings, extending the availability of important goods well past the point where many retailers have moved on to the next season. When our competition runs out of ice melt or snow shovels late in the season, Ace uses tools to react more nimbly, and sense where demand will be, and route inventory there efficiently.

Improved data analysis also enables us to retain inventory in central locations to help reduce inventory positions while increasing our service to our retailers. With big data, we’re now able to take an end-to-end view, from sourcing strategy to buying strategy and all the way through the pipeline, to understand how to best serve the end consumer.

The result is that our retailers across the U.S. can rely on us to have the right products in our warehouses and to ship them where they’re needed, on time. Our task is to do all that heavy lifting in the background and make it painless, so they can focus on retailing and the end consumer.

Ultimately, those gains in efficiency and customer service levels require traditional supply chain competencies as well as new skills… You still must connect the needs of the organization and the needs of the consumer to the tool set.

Ultimately, those gains in efficiency and customer service levels require traditional supply chain competencies as well as new skills related to new technologies. You can collect all the data you want, but it won’t help you if you can’t understand it well enough to make decisions or react when something goes awry. You still must connect the needs of the organization and the needs of the consumer to the tool set.

For many organizations, the power and availability of the tools are running faster than their readiness to use them. They still need to connect the dots and learn how to apply the information to their business. It may be a bumpy ride for some, but I’m optimistic that we’ll all get there. Otherwise, you have a fancy tool kit that can’t help you serve your customers the way you want to.