At the recent CSCMP Edge 2020 conference held last week, Arthur Valdez, Executive Vice President and Chief Supply Chain Officer for retailer Target was featured in a 30-minute main stage interview.
In this interview moderated by CSCMP President Rick Blasgen, Valdez spoke to the retailer’s efforts to transform physical stores as an integral component to online customer fulfillment. From our lens it was unfortunate that more time could not be allocated to this interview since Valdez represents, by our observation, the pinnacle of supply chain leadership relative to Omni-channel customer fulfillment support capability.
In recent Supply Chain Matters blogs highlighting retailers who were best able to respond to the COVID-19 pandemic online buying surge, it was clear that Target would be included.
In what was headlined as a “monster quarter” in financial and operational performance, this retailer reported the strongest quarterly sales growth in the firm’s history and similar to other retailers that we have highlighted, was able to benefit from product selection, inventory availability and most convenience for online buyers, many of whom were new to Target. Some were likely frustrated by lack of inventory or online response from other retailers.
The Broader Perspective
What we as supply chain management professionals sometimes do not get the time to do is reflect on how organization’s reached certain points in an overall journey toward business transformation.
Further, there are the notions that transformation does not occur in a manner of several pilot initiatives but rather a lot of invested time, thinking and collective leadership.
In the case of Target, it was been at the least, a four-year journey. It also ran counter to traditional retail industry thinking at the time, and thus required active leadership as well as commitment. Like many transformational efforts, there were resets and adjustments, but the end goal remained consistent.
CSCO Valdez was recruited by Target in March 2016 after serving 16 years within Amazon’s supply chain organization rising to the leadership role of Executive Vice President, Chief Supply Chain and Logistics Officer. At the time of the Valdez appointment, Target CEO Brain Cornell specifically addressed five strategic priorities, many of which had supply chain connotations. The first was to become a leader in digital online fulfillment, including direct from store shipping capabilities to manage overall inventory more efficiently. That was bold in 2016 and counter to prevailing thinking among retail executives.
For his part, Valdez proceeded in adding a lot of deep supply chain leadership to ultimately build-out this retailer’s Omni-channel online customer fulfillment capabilities. He recruited supply chain talent from Amazon, Walmart, and other online retailers, executives who demonstrated vision and bold thinking.
Credit also goes to Brian Cornell who established the vision and leadership to declare that local retail stores were the advantage that traditional retailers had in competing with the mega online retail platform providers, especially Amazon.
The most unique move, by our lens was in establishing a singular vice-presidential leadership role for global inventory management. Supply Chain Matters characterized that move as the key capability for successful omni-channel fulfillment competency, along with network and advanced technology enablement. That role had to be incredibly difficult and challenging without a lot of high-level executive support and mentorship.
This supply chain industry analyst recalls in 2018 and in 2019, reading and hearing of conflicting views among retail line-of-business teams, each representing either online fulfillment businesses and the other traditional brick and mortar stores. Each were driven and measured by different P&L measures and each likely controlled financial investments in inventory, buildings and technology. There existed the classic debate among marketing and merchandising who viewed online buying as a pure merchandising based strategy, advocating technology investments in all forms of tracking customer interaction and buying intentions. That seemed great, if at the moment of truth when the customer was ready to buy, there was inventory available, and would meet delivery and service expectations.
The takeaway for our readers is twofold.
COVID-19’s major disruption to both product demand and supply networks has provided evidence that transformation can and has occurred in a drastically reduced time period. Sustaining transformation however, does take added time and perhaps some setbacks along the way.
Transformation is not solely a technology led effort, rather it results in investing in challenging traditional thinking. Such thinking includes a laser-focus on customers and their specific needs, re-thinking how processes and decision-making can be performed with added intelligence and speed and at the same time exceeding overall business financial and operational objectives.
The supply chain objective for the “new normal” is a focus on enhanced agility and resiliency, enabled by most appropriate technology. Preparing for a new normal of continuous business and supply chain change requires prioritization of which capabilities to focus on in building a digital foundation. That should be followed by addressing the organizational team and individual skills needed to sustain a digital based business process and decision-making capability.
© Copyright 2020, The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.