Fate Leads the Willing to Supply Chain Transformation

171205 December cover

In “Letters from a Stoic,” ancient Roman philosopher Seneca wrote “the willing soul Fate leads, but the unwilling drags along.” Letter 107, including this quote from Cicero, focused on the impermanent nature of the world and the need to be prepared for change.

Similarly, as we approach the end of 2017, the supply chain community continues to grapple with the extremes of Seneca’s letter, especially the fate that meeting customer expectations is an entirely fluid proposition. Retailers are a prime example, as in many cases, their poor financial performance results from a historical inability to embrace change and adapt their strategies. For example, following the 2015 holiday shopping season, we wrote that despite stubborn merchandizing methodologies requiring extensive inventories, our Consumer Value 2020 study suggested that product availability was “neither a high priority, nor low” for customers making buying decisions.

To articulate how companies failed to recognize this change in behavior, we also highlighted how retail inventory growth was outpacing slowing sales growth. Now, inventory growth hasn’t subsided entirely, but a remarkable trend emerged in 2017 showing that some have begun to let fate lead them forward; looking backward from August 2017, overall retail sales growth was greater than retail inventory growth in eight out of the last 12 months.

Retail Sales & Inventory Growth Chart

JC Penney’s (JCP) actions demonstrate how such strategic shifts are initiated. Two years ago we described their supply chain model as having “differing levels of omni-channel implementation (that) accentuated inconsistent expectations among consumers.” However, JCP’s Q3 2017 earnings call highlighted the motivation behind significant behavioral changes. As stated by CEO Marvin Ellison, “The goal is simple, we want to flag the organization, streamline decision-making and increase our agility in this rapidly changing retail environment.”

With this goal at heart, JCP has broken from past inventory proliferation, showing a “nearly 9% reduction in the quarter,” facilitating a reset of its women’s department offerings and leading to “the first positive comp for the month in this category in 14 months.” Also ground-breaking for the company was the decision to dissolve the chief merchant position with Ellison’s stated reasoning of, “we should have more nimble, agile decision-making based on merchant instincts and data without having this hierarchy that slowed things down.”

JC Penney’s attempt at transformation is in the early stages. The drive for change is echoed by the broader supply chain community. Our 2017 Future of Supply Chain survey revealed that the percentage of those seeing little or no change to customer fulfilment has decreased steadily since 2014. This means that companies are accepting the need to drive change and are taking the time for some serious introspection; they’re reassessing what is really important to the company, comparing that against the initiatives already in-process, and choosing the best course of action.

Impact on Customer Fulfillment Chart

Nike is also embracing continuous transformation. Consider the words of COO Eric Sprunk at Nike’s 2017 Investor Day: “We are transforming the sophisticated global supply chain from one where a futures order was historically our signal to start supplying the market into one, where consumer demand is our signal to anticipate and respond. To make this shift, we’re digitizing our end-to-end supply chain and creating a model with shorter lead times to deliver what consumers want, when they want it, where they want it.”

Whether your approach to a strategic shift is based on blending innovative and automated manufacturing like Nike, or organizational behaviour and structure like JC Penney, it’s clear that the very nature of supply chains is always changing. As the leaders of today, preparing the leaders for tomorrow, the time is now to make a break from “the way that it’s always been done.” If you’ve already begun your transformation, you know that embracing change and letting fate lead is an ongoing process.

If you’re letting fate drag you, either through stalled initiatives, or hyper focus on the obstacles ahead of you, consider the words of another noted stoic and ancient Roman emperor, Marcus Aurelius, who said, “The impediment to action advances action. What stands in the way becomes the way.”

 

Your questions and feedback are always welcome via email at [email protected], or via Twitter @pvanhull.

Author Patrick Van Hull

More posts by Patrick Van Hull