Andy Murray sits down with Mike about the customer implications of on-shelf availability and out of stocks.  Andy is a former executive at P&G, Saatchi and Saatchi X and recently retired as the Chief Marketing Officer of Walmart ASDA. 

Andy provides us prospective about the customer implications of out of stocks for retailers.    What customer choices are made when a retailer is out of stock from a brand switching point of view? Why is OSA is important for both brick and mortar shoppers and Buy Online Pick Up in Store (BOPIS) shopping.   

Donnie Williams 0:04

Welcome to Season Two of the SCMRC lead podcast featuring epic supply chain lessons from our industry partners. My name is Donnie Williams and I am the Executive Director of the Supply Chain Management Research Center in the Walton College at the University of Arkansas. Season Two of the podcasts will be hosted by Mike Graen. Mike is the director of the retail supply chain initiative, and this is a strategic partnership within the SCMRC. The goal of this initiative is to surface the challenges and opportunities of on-shelf availability or OSA. Focusing on the concepts, tools, and technologies driving retail OSA. Season Two will feature a dynamic guest list of retailers, CPG suppliers, solution providers and industry leaders to drive collaborative efforts and advanced learning within the industry. Thank you for joining and enjoy the podcast.

Mike Graen 1:02

Andy Murray 2:19

Thanks for having me, Mike. I really appreciate it. It's been, it's a real honor to talk about this, especially with you since our combined past of overlap for so many years. And it's great to compare notes talk and shorthand at times. So catch, call me out if I'm using acronyms that only you and I know from our shared background.

Mike Graen 2:38

You got it, you got it. Before we get too much farther, I want to introduce Pierce to us. Pierce is actually a University of Arkansas, business school supply chain major. Andy, I have taken your lead and your suggestion to, to really integrate the students from the supply chain organization as part of every one of the podcasts that we do. So Pierce, why don't you go ahead and unmute and kind of introduce yourself, give us a little background about yourself.

Pierce Coenen 3:04

Yep. So I'm a junior at the Walton College of Business, I'm pursuing a degree in supply chain. And I've been around warehouses and semi trucks as long as I can remember, my dad's in that industry. So I'm excited to sit down and talk with you guys today and see what insights you have to offer.

Mike Graen 3:25

Awesome, welcome aboard. And if there's any questions you have, I'm gonna, I'm gonna just let you know upfront, I'm gonna put you on the spot at some point in time during this and and have you ask a question of Andy. But if you have any questions along the way, or any comments that you want to make, we want to make sure that this is very interactive. So feel free, come on and do that.

Pierce Coenen 3:43

Yes, sir.

Mike Graen 3:44

Andy Murray 4:57

Well, sure, yeah, Boy, I tell you um I'll tell you one story. I was in Asda in the UK and I, we had substitutions, I've been in the store earlier time and had walked the store for certain things. And I knew they pretty much carried certain items. And, you know, being an American in the UK, you it's really kind of confusing to shop, a store like that, and where the foods were called different things. You know, meats are classified in joints, and I thought joints were something that were sold in these dispensaries or something. And so, so, you know, in any way, we do a lot of grocery home shopping to test the system out and using that, and it's a great, fantastic grocery home shopping thing. We were starting to get a lot of substitutions. And I'm like, wait a minute, I know they have these products. And you know, it's just really frustrating. And so as, as an experiment, you know, I got this order that was out of stocks on on it in the grocery home delivery. And so the store, it's kind of sad, I was doing grocery home shopping when the store was only, like four blocks away. And so, but anyway, you know, what can you say? So I was busy. And I walked down to the store, because I said, I know they've got this stuff, this is crazy. And so I went down to the store, and I found most of the items. And I thought that's really strange. And so came back. And I said, Let's try something else. Let's take substitutions off and see what happens. And sure enough, took substitutions off. And our order completion rate pick rate, you know, fill rate accurate was like went to the roof. And I said there's something going on here, right. And so going back into that store, again, with a different view to what what could have caused that? Well, it appears all the product was there. But the store had had that weekend, several modulars modulars reset, and they changed positions in a lot a few of the items that were out of stock on and moved. And the order pickers were going fast. And you know, they didn't they they have routines too. We talked about customers not finding things, what happens when you reset, it feels like an out of stock. And sure enough, you know, they've been moved around a corner, and was now on an end cap. And so from a picker standpoint, it's like he didn't have it. And but they did have it and it was just the speed and the pick rates. They just, you know, missed it. And so that that turned into an insight really on how even little things like a modular reset can affect customer experience, which that is part of the supply chain process, right?

Mike Graen 7:30

Yeah, absolutely. That's a great example. That's a great example. And just to build on that, since you sort of hit on the whole online order, etc. I mean, that wasn't available several years ago. What was available several years ago, was you built your order at home, you got in your car, you drove to the car you drove walked up and down the aisles, you pick stuff up, you checked out or waited in line to be checked out. There's no self checkouts at the time. Here's I'm dating myself a little bit, hang on so and you came home with the product. Now I got all these options. We got online grocery we got, you know, pure online players like Amazon, we've got integration of the difference of those, we have some retailers that expose their on hands in stores, saying I only have three. The other ones say I'm out of stock when you go to the store and you actually find them. So from a customer perspective, help us think through all what are the what are the customers going through that customer journey and all those different ways that they can get their product? And what is the implication from the supply chain perspective and on shelf availability of that?

Andy Murray 8:39

Wow, that's a big question. There's a lot of implications there. I think, you know, if you start with the customer mindset, and what they're trying to do, which is you know, save, the customers have three budgets, they've got a time budget, a money budget, and a frustration budget. And depending on the category you're shopping, if they don't find it in store, wherever they're going in a certain amount of time, you can exceed their frustration limit and they'll just walk out they'll walk out of that aisle without buying anything because the maximum amount of time. So time has always been, you know, a real important component. And you look at what's happened with what what what we found, what I found through the years is that if you look at an aisle and you try to understand what they're coming in there for there certain categories where, let's say razors you're coming in a razor is a refill purchase, if you come in to buy the razors at but yet the merchant might want to sell you new systems. And so if you come in with razors on your list, and you're gonna get 90 seconds to that, that experience, and they make it harder to find the razors you're looking for, but easy to find new systems. You know, if you use up that time budget you're out, but if you make the thing that usually is on the list in a refill type category, easy to find, first, the customer will double back and give you browsing behavior. To spend a little bit more time, they might be more willing to do that. And many categories work that way. Ice cream is another example. You know, vanilla ice cream, most important, easiest refill type. That's a refill mindset that the customer comes into. But if you're stacking all the latest flavors of innovation from Ben and Jerry's, you know, you make vanilla hard to find. They're not in browsing mode until they accomplish the task and the buying mode. And that's one key insight that you've got to understand in terms of how customers interact with this space. And I think what's going to happen, what is happening is, a lot of these essential categories, because of COVID, are now easy to find online and are quite comfortable with it. And so the concern I have and how that could play out is certain categories that are essentials are now pretty comfortable for the consumer to shop and buy online. And you're not going to get much browsing behavior in those categories. And so how do you get new items, if you're a supplier with a new item, and you want to get it in front of a customer, if they're not browsing that that aisle and so I think the most categories, Mike are really over ranged and under choiced. And so when you can't really see differences in how its shelf set up. And you're just looking a lot of range, you're not getting that I think what's the unintended consequence of some of the things that's happened with COVID is, you're going to have to have more choice clarity at shelf so that it entices better browsing experiences, and most essential categories are not blocked in a way to really delineate the choices you have, and how to make that a compelling experience. So I do think that's could be a real challenge for getting new items in the store, but also certain categories, which is now just as easy to buy online. And it really has affected the customer experience.

That's great point,

I have a question about the online shopping. So as a customer just purely from a customer standpoint, I myself have never used the Walmart online pickup or anything like that it's really never occurred to me to even go online and shop for groceries. I've always been someone that just goes in the store. And I find that to be the case with most of my peers as well. And I was thinking, Do you think that maybe I mean, since the older, like the older group of people may be a little more worried about COVID and things like that. And they may have now finally gotten comfortable shopping on the internet, do you think that you see more middle aged people shopping online than you do younger people?

I can't say about the age demographics, but overall, total shopping has just gone through the roof when when COVID hit, we hit a six year type milestone in six weeks on our grocery home shopping. The growth, and it just went crazy. And you know, you got people, you know, learning that and using it pretty pretty rapidly. So from an age standpoint, I think more middle, middle aged people are definitely, definitely older people got more comfortable with it as we were kind of forced to. And not just online shopping, but many things like that, you know, QR codes that have been around forever as a way to aid and interact. And yet, no one was doing QR codes. But now the restaurant industry, you know, with menus, because of COVID QR code, all of a sudden consumer adapts adoption of QR codes is a non issue. And so I do think, you know, things like COVID has changed the way we've adopted technology into our lives in ways that, you know, the older people are used to QR codes now because, you know, they've been forced to because of menus and restaurants and stuff like that, which it ends up being actually a beautiful thing. And so it has helped I think all age groups in some ways, but probably more older groups, boomers and such adopt a technology much faster.

Yes, I definitely agree with them. I always see my dad, we go to a restaurant, and he had probably no idea what a QR code was before COVID. Now without his phone, put the camera to it and he knows exactly what to do. He used to be like, please show me how to do this. Now I can fluently do it. So I definitely agree with what you're saying.

Yep, that's great.

And also, I mean, Andy said it really well to start off, you know, people have three budgets, right. They have a financial budget, they have a time budget, and they have a frustration budget. I've never heard it put that way, Andy, but you're absolutely right. I think my perspective is people who didn't who went into a grocery store and pick stuff off the shelf and went and checked out with it. Pre COVID and said yes to fancy etc. Well, once they did they COVID push them into I can't do that this way anyway. Now they've realized how much time they're saving and they value that. I don't see it slowing down.

I don't either.

I don't see grocery stores ever going away. I think there's still going to be a need for a brick and mortar environment. So everybody who thinks Amazon is going to take over the world and the retailers are gonna go to go away. I don't believe that for a heartbeat. I think those retailers like WalMart who can leverage their brick and mortar platform because they are in such close proximity with the customer, but offer people an online shopping experience are going to win. Because nobody wants to shop for paper towels. You're not shopping, you're stocking up your pantry. Now there's a new X Box that showed up at Walmart. Yeah, you're gonna go check that out. That's cool. That's shopping to me. Putting product in a basket to replenish your pantry is not shopping in my opinion, anyway.

No, you're absolutely right. And imagine though, if you're Scott's paper towels or Kimberly Clark you know who kind of count on new items to get noticed in a physical experience where you might browse and catch the eye of something like that the that becomes a much bigger challenge now right? Because you're you it does make it easier just to stick with the choice you know,

Great point. Still let's do a little on the spot consumer you so, Pierce you don't shop online. That's fascinating.

Yeah

What kind of, I'm gonna put you on the spot. What kind of paper towels do you buy for your, I'm assuming that's a dorm room or an apartment? What, what kind of paper towels do you buy?

Yeah, I live in a house with three other guys.

Okay

And I have to come right out and say I don't think I've ever personally went and bought the paper towels. Just to be honest, but if I were to buy them I'd probably buy I don't I'm not sure. Um, I don't know. But uh, I do. I do buy toilet paper and stuff like that. I always buy the one with the bear on it, I think Charmin.

Okay, do toilet

I buy Charmin every time

Okay perfect. What if you go to the local Walmart store since you don't buy online and they don't have Charmin on in stock? What are you going to do? Are you going to switch to a different brand? Or are you going to leave your buggy and go to Harps?

I'm probably just going to grab whatever's next to it.

Perfect. Now let me switch the scenario. A little bit more personal. Do you shave?

Yeah.

Okay. Do you use a razor?

Yeah.

Okay, what type of razor do you use?

I use the Harry's razor. I think it's the cheapest one you can buy so.

Perfect, Harry's is no longer in stock at the Walmart that you're at. You've already invested in that handle. All you're looking for is blades. Harry's there are no more blades. What are you going to do? You're standing in front of the shelf.

I'm probably going to pick a different razor. I'll probably just buy the starter kit of one or something, I guess because I don't know. I'm not I'm just not online shopping for like

I'm not talking about online. I'm talking about just brick and mortar.

Yeah. Um, yeah.

Okay so

I'm not gonna go, I'm probably not gonna go to a whole different store just to get a razor because I probably have a car full of my groceries. I'm probably just gonna grab a grab a different razor, to be honest with you.

And and the fact that you had to go from Charmin to a different brand. Does that make you angry? Or that's no big deal?

It's I probably wouldn't give too much thought to it to be honest.

Okay, how about if you switch from

Because I think if it happened over and over again, and it just was never there again.

Okay.

I may think, yeah, I may think about switching but the Walmarts especially with the neighborhood markets are so close in proximity to almost everything it's hard to escape them and make it's it's hard to out convenience a Walmart neighborhood market if you get what I'm saying.

So the jump from the Harry's brand, because now I have to buy a new handle all that stuff from Gillette. Does that give you a little more angst than the move from toilet paper?

Um, I can't say it would I think something that that would probably like probably like drinks and snacks and stuff like that they stopped caring, like, I drink a lot of Propel and I drink a lot of body armor. So if they stopped carryinh propel and body armor, I might have to go do I probably move to a different store that did carry that.

So So Andy, here's the question. And this is this is where I want to go back to you and have this discussion. Because I believe out of stocks have a different perspective. Somebody's going to be the customers always disappointed. They are going to have a frustration. I think there is a difference. If it's who cares. Paper towels switch from one to another. I can tell you one thing, if my wife goes to the store, and they don't have the dog food that we want. Yeah, is she she ain't switchin right, we're not gonna mess up our dog's digestive switch. Just, we will leave a cart with a bunch of frozen food and go somewhere else before we'll switch to another dog food. So Andy out of stocks as a retailer perspective, they play an important role. And do you do how do we think about switching at brands versus switching retailers?

I think first of all, it's a total if you look at as a total ecosystem, right? And, you know, that's this, this podcast is bad news for Harry's because, you know, so it's bad news for somebody on an out of stock basis, whether it's going to be almost switch retailers or switch brands because look how easy you will switch brands. If you're out of stock and you're Harry's that's a petrifying thought, right? So the out of stock position of who it hurts it's going hurts somebody, and it's gonna hurt your brand that thinks they're, they're, Harry's just lost a customer. And so that's the power of out of stocks, if you got a category like that. Diet Coke, if Walmart's out of Diet Coke, I'm switching, I'm going to go somewhere else, you know, because I'm not going to switch to Diet Pepsi or something else, that's just not I'm not going to do that. Diapers. The same way I know are my kids who are buying diapers for their grandkids, they there's a certain diapers have certain effects on the skin, if they don't have it, that's the first place they'll go in the store. They're not, they're gonna leave and get the rest of the grocery somewhere else because it's an expensive purchase, and they're not going to switch. And so there in that case, the retailer lost. And so either way you look at it, either the retailer is going to lose, or the brand is going to lose, because the brands losing loyalty, because they've just made it easy to try another brand. And being out of stock or the retailer's lost a customer.

Right, right. Great, great perspective. And the fact is, you've had so many years in the industry, and just like myself, have worked for both the number one supplier Procter and Gamble in the world, and the number one retailer in the world, you get to see both sides of that.

That's right

I think you have situations where people look at that if you're, you've always been a retail, well, of course, they'll switch to another brand that I've got. They know that that now it's put a hardship on the customer. And even if they do switch, just like Pierce, you mentioned, there's angst there. It's like, gosh, you're always out of the, oh, wish they'd stop doing that. And, and Sam Walton once said, you know, for every one customer that leaves or complains, and leaves seven leave and never come back, and they never say anything. Right.

Yep.

So that is a huge and that was sort of my next question, Andy as you think about exactly the customer metrics, it's really hard to measure, it's really easy to measure sales and profit and inventory levels, and all those kind of key performance indicators. Customer satisfaction,

Mhm

how important is on shelf availability and product in stock to the to the whole customer satisfaction score.

It's hugely important, it's one of the top factors and people don't understand that. It's a major factor. And we had asked, when I came here, we did not have a customer promoter score. And it's different than a net promoter score, we created a customer promoter score using the till receipts and a survey system to allow us to do that. And we took a year to get the base data done the next year, we put it in as a third of everybody's bonus in the whole company.

Wow.

And so as profits sales and customer Promoter Score, that's how strongly we believe that it drove it and key into customer Promoter Score gonna be things like fast service, friendly, clean parking lots and all that availability is at the top. It did you able to find and get what you're looking for. And so out of stock, can is sometimes more so the perception, the retailer doesn't have it, if you're doing a physical shop, and it's in, they can't find it, it's in a different place, or they've changed the modular because, you know, people shop on routine and all of a sudden, it's not there anymore, it's somewhere else it should, it might look in stock, but from a customer's perception, if it's out of stock, it's out of stock. And so I think that's the piece that we often overlook in terms of you know what that really means but on shelf availability is a major factor in customer satisfaction. It ends up being a it's a dissatisfier not a promoter point because they expect you to have it, right?

Right.

So dissatisfier is going to be out of stocks and dissatisfiers have a bigger impact on if we're going to come back.

Great point. Very polite. Alright, Pierce, going to turn it over to you. You got a question for Andy? Make it a tough one. Don't Don't take it easy. Want to see beads of sweat coming down?

Okay, so I was doing my research a little bit before this. And you know, the class that I met, I met Mike in is a delivery and transportation class.

Yeah

I was thinking about delivery and transportation stuff. And, you know, I know there's a shortage of truck drivers, which has been going on for the past year or two. And from just doing a little bit of research, I found that the industry needs somewhere around 80,000 more truck drivers.

Wow

And so obviously, this is driving up the price of cost per load. And I was wondering, do you think that has anything to do with all of the out of stocks we're seeing and stuff like that, you know, maybe these these companies aren't willing to pay $5,000 for a truckload or something like that. It's just a way too high of a price. And do you think that's why we're seeing all of these out of stocks because the company is just, the supply chain is not working well? There's not enough truck drivers stuffs getting blocked up. Do you think that that's causing these out of stocks?

100%. Some would tell you that that driver shortage is I know from talking to a few suppliers that I work with driver shortages are absolutely driving, no pun intended. But but they are the number one reason they're not there on shelf isn't there, the products in there, but there's no drivers and it's got a huge effect on it. In some cases, a certain supplier, it's actually they do delivery, direct to store delivery is they don't have enough trucks that the drivers aren't the shortage it's because of the growth of online shopping and such. You know, delivery trucks, the chassis all the things use for delivery is in shortage as well. And so that supply chain issue is affecting the ability to get trucks, even for drivers. And so yeah, it's got a it's got a massive effect on it, in terms of the labor force. The other thing that has an effect on it is store labor, it's hard to get many stores are running 20, 25% short on staff, well, if you don't have staff, you can't stock the shelf. And stocking the shelf is a major part of the store labor that you know is is making it hard to keep the shelf full, it could be could be absolutely be in the depot, it could be in the back room. But if it doesn't get from the back room to the shelf, you know, to the customer, it's out of stock. And yet, if you've got labor shortages at a store level that can absolutely affect what you're seeing from an out of stock more than thinking it's, we just you know, it's there's just no product, right. And so most people are seeing they have product, it's stuck in this whole supply chain, logistics process. And I just say, you know supply chain logistics issues and how it affects the customer. From being you know, in a big retailer, on the executive team, we would spend probably a good major portion I'd say of our time every Monday review of the weekend and such talking about transportation, logistics, shelf availability, those that's the blocking and tackling of retail, and you'd be surprised of the, Mike knows this, the million places it could go wrong and how hard it is to do but also makes it very exciting. Because it's the place where innovation is occurring to make these better. Almost all the customer experience innovations in the last couple of years had been driven by supply chain logistics. Last mile delivery, we did a thing at Asda where if you got your own pick, if you're doing a pickup store pickup, you know, just add this little feature in it, let us know when you left the house. And it kind of gave us a notification when you turn that on, we could go ahead and start picking your order ready, you know to get it to the curb and cut the time down from like eight minute wait time to a minute or two. Right. And that's an innovation from supply chain logistics that has a great customer service benefit. So I think it's really underrated how supply chain logistics is driving innovation in customer experience. That's where it's coming from.

Yeah, that's a, Andy, that's a that's a great example. I've got I've got two more quick follow up questions to that one so retailers and not looking for specific numbers or any specific examples, but retailers costs at a store level, most of its in labor, right?

That's right

I gotta pay people to check customers out, I got to pay people to put product on the shelf. There's this whole new bucket of work, which is I got to pay people that take, put stuff on the shelf, to take it off the shelf to put it in a basket to deliver somebody's home. Somebody's paying for that. Where does that come from? What are the implications from a profit perspective from a retailer? Should it be shared amongst the supplier community? How do you think about that additional capability you're delivering for your for your customer, which is a great capability. But the reality is, in most cases, they don't have to pay for it. Where does that, where's that money coming from?

It's it's well, most online shopping is margin dilutive to the p&l. But it's it's it's one of the it's a game you can't, you know, be out of. And so the idea is you got to get in the game, and then start to perfect and reduce your cost and optimize labor and do other things. But you know, that's the danger point is that most of the time for most retailers. It's it's it's not as not near as profitable. Because as you just said, it's double handling and all that right now it's coming out of the macro p&l, but you're starting to see inventions where people are using more dark store space in the back to optimize the picking and making sure that you're not double moving it. What I have a question on is the more darks that store space you create to do optimize picking for pickers so you're not double handling that. What does that do to shelf presence for the shoppers that come in the store? Because the nice thing about grocery home shopping pickers picking from those shelves is they're seeing out of stocks real time and you basically are getting inventory adjustment information by them going up and down those aisles but you take them out of those aisles and you put your priority in the back room. What happens to the, to the accuracy? And such when you don't have that happening? And I just wonder what kind of dynamic's going to happen? Because you are every retailer is trying to optimize to lower that cost. That's there, because it's a huge drain on the p&l from an E commerce site.

Yeah. And not only that, let's just be honest, on hand accuracy in a retail store, is Oh, Jeff, Pierce, we walk through these particular examples in class yesterday. 50 to 60%, accuracy is not uncommon. No, I think I have products that I don't really have. So what you've really done is if I think I have 10, in I really have two, I've already got two places it could be I could have it on the sales floor for a customer to buy, I can have it in the back room, and I'm adding a third location. Well, if I can't keep track of it in two places, how am I going to keep track of it in three? So there's a there's an accuracy perspective, and what I find a lot of, especially online and Pierce, you'll you'll order online one day, there's a lot of hiding of inventory that goes on online, you know, it says I have three, but I'm not going to expose that I'm gonna tell customers, it's out of stock, because I don't want to disappoint them. I'm hiding inventory from them. I am protecting myself from that customer frustration. But that's maybe a product that a customer really wants, and I really have it. I couldn't order it online. But I walk in store and you got it. Well, there's another frustrating part for the

Right.

Wow.

Yep. 100%. And I think, you know, I look at data that we had is that, you know, stores had a healthier, higher percentage of grocery Home Shopping orders from that store, will tend to have a higher online a higher on shelf availability, at inventory accuracy numbers, because they're aided by that extra volume of going up and down the shelves and correcting and fixing and doing that. And so there's a correlation would also probably be hold true that you take that away, it could probably be lower.

Well, the measure of in stock has always been measured by how much does the system say I have, and it's the one I have it in stock.

That's right.

But now, I've got grocery pickers that are literally going to the aisle and go, here's one, I scan that item, I know I have that one. If it's not there, I'll scan the label. It's a nil pick. I know it's so our pickers are actually the best metric for whether it's really on the shelf for our customer versus

That's right.

I think I have it but it's plugged somewhere it's behind five other products. It's in the backroom, it gives a much better indication of whether it's really on the shelf or not.

That's right. And so you can see the implication if you move that picking to a part of a dark store environment, you know you have the potential to drop that on hand accuracy levels in store for sure.

Yeah. And there are some there are you know, where it is part of these podcast series we're going to, we're going to talk about some technology like algorithms and like robot shelf scanning robots that will help to automate those alerts for the store associates. But you're right, nothing's as good as an associate from that store picking the item going, I couldn't find it and feeling frankly, the frustration that customers have felt for a long time. So this is

exactly no, no, exactly. Great, great point. And that's where the omni channel element of that makes the store better. Because there's people are up and down the aisles, and they're checking and helping with that product. So

Got it, well we're running kind of close on time Pierce, Pierce, any other last questions you got for Andy?

No, I don't think so. I think I'm good.

Great questions.

So the one question I have for you, Andy is what should've we have asked you? What is the question that you we should have asked, but we never did.

Man supply chain? Where is innovation to be coming from? I think there's, you know, what's driving innovation? Because I do think we've been optimizing a while in supply chain logistics. But I think this play, it's ripe for innovation. And I think you look at the innovation opportunities out there to continue to innovate and take that wave of or, you know, the tailwind that COVID came to push supply chain logistics forward. It's it's going to be question you should've asked, what do you see coming next? The good news is you didn't ask it. And the other piece of the good news is I have no idea.

But the interesting part, while you may not know what's coming next, from a supply chain perspective, if I had to go to one person in the industry right now to say, what is the customer impact? And what do we need to make sure that customers but I mean, Sam Walton said over and over, the customer's always right, focus on the customer. The customer makes a choice every day about when they spend their money, they can spend their money with us, or they can fire us tomorrow and go spend it at Harps. They have no problem with that at all. At the end of the day, we've got to have people who are out there staying very connected to our customers, to make sure that we don't make such things such innovative and so functional and so reliable that we completely miss. We haven't done, in my opinion, move to an online pickup and delivery soon enough. I've thought for 20 years, that was a good idea. Nobody likes going to buy paper towels, can't we figure out how to automate that is unfortunate that we're now moving that fairly fast. But we shouldn't have done that probably 10 or 15 years ago. So

Mike, can I respond to that? The reason I think that's true, is because the way that business cases are made, and so you can make a business case very easily on store labor reduction. And that's a huge issue. And so anything that makes the process efficient, you're gonna get funding on supply chain logistics, innovations, and there's a lot of opportunity there on how trucks are unloaded in the back, you know, the all the logistics of that. But when you start talking about how you make the customer experience better, it's hard to find the case studies that show you the ROI of that. And you can go to finance and stack that up against a labor reduction, right? Self checkout is very easy to measure against how many cashiers you can change and do that. And so I just think the whole industry of supply chain logistics has been optimized, optimizing on savings.

Yeah

Now you start talking about optimizing on new experiences for the customer. That's what's the hard bit is how do you get case study enough so that you could go with a business case that finance sign off on and I you know, good good on people that are are thinking about this as an r&d budget, with supply chain logistics, because you know, your products have r&d budgets, to look at new brand development ideas. Well, what if there was an r&d budget for supply chain logistics that you could go test and learn on new ideas that actually changed the game for the customer?

You know, well, I thought it was gonna close out this podcast, but

I'm sorry, just making your editing job harder.

No, I have one more question based on,

Yep

Talk to me about seamless checkout, Amazon Go just walk out technology. I'll walk in, I scan a badge, I grabbed three things, I walk out and never talked to a customer, or somebody checking me out, it's not a self checkout process. That's extremely hard to do. And that's very, very expensive. Is that part of what's in the customer domain in the future? Is that something you see where we're gonna go?

Certain segments, certain segments will respond to that, and others will not. I mean, most stores have a really hard time going to 100% self checkout, you know, so I think that's a real challenge, you know, we had scan and go in has gotten mixed results because of theft. And you look at what's happening with store theft today, you know, Walmart sending sample backed away from scan and go, except for maybe now Walmart plus customers, I'm not quite sure, but but the you know, part of this because it probably should have been called Scan, pay and go, but they left the pay part out. And so, but I do think the the, the that bit of it is a challenge. So I think you got to work through the theft issues. And if you look at retail theft, and what's happening, I just, I think for certain customer base, and it's really good, I personally like things like self checkout, the seamless checkout with nothing, definitely think it's going to get there. This is where Asia is out in front, I think you got to go look globally at what's happening, and then start to model from there and see where that ends up going. But you're right, the technology, pressure to pull that forward and make you've been working on fid technology since it came out, you know, you think of the leaps and bounds of the whole thing has to be technically reinvented. And so I think it's, it's coming. I don't think it's going away. I think it hits certain segments, others, like the human touch, the human interaction, and for many people, just the humanity of it of shopping and grocery is so important to them. And so, yeah, I think it'll be there for some, but it's I don't think it's going to disrupt the mass.

Yeah, man, I can't, I can't thank you enough, Andy. This is a great overview really, really helpful. we so much appreciate you taking the time out of your busy schedule, certainly, since you're not even in your kind of regular home office, but you've kind of rearrange your schedule. So thank you so much for that. Pierce.

Thank you

I hope. I hope you have an incredible successful career in the supply chain friend, we, I'll guarantee you one thing when Andy and I are no longer working, there will be plenty of things to work on. Let's just plan it that way.

Yes, sir. I don't doubt it.

Yeah. So thank you both very much. And have a great weekend and take care.

Thank you, Mike. See you Pierce. Nice meeting you.

Nice meeting you as well.

Thank you for taking the time for this epic discussion. And a special thanks to Mike grain for leading the retail supply chain initiative. On behalf of the Walton smrc We are delighted to lead with you as we learn, engage, address and develop all things supply chain to lead the world of commerce from Northwest Arkansas. Have a great day.

Transcribed by https://otter.ai