Why Supply Chain is the New Cool Kid at School

Who as a child doesn’t remember playing with the box? Regardless of what had come inside, sometimes the best part was making a robot head, a car or a small house from the box. Give any two year old an Apple Watch tomorrow and chances are the box it comes in will have more value and utility.

For many years Supply Chain has been seen as a function in most organisations, something that helped us get WHAT we sell to WHERE it was needed. Warehouses, depots, trucks, logistic third-party providers, just-in-time delivery and cross-docking. It has a language all of its own (by the way cross-docking is the ‘unloading point where a truck meets a warehouse’, not anything to do with angry sailors or transvestite warehouse managers … although they must be out there too!).

Invisible Until It Is Needed

As the global need for logistics grew more complicated, so too did the Supply Chains. But for many boards of directors, their supply chain was perceived as being like a divers oxygen tank – a heavy clunky necessary piece of equipment, providing the ‘air’ you need to survive, not a second thought given to the engineering or HOW it works – that is until it fails. Supply Chain is invisible until something goes wrong. “You don’t realise just how important it is, until it doesn’t work as it should” commented a retail CEO to me last year, having just gone through a painful Central Distribution overhaul. The logistics director was suddenly his new best friend.

But those days are over – The days of supply chain being just a function. Today the Logistics Director has a seat at the boardroom table much closer to the top than they used to. They are fed grapes during meetings and wafted with large palm fronds by their colleagues. You see Supply Chain is the new Marketing.

What the shopper or consumer deems as ‘value’ has always changed. Sometimes it is BRAND, other times PRICE. Some consumers value QUALITY while others see CONVENIENCE as a benefit. What shoppers ‘value’ will always shift. The trick is to keep up.

Delivery is a battle-ground for ecommerce retailers. HOW and WHEN a product is delivered is the new added-value. There has been a very clear shift in consumer and shopper expectations regarding delivery in the past 5 years, a shift which will undo many businesses unless they adapt.

I Want It Now

When Roald Dahl’s book ‘Charlie and the Chocolate Factory’ was written in 1964, he created a great character called Verruca Salt. She was a nasty little girl who wanted everything she saw, and wanted it now. She wanted one of Mr Wonka’s Geese that laid Golden Eggs, even though they weren’t for sale. Her father gave her whatever she asked for, terrified of his own daughter’s wrath. Well prepare yourself for an entire GENERATION of Verruca Salts. THEY WANT IT NOW and they’ll stamp their feet and fold their arms until you give it to them.

 

The Millennial generation are seen as many things. Hyper-Connected, Self-Centred, and Omni-Channel Demanding. But they are also the “Instant Gratification Generation”. A 35 year old today was 17 when Google was launched. An 18 year old today was born the same year as Google (an A.G. – After Googler). Growing up with Google as an everyday tool re-wired a generation. Everything you want to know is there at your fingertips, in an instant. Every map you want to navigate, every video you want to watch on You Tube, every product you want to buy. These consumers grew up in a world of NOW. If I want it, I can get it immediately. And this, my friends, changes the game for everybody.

How Soon Do You Want It?

Usually people think about ecommerce and digital retail when they think about instant gratification and delivery. But this is not an ecommerce only phenomenon. This is a cultural and social norm shift that effects every industry. No matter what you are selling, no matter where, they want it NOW. And of course, even those Digital Immigrants (born before 1980) have noticed their own shifts in expectations. Let me ask you two questions.

Firstly, if you ordered something online at 09:30 on a Monday morning, when would you expect to get it delivered? The same day? Next day? By Wednesday? Certainly Thursday surely? The answer actually depends on what age you are. If I ask a group of 18-24 year olds, it will be “Same or Next Day”. A 35 year old will say 1-2 days, a 45 year old 2-3 days. But that’s it. EVERYONE certainly expects it by Friday, even the 75 year olds. Now remember that it wasn’t that long ago that anything you ordered via mail-order catalogue arrived ‘within the next 28 days’ – remember that? If they said that now, you’d just laugh. We’ve gone from 4 weeks to I WANT IT TODAY very quickly.

Secondly if I asked you how soon you would expect an answer from an email enquiry or tweet you sent to a brand or company, what would you say? Within an hour? Two hours? Same Day certainly. The speed at which we expect an answer or a product has changed. The world is faster, and so too are the shoppers.

 

2015 will be remembered as the year Same Day Delivery became ‘normal’. EBay Now has been delivering within nominated urban centres within 4 hours for years. Google Express offers same day delivery. Amazon wants to fly a drone to your home so they can fulfill their Prime member’s needs within 30 minutes.

In fact Amazon is a brand that completely ‘gets’ ‘I Want it Now’. They are a company that has centred themselves around that fundamental proposition as their ‘product’. Amazon sells everything, but what they are actually ‘selling’ is that ‘NOW’. They went from 2-day delivery for Prime Members, to same day, to Prime Air in that 30 minutes. They pioneered the ‘1-click order’. When they launched their FIRE phone, the device automatically buffered associated You Tube videos in the background as you watched your selected clip, just ‘in case’ you clicked on them to watch. Jeff Bezos ‘gets’ I WANT IT NOW.

Sandwiches From the Sky

Another brand I came across recently that understand that ‘delivery is the new cool’ is the Jafflechutes Brand (click the video below – trust me it is worth it. I won’t bore you with the details here other than to say it involves toasted sandwiches, mystery destinations and a small parachute).

 These guys in Melbourne have identified a core truth about this new consumer world. It is not so much WHAT you get but HOW you get it. It is why millions of people all over the world watch UNBOXING videos, clips posted on You Tube showing shoppers take receipt of their purchases for the first time. HOW YOU GET something can be an experience.

Of course I WANT IT NOW puts HUGE pressure on Supply Chains. Systems built to a business model from the 80’s are finding it hard to cope with the new demands placed on them today. Today’s supply chain needs to be flexible and adaptive, not linear. Gone are the days of delivering to a fixed point in a ‘chain’. In fact we need to stop using the words ‘SUPPLY CHAIN’ and start using a new word – SUPPLY GAINS – the value we can add to the consumer experience through inventive and creative delivery.

 

Don’t Worry – We’ll Find YOU

Look at what DHL, AUDI and AMAZON were able to achieve in Germany when they came up with a system of delivering to the trunk of your car, no matter where it is. Ordered something online? Don’t want to wait at home or the office for delivery? No problem. The GPS technology will find your car, and the delivery driver can open the trunk with secure access to deliver your package. We’ll find YOU.

Or look at what Budweiser are doing in Washington with their ‘one tap beer delivery app’. Open the app, simply tap once to confirm that your location shown by that blue dot is correct, and within 20 minutes, 36 bottles of ice-cool Budweiser will be delivered to your door. Why ever leave your home again?

 

The world has changed, and those that don’t, won’t survive. The other day I looked at the back of the Kellogg’s Cornflakes box on my table and saw their latest offer – collect the token codes from a few boxes, go online to enter your codes and details, pay the postage and packaging, and they will send you a Personalised Spoon. A spoon with your name on it. OK – it’s not the world’s hottest offer, but you never know – there might be a spoon mix up someday and I’ll be able to say “No – that one’s mine!” But here is the best bit – “Please allow up to 90 days for delivery”. 90 days??? Clearly the spoon is made from metals mined on Jupiter. I laughed so hard, milk came out my nostrils.

The game has changed. Instant is just expected. You can argue against it if you want. The world is getting too fast. Where has the virtue of patience gone? Why can’t things just slow down a little? But it is what it is. You don’t have to like it, you just need to understand and survive it.

So next time the Supply Gain Director walks into the boardroom, show them more respect. They hold a lot of the power now. HOW and WHEN we deliver has become part of your product. Sometimes it supports the value proposition, other times it IS the value proposition.

And learn how to drive a forklift. However you get on, you won’t be as bad as this guy