The Customer is the Channel

This is an excerpt of the original article. It was written for the January-February 2022 edition of Supply Chain Management Review. The full article is available to current subscribers.

January-February 2022

Well, that’s over, and aren’t we all glad to put 2020 in the rear-view mirror? For a minute, however, let’s look at a silver lining, because I think there is one for supply chain managers. That’s because the pandemic put supply chain in the spotlight like never before—and, with the approval of a vaccine just a few weeks ago in December, supply chain and cold chain are back in the news… While sales usually gets all the attention, maybe 2021 is our time to shine.” That’s the beginning of the column I wrote for the January 2021 issue, and maybe I was a little too pollyannish.

Browse this issue archive.

Already a subscriber? Access full edition now.

Need Help?

Contact customer service

847-559-7581   More options

Not a subscriber? Start your magazine subscription.

For most retailers, the last five years has been a relentless rise in digital commerce and heightened customer expectations. Needless to say, those trends, along with a demand for even more convenience and speed of delivery, were accelerated by the pandemic, as consumers shifted more of their purchases from brick-and-mortar and other traditional sales channels to the Web.

By all accounts, there is no end in sight. Some prognosticators on retail’s future are predicting as much as a 50/50 split between online and offline channels at some point in the future. While these kinds of predictions make for an entertaining academic exercise, the reality of the situation is simple—the customer doesn’t care. Steve Dennis summed it up perfectly in his book “Remarkable Retail:” “The customer is the channel.” And what do customers want? Among other things, they want a simple, harmonized path to purchase that makes them feel special, appreciated and valued. And, above all else, they expect product availability—when, where and how they wish to acquire it.

Key to meeting customer expectations is keeping inventory on the shelf—whether that shelf is in a store or a distribution center. Like most retailers, that has been both a challenge and a goal for Princess Auto Ltd (PAL), a national, Canadian, hard goods retailer with 51 stores located from coast-to coast. In 2015, before the pandemic, PAL realized it needed to improve its supply chain performance, and, as a result, embarked on an ambitious plan to improve planning capabilities, agility, inventory flow and—ultimately—its in-stock performance.

This article outlines how Princess Auto Ltd evolved its planning processes to a customer-driven, integrated supply chain, where stores are the key to satisfying customer demand, regardless of the channel. More importantly, it will share how the retailer used the flowcasting model and leveraged the agility and flexibility to pivot their customer fulfillment planning model—in the process improving product availability, customer order cycle times and margins.

SC
MR