Saturday, 29 September 2012

If we asked you for one piece of advice for retailers looking to improve their logistics, what would it be? / Internet Retailing 2012

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In today’s preview of our annual conference, Internet Retailing 2012 (IR 2012), to be held in London on October 9, we have the latest in a series of interviews with speakers at the conference. Today Walter Blackwood, director of group logistics at Mothercare, is in the hot seat.

Walter Blackwood’s presentation, Moving from the virtual world into a physical delivery, will be in stream three of Internet Retailing 2012 on October 9. His presentation starts at 11.20am.

Internet Retailing: If we asked you for one piece of advice for retailers looking to improve their logistics, what would it be?

Walter Blackwood, director of group logistics, Mothercare: I think the critical element is to define and then be able to support a clear customer proposition right through all the elements of the supply chain. I think retailers who try to give too broad a proposition struggle to deliver it. But if you are clear about what you’re trying to do then you can align your business. So if you say that my proposition is ‘I’ll have it to you in the next six hours,’ then all the elements from delivery and warehousing to after sales support have to support that.

The critical challenge is to make promises that you can effectively support and do so economically. When direct sales were 5% of people’s turnover then if it cost a bit extra to deliver it then people didn’t notice so much. But once it’s 25% or your biggest single channel to the customer then understanding the economics of supporting that proposition and doing it effectively is critical. If you don’t do that you end up losing your shirt.

IR: You moved to Mothercare after 15 years in business to consumer logistics, where your experience includes developing networks including Parcelnet (now Hermes), HDNL (now Yodel) and most recently Collect+, where you were managing director. How does your previous experience in logistics help you in this job?

WB: I think it’s frightened the carriers to death because I know more about their businesses than they did – and that’s always a good place to be. But I think the key issue is that I understand the importance of the partnership arrangement. You can’t buy customer-critical services as a commodity. You have to work with those people supplying the warehousing or delivery and ensure their plans are aligned with those of the retailer. Then you get a successful outcome. It’s been good to bring the other perspective to that. The learning curve – asking the right questions, defining the proposition correctly, making sure our information, forecast, all the elements of our requirements are properly reflected in responses from suppliers. That means we’ve moved through the development process much more quickly than we probably would have otherwise.

IR: Have you made big changes since you’ve been at Mothercare?

WB: We’ve changed carrier because we needed to improve the quality of service to the customer and to make sure we had a clear and developing proposition to meet our customers’ requirements more effectively. We’ve done a great deal of work to make sure that the fulfillment operations are properly aligned. There’s a big difference between a multiple channel and a multichannel retailer – we’re having to bring those together more effectively into the same space, to work together to make the customer experience more effective. I think we’ve made a lot of changes in starting to build that proposition for the future.

IR: How will retail logistics develop in the future?

WB: It will be much more driven by the customer. If you go back into retail logistics 20 years ago, the logistics process was entirely invisible to the customer. They didn’t know what t-shirts or beans should be on the shelf. They didn’t know where the warehouses were, how many trucks were being used, how efficient or effective the operation was and they didn’t care. Their perception of the retailer was what they saw on the shelf. If there should have been a whole load of t-shirts there that weren’t, they didn’t know that.

In a multichannel environment, the new retail logistics world, the supply chain is very, very visible to the customer and they expect it to work. They expect it to be local to their home or to be available to reserve. That means all their internal processes that used to be driven by cost and efficiency rather than effectiveness now have to work to meet the customer promise in a much more open way than they ever did. That means customers are driving change in the chain – and when it doesn’t work they notice and say that isn’t good enough. They’re starting to recognise those retailers who are actually responding to that and changing their supply chains and retail logistics accordingly.

IR: What practical difference will that make for retailers?

WB: It will make it more complex because you’re not dealing in palletloads any more. The retail supply chain works very differently from a home delivery proposition. If you go back to before the internet, mail order was a very different channel and had different processes from the local retail chain in terms of the way the warehouse was laid out and transport was organised.

Now every major chain has to combine both of those elements. That means that the picking, packing and returns, all the elements that went into old direct mail order business are now reflected in the requirements of a retail environment that would normally have had nothing to do with that. Now we need to merge those together and recognise that the customer in this multichannel or omnichannel world is looking at both of those channels at the same time. They don’t see the difference. There’s been lots said about the customer who looks online and buys in the shop, or looks in the shop and buys online, or the other way round – it all merges into a view of the retail organisation and the retail process has to change to meet that requirement.

IR: Is it the case that once you’ve merged the logistics involved in different channels, then in the future if you add on another channel it won’t make much difference?

WB: The problem is that we don’t know – that’s the great joy of the modern era. Things change very, very quickly. We have people who created separate direct delivery businesses, separate retail operations within their businesses, with a retail warehouse and a direct warehouse because they were seen as different channels. But now they are merging again. Now you’ve got this whole process where click and collect is the biggest growth in the multichannel environment. Direct warehouse now has to get into the store. It was built originally so the store and direct were something different. But the customer doesn’t see it that way. They say: ‘On Monday I might have something delivered direct to my home and on Saturday I might just pick it up when I go shopping.’ They expect the process to work – but then the retail warehouse hasn’t been configured to pick singles and the singles warehouse hasn’t been configured to deliver to the store. You have to move the stock to the right place but if all your customers come and reserve your stock and strip out the toy of the month, then you’ve used all the store stock and customers walking into the shop find it isn’t there any more.

The channels have to respond quickly to that and make sure its continually in stock – and that’s a different kind of game. That’s the fun bit – it’s why it’s an interesting challenge. It’s very different from the days of invisible supply chains – it’s very different.

Walter Blackwood’s presentation, Moving from the virtual world into a physical delivery, will be in stream three of Internet Retailing 2012 on October 9. His presentation starts at 11.20am

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