Business Technology: Supply Chains Hit Home (Sweet Home)
A not-so-Socratic dialogue on in-home supply-chain fulfillment experts, dog food, cereal, TV ads, Webvan, Walgreens, Jim Collins, and just-in-time shampoo shopping.
"Did you see that ad on TV last night about supply-chain fulfillment experts operating right inside somebody's home?"
"Uh, no, I musta missed that. Then again, I don't usually watch the Sci Fi Channel, if you get my drift."
"Very funny. But I'm serious: The ad showed a guy in a sort of uniform quietly moving through a family home, replacing that empty cereal box with a full one just before a hungry kid opens the cabinet, opening a new sack of dog food as the hungry bulldog eyes him warily, and handing a full bottle of shampoo--very discreetly, I might add--to the guy in the shower who'd just run out."
"You don't say. Cereal, dog food, and shampoo. Does he wash windows, too? And what did you call this guy in the uniform--a gold-chain fistful?"
"Y'know, your attempts to be so above it all and uninterested won't seem so clever when this trend blows past you and you find yourself outta toilet paper at a very critical time. Then, my jaded friend, you will wish you'd listened a little more closely when I was trying to tell you about The Next Wave: home-based supply-chain fulfillment experts."
"The supply-chain event-management system now tracks our orders, shipments, and inventory positions down to the [distribution center] level," [Best Buy logistics director Chuck] Dow says. "Our next phase is to achieve this same visibility down to the store and SKU level."
-- Elena Malykhina, InformationWeek, Feb. 1
"OK, OK, OK, don't go getting hysterical on me. Get a grip. Start at the beginning and tell me how to avoid the impending toilet-paper crisis."
"Yeah, listen and you might learn something. OK--did you know that every year Americans buy about 10 million drill bits when, in fact, nobody actually wants a drill bit?"
(Blank stare; no reply.)
"Well, the point is, see, that nobody wants drill bits, do they? No! What they want is HOLES, not bits, but to get the holes they first need the bits!"
"What in the world are you talking about?"
"That's my point--we shouldn't be talking about bits, we should be talking about holes. And we shouldn't be talking about supply-chain fulfillment experts, we should be talking about satisfied kids with cereal and satisfied dogs with food and satisfied dads with shampoo."
"So you're going to raise $20 billion to resurrect Webvan so you can deliver dog food to people's homes so Bailey the poochie doesn't go hungry? Dude, I can see the IPO now--here's $10 to get me in on the ground floor."
"Enough sarcasm! Now shut up and listen. Walgreens -- one of Jim Collins' Good To Great companies (HarperBusiness, 2001)--is expanding rapidly into the eastern U.S. and will soon be a nationwide chain. How will they differentiate themselves from other national chains--I mean, Wal-Mart's already in those places, and Wal-Mart sells a whole lotta dog food and shampoo and cereal, right? Well these new ads seem to be Walgreens attempt at staking out a unique value proposition: They'll be your family's just-in-time supplier. At a time when corporations are collaborating to optimize their supply chains at the business-to-business level, why shouldn't that concept--and all the benefits it delivers--be extended to the consumer level, right into your home? People today are becoming incredibly comfortable with the idea that they can go online and get what they want, when they want it, how they want it, at the price they want. And they're starting to understand that the 'supply' side of the supply-chain thing doesn't matter worth a hill of beans if the demand side is disconnected. So in the TV ad, the guy with the Walgreens jacket represents the just-in-time and seamless supplier-to-consumer connection--convenience to the end customer, intelligence in the supply chain that lets it happen, information and knowledge moving instantly throughout all the elements of that supply chain, representing that what matters now isn't just low prices but also the knowledge and context that we have what you want when you want it and we'll help get it to you."
"You mean Walgreens will make house calls?"
"Well, I guess you could call it that. Whether they actually have the guy in the blue jacket in your house sticking stuff in cabinets just before it's needed, or whether they're going to use technology like custom Web sites for each household that allows families to order electronically and then at their convenience go to the store and pick up their stuff at a special self-service counter or even stay in the car and use the drive-through window that most new drug stores have built, the point is that Walgreens is making a promise that goes beyond low prices and smiling, avuncular pharmacists who you can comfortably ask about things like suppositories or loose dentures, and extends right into your home: your convenience, your needs, your time, your comfort."
"Cool. Do you own Walgreens stock or something?"
"Not exactly. But take back that $10 and make it $1,000 and I'll give you 5% of my Webvan stock. And I'll deliver it right to your house."
To discuss this column with other readers, please visit Bob Evans's forum on the Listening Post.
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