Slide 1: Welcome to our session: supply chain LeaderSHIFT 2020 – the art & science of driving transformational change presented by Hunt Executive Search, with our special guest, Amazon’s Torsten Pilz.
LeaderSHIFT isn’t just a play on words. ….. It’s an accurate descriptor of what effective leadership requires today.
Core competencies used to be constant. Today’s reality is that what’s most important….Is constantly changing. And accelerating still.
We have a distinguished guest whose future work will directly impact each and every one of our futures. This is true for each of us as consumers and most certainly true in our professional life’s.
Slide 2: Radical new dynamics are in play in retail and e-commerce channels that are undercutting established positions of strength while constantly creating new… and disruptive competitors.
How to best manage omni-channel market complexities, determine competitive & profitable pricing strategies and how to service customer’s before, during and after the sale all require delivering next level supply chain strategies that are not in existing today.
These supply chain strategies are created and delivered by you and your teams and can’t be created with the same level of thinking or leadership that got you where you are today.
Slide 3: While an estimated $1 billion or more in sales occurs through a small group of “pure-play online order with delivery” business models, numerous brick and mortar “food” retailers (many of whom are here today) and hundreds of virtual online retailers make up the balance of the online grocery $13 billion in sales.
Delivery of fresh, perishable and meal solution products will continue to define the most successful - yet challenging business models because of the
Limitations or yet to be solved problems of fresh delivery.
Slide 4: Although online shopping remains only a sliver of the overall market today, if current trends, activity and investment continue, it’s forecasted online shopping will grow at a Compounded Annual Growth Rate of 21.1%.
By 2023, at the middle of those two projections, online grocery sales would exceed today’s sales of the nation’s largest supermarket chain, Kroger. that’s a game changer for all of us.
Slide 5: MARKET DYNAMICS are RAPIDLY CHANGING.
In order for both manufacturers and retailers to succeed, the supply chain organization will have to transform.
While the totality of manufacturing volume remains steady, the channel variables that impact supply chain deliverables changes significantly in every geographic market.
Virtual supermarkets and automatic subscriptions will drastically change the rhythm and cadence of today’s supply chain strategy.
The expected 40+ point gain in home delivery and at store pick up in all markets will certainly disrupt today’s less than agile models.
Slide 6: While we’re all scrambling to get ahead or at least adapt to get the requisite traction to navigate the new landscape,
Disruptive forces are leading the rest in the transformation of our new and exciting world.
Amazon is leading the pack and in many cases actually creating the disruptive forces traditional retailers are having to contend with.
While our companies compete with amazon at many levels, observing amazon also provides us with guidance of how to “fast-follow” and navigate the ever changing terrain that makes up our individual markets.
Most of our company’s are not creating the disruption. So being a fast follower and early adopter is likely the best strategy, but you better do that right.
Slide 7: This slide is the output of the future of supply chain survey of over 1,000 executives, largely from consumer goods and services companies.
It illustrates the reality of disruptive technologies and their implication to CPG manufacturing and omni-channel retail.
Throughout our Q&A session today, we’ll underscore and discuss each of these disruptive technologies and how they are forcing the transformational changes in our supply chain.
Slide 8: SPEAKER INTRODUCTION
We are proud to bring amazon to the table here for the first time ever. It’s our pleasure and a distinct honor to introduce our panelist speaker.
Torsten Pilz is vice president of worldwide operations at amazon overseeing end to end operations for AmazonFresh, PrimePantry, PrimeNow, AmazonCampus and fulfillment.
Prior to joining amazon, Torsten was senior vice president of supply chain and operations for Henkel North America and the global head of supply chain management for Henkel beauty care worldwide. As if there isn’t enough evidence that Torsten is most often the smartest person in the room, he also has a PhD in chemical engineering.
Please join us in warmly welcoming Torsten to his first ever GMA/FMI (trading partners alliance) supply chain conference. We thank him for his willingness to share his thoughts on leadership!
Slide 9: TRAILBLAZING Torsten, your role at amazon might be the most interesting supply chain job I know of. It’s pretty rare you get to be a trailblazer and do something no one has ever done before.
Very few companies, if any at all, have the supply chain vision and/or challenges of amazon. Very cool to say the least!
Our first questions was: What are the most significant challenges you’ve personally experienced adapting traditional, high volume, high velocity supply chains to the "each pick" world of ecommerce?
If you could get the answer to only one unsolved problem in 2016 that you’re facing today, what problem would you pick to solve first? -
“If anyone has the solution to that problem, please e-mail me and I’ll negotiate a month’s worth of free groceries on AmazonFresh in exchange?”
Slide 10: DELIVERY / TRANSPORTATION
Delivery is a big topic right now. It’s quite literally where the “rubber meets the road” for AmazonFresh, AmazonPrime and PrimeNow.
We asked these questions, specifically as it related to fresh:
What are the most challenging hurdles and efficiencies you see specifically in “fresh” supply chain?
In e-commerce grocery, what opportunities exist in drop shipping, 3pl’s or even using Vendor Managed Inventory versus Fulfillment?
UberRUSH is just the latest myriad of businesses tapping the burgeoning demand for same-day delivery. Uber’s entry into the market underscores how important online offering and delivery options has become for all businesses, including grocery-focused retailers in today’s omni channel world.
Imagine cab lines lined wrapped around fulfillment centers and supermarkets like they are at airports, waiting in line for their pickup to deliver to the consumer… what a thought!
We asked Torsten: how does amazon view the “uber” like delivery options and what implications good & bad might it have on the totality of grocery?
Slide 12: DELIVERY / TRANSPORTATION (Drones)
Many companies, not the least of which are Walmart, google, DHL and amazon, have applied for FAA permission to test drones.
I know of one company that’s developed and testing a prototype autonomous delivery vehicles that deploy drones from the vehicle itself as it moves through neighborhoods, which would of course eliminate miles of drone movement from fulfillment center to homes.
We could not discuss any specifics in the PrimeAir program, but we can assume it’s just a matter of time before we realize the viability of these systems throughout the supply chain in some way, shape or form. The implications are enormous end to end. Torsten shared, other than the “coolness” of home delivery, what other parts of the supply chain could be most significantly impacted by the application of autonomous vehicles and drone technology, for anyone…
Slide 13: CUSTOMER EXPERIENCE / EXPECTATIONS
Consumers seem to be Expecting More and More each day. Recently “unrealistic” expectations are now being delivered.
What are some of the most recent insights around Customer Experience & Expectations you’ve realized and what are you most challenged with today?
Limited choices don’t cut it, and next day delivery is not fast enough.
Slide 14: CONSUMER PICK UP OPTIONS
Walmart To Go is NOW OPERATING in 60 markets and will likely be UP AND RUNNING in 125 MARKETS NEXT YEAR. Most Regional Grocers are offering IN-STORE and/or DRIVE-UP services as the LAST MILE of the e-commerce offering. Amazon seems to be shifting or at least adjusting strategy by adding some brick and mortar along with other services like refrigerated lockers in certain markets.
How do Customer Pick Up services “change” overall supply chain strategies?
What can consumers expect from Amazon’s customer pick up service offering in the future?
Slide 15: EMERGING SCIENCES & TECHNOLOGY
I’ve seen some amazing “virtual reality” applied to grocery/retail planning, analytics, merchandizing and planning. Kantar and others have “Ready now” virtual tools for merchandising and planning that will be applied to “virtual shopping” that create a better than in store experience.
Prediction, fulfillment, flexible and adaptive systems seem to be fast replacing “architectural ERP”.
We asked: what emerging sciences / dynamic technology have you employed and what’s the impact for manufacturers and retailers going forward?
Slide 18: INVENTORY / MERCHANDISING Moment of Truth.
There are many Moments of Truth and the Market Dynamics are accelerating that fact.
For many consumers the moment of truth is not always a positive one. The industry has identified that 9% of the time consumers cannot find the items they want, when they want them. Studies have shown that this is one of the largest factors contributing to consumer defection.
What have you learned about the importance of product mix and availability in AmazonFresh and how has it impacted your business?
Torsten essentially said: A very narrow selection doesn’t cut it. Elaborates…
REVERSE LOGISTICS: Instacart and Google talked about the issues of grocery returns in their local deliver services and the fact that Reacquisition Costs are 12X.
What is the biggest challenge around returns in grocery e-commerce?
Slide 20: REGULATORY (Topics included)
Regulatory is such a complex variable right now. Federal, State, County, City.
If Amazon is going to deliver certain fruits and vegetables throughout the entire country, all year long, you’ll have to “Import” them.
Foreign Verification Rules from Food Safety Modernization Act (FSMA), Produce Safety Rules, or Record Keeping Rules for Fresh Products Food Safety and the like will impact that.
How does FSMA and other Regulatory Compliance impact your supply chain strategy? and While FSMA impacts supply chain end to end, is there a specific challenge that’s standing above the rest?
Slide 21: TALENT LeaderShift Competencies
For decades, we at Hunt Executive Search have violently cringed when a CEO or senior executive would say; “I can’t put it in words, but I’ll know the right leadership skillset when I see it”. That’s not much of a target for anyone to hit.
Now, we’re hearing executives confide, that in truth, they may not even know it when they see it. They can’t even fathom specific competencies they need in many supply chain roles.
Biological Supply Chains: vertical integrations with fruit, vegetables, seafood, meat. Lean to People-less: manual pickers to robots. Trucks to Autonomous Vehicles & Droids. Tech Savvy to Real Time Big Data: insights for merchandising and end to end e-commerce. ERP to Artificial Intelligence: levering insights and disruptions to be applied real time.
We find ourselves surrounded by people that have been in the same industry for quite a while and institutional blindness is a real barrier for almost every enterprise.
Slide 22: AMAZONONIAN TALENT (Topics included)
Amazonians aren’t just born.
What are the most important Competencies & Attributes you look for in your Supply Chain Talent and Leadership?
*Can you please share a little about the Amazon Leadership Principals?
How do you identify talent with the technical competencies and intelligence you need in your Talent Management strategy?
How do you assess Talent against the Amazon Leadership Principals when your recruiting talent from outside the organization?
Slide 23: War For Talent
The only effective way to assure FRESH THINKING is to “Recruit Fresh Blood”. That’s true at every level, from individual contributors to senior leadership.
We asked Torsten: How big of a challenge is the War for Talent in supply chain at Amazon, and what strategies do you employ to address Talent Management?
Torsten: Companies can figure things out and make them work. The question is can it become part of their DNA and will they be able to attract and retain the right people talent required to profitably and sustainably build the business.
It’s always been a challenge in supply chain to identify and develop talent that can think end to end and now it’s more important than ever.
Now end to end competence leveraging technology and systems has become necessary. This requires very smart people who can think in new ways.
Slide 24: AUDIENCE QUESTIONS???
====================================== A few of the topics discussed during Q&A:
1.* “Coolness” of home delivery: Options, and innovative delivery models. Discuss some publicly available info on home delivery and outsourcing. Also, looked at creative solutions when thinking about delivery, specifically as it pertains to food and maintaining freshness (shelf-life and temperature control), without requiring significant asset investments. -- 2. Leadership & Career Path: A look at Torsten’s career journey. Insights on how to shape and develop your own career. Meet & greet included insights from Hunt Executive Search on developing leadership in your own organization, and feeding your own professional development. -- 3. Supply Chain has always been a service provider and cost center, should it evolve into something different? Thoughts from Torsten & participants. -- 4. Opportunity costs of not being ecommerce & omni-channel ready: **Shoppers already buy a large percentage of several major categories online, and most industry observers expect online share of sales to grow from ~2 percent today to 7-8 percent over the next four to five years. That five to six times faster than conventional channels. Some studies put the importance in terms of dollars and cents: The opportunity cost of not being in the Omni Channel today is 10 percent in lost revenue—which translates into millions of dollars for most retailers.We talked about Amazon’s view around the opportunity costs associated with Omni-channel variables (e-commerce, delivery, customer pick and traditional bricks and mortar) in grocery… and much more.
Slide 25: THANK YOU: We would like to thanks Torsten, for his Time, Commitment, Collaboration & Willingness to share some of his LEADERSHIP WISDOM with GROCERY MANUFACTURING, RETAIL & OMNI-CHANNEL COMMUNITY. Collaboration like this is what allows the entire industry to grow, together. Thank you to the GMA, the FMI, the TPA, and Amazon for allowing us to present today. For questions or more info, please contact us.
Heather Whaley Principal, Hunt Executive Search, Inc. Main Office: 001+ 704-696-3600 • Toll Free: 1-800-486-8476 • Fax: 704-696-3295 • Heather@HuntSearch.com
Leading Boutique Executive Search Firm with Best In Class Global Network, Market Mastery and Results. eDossier • Website • LinkedIn • @RecruiterWhaley • GMA • NACDS
Online Order and Store Pickup
Online Order and Shipment
Store Pick-upor Home Delivery
Dorothy Lane Markets,
Specialty Online with Delivery
US Online Grocery $13 Billion
Source: The Hartman Group
US ONLINE GROCERY
Biological supply chains: vertical integrations
with fruit, vegetables, seafood, meat
Lean to peopleless: manual pickers to robots
Trucks to autonomous vehicles & droids
Tech savvy to real time big data: insights for
merchandising and end to end e-commerce
ERP to artificial intelligence: levering insights
and disruptions to be applied real time
• Customer Obsession
• Invent and Simplicity
• Are Right, A lot
• Hire and Develop the Best
• Insist on the Highest
• Think Big
• Bias for Action
• Vocally Self Critical
• Earn Trust of Others
• Dive Deep
• Have Backbone: Disagree &
• Deliver Results