Are Your DTC Operations Innovating Fast Enough to Stay Competitive?

“We seek to be Earth’s most customer-centric company. We are guided by four principles: Customer obsession rather than competitor focus, passion for invention, commitment to operational excellence and long-term thinking.”

Amazon’s Jeff Bezos has invested privately in Blue Origin to build and launch rockets, with a massive launch pad being built at Cape Canaveral, FL.

Just recently, Bezos launched a joint company to lower workers’ healthcare with Warren Buffet’s Berkshire Hathaway and J.P. Morgan Chase. The three companies have 1.1 million employees among them. Bezos is also reportedly launching a B2B transportation company that many see as competitive with FedEx and UPS.

Amazon CFO Brian Olsavsky said the company added roughly 30% to its warehouse square footage in each of the past two years.

We can hear your response: Billionaires can fund anything they want to. That’s true. But take a step back for a minute. What we’re getting at is Amazon’s “passion for invention.” For us as we consult with multichannel companies, it begs the question of whether most companies are innovating fast enough to stay competitive.

Bezos isn’t doing this himself. He has thousands of employees and managers that have caught his vision and are working toward these goals. The company’s headcount grew 66% in 2017 to 566,000.

What are your plans for improvements to your DTC operations? What are you doing to radically boost productivity, lower costs and improve customer service? These 6 questions will help you gauge if you’re innovating fast enough. 

Is Your Productivity Improving?

As we do operational assessments we commonly hear that management wants to know if advanced systems can be adapted and cost justified. More than half the time we have to determine what the productivity gain will be, and the metrics to measure it – mostly ones they don’t currently track. Also, they often don’t have technologies in place such as barcode scanning/reading these advanced technologies require.

Secondly, when you review productivity, is it improving historically? For many companies the units of work (cartons shipped per hour, picks per hour, etc.) are not improving. It may be constant or it could vary widely depending on the time of year. Factor in the increases in operational expenses, and cost per order and per unit produced can vary considerably.

Are You Part of the Strategic Planning Process?

Do you have a clear idea of the company’s future growth by sales channel? How about the scalability that will be required to meet these projections? What new products are in the pipeline? What are the operational, tactical plans that will be required, and in what timeframe?

What Are Your Competitors Doing?

Customers and competitors help shape our objectives for improvement. How do we shorten order to door and decrease DC cycle time? Can this be done at a lower processing or shipping cost, with fewer errors?

Do You Have a Research Budget?

Most DTC operations are very lean and don’t have much time to do anything but get the work out. Do you have a research budget and personnel time to explore technology and changes in process or software that could bring benefits? We mean an actual budget and time to identify necessary changes. Does it allow you to bring in consultants, vendors and other resources to help you explore ideas and options?

What is the Cost of Failure to Implement?

How many times do you solicit a proposal from vendors only to put it on the shelf? Or worse yet, actually pay for consulting and never implement the recommendations? What are the reasons for shelving it? Is it because the solution didn’t fit your environment, or a lack of bandwidth or management approval? If it’s still a valid idea, can you form the beginnings of a plan?

What’s Your Continuous Improvement Roadmap?

As you evaluate your DTC operations options, what improvements represent quick wins or low-hanging fruit? Do those first, then go after longer-term projects requiring additional development time and  budget.

Commit to a continuous process. Often, DTC operations teams draw up plans but don’t have time to implement them. They may get sidetracked, or a year down the line find they lack a continuous improvement process.

Most of us are never going to launch rockets like Bezos or Elon Musk, but we need to objectively determine if we’re innovating fast enough to remain competitive. Are you implementing change early enough so that management can see the wins, catch the vision and get behind fulfillment and customer service changes at a reasonable cost? These are the questions you need to be asking.

Curt Barry is Chairman of F. Curtis Barry & Company

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