Rising consumer expectations (anytime, anywhere, right price and good quality), continued product innovation by suppliers to serve the category of one, and logistics partners playing tough (resource constraints, raising costs, asking for flexibility) are among the trends contributing to the complexity of managing supply chains.Rising consumer expectations (anytime, anywhere, right price and good quality), continued product innovation by suppliers to serve the category of one, and logistics partners playing tough (resource constraints, raising costs, asking for flexibility) are among the trends contributing to the complexity of managing supply chains.

As retailers look to tackle these challenges, analytics has emerged as a key capability that can deliver real-time information and actionable insights, enabling companies to achieve better and faster decision making and gain a competitive edge. According to research by Andrew McAfee and Erik Brynjolfsson of MIT, companies using big data and analytics in their operations show productivity rates and profitability that are 5% to 6% higher than those of their peers.

Critical to helping grocery retailers and mass merchandisers harness analytics and digital capabilities is the right supply chain talent. Baby boomers, Gen Xers and early Millennials are adept in the current organizational structure; Generation Zers are poised to add value with their ability to navigate a data-driven environment. Leveraging the current organization talent while harnessing Generation Z’s abilities can supercharge the supply chain organization and deliver significant business results.

To effectively transition to a data-driven and analytics culture, retailers must first examine how they make decisions today and what kind of change will be required to align the organization with data-driven decision making.

More often than not, we see traditional retailers operating in silos with few analytics-dedicated, specialized personnel, and the focus is almost exclusively on data availability, report generation and special projects. One retailer’s logistics group had 30-plus reports and scorecards that informed them of their performance, but the management team could not answer the root cause of increased spend and poor on-time service. The goal is to infuse analytics into supply chain decision making to enable fact-based discussions.

Supercharging the next generation supply chain requires keeping the business users front and center while building data-driven capabilities. There are four key building blocks to driving and sustaining a supply chain transformation anchored in ­analytics:
• Design analytics and visualization that business users can understand and trust. Advanced and complex analytical models often fail because business users do not trust them and they don’t reflect their daily operational realities. It is critical to design the analytics while walking in the business users’ shoes.
• Develop processes and align incentives to translate insights into action. Oftentimes the momentum generated with powerful analytical insights leads to confusion, as business users perceive this as “another additional analysis and meeting” in their schedule. Leaders need to tackle this challenge aggressively by leading from the front in communicating the new data-driven way of solving operational problems.
• Embed analytics with the right organizational structure. Typically, food retailers hand pick a small crew of supply chain associates within their team with analytics background and dedicate them on analytics-focused initiatives. The advantage of this approach is that the team brings together institutional knowledge and an analytical mind to drive insights that are executable. As the transformation progresses and business value is generated, the teams better understand their future talent needs and expand with the relevant talent (such as data scientists, analytics-to-business translators) and eventually become an Analytical Center of Excellence.
• Build technology capabilities. Partnering with the technology team along the analytics journey is important rather than providing them with the business requirements at the end to automate data extraction and analytics. It allows them the opportunity to evaluate the infrastructure and applications needed to deliver insights that matter.

Consider the case of a large food retailer dealing with the challenge of balancing the needs of its shoppers, suppliers and logistic partners. Management had prioritized two areas of focus: improving their inbound service and reducing their logistics spend. Using an “insights that matter” approach, they established the hypothesis about the potential key drivers of poor service and high logistics spend. After identifying the internal and external data that could aid in the analysis, they rapidly prototyped basic analytics as well as optimization modeling along with persona-based visualization to prove or disprove the issue hypotheses. The work was led by a team consisting of subject matter experts and analytics talent. After validating the opportunity, they started to change the existing processes to make analytics “the way of doing business.” The results were data-driven solutions that addressed the initial areas of focus and had the buy-in from the entire organization.

Initiating and sustaining this type of high-performing data-driven supply chain requires developing the right talent within the organization. One effective approach is extracting key business users with a greater aptitude for and interest in analytics, and training them through a combination of chair-side mentoring and learning-by-doing approaches and then embedding them back into the functional team as the supply chain analytics group. Another effective approach is to hire Gen Z talent with advanced analytical skills and blend them into the existing user base. Attracting Gen Z talent to supply chain requires creating an environment that can successfully compete with the more well-established and enticing worlds of technology and start-ups. This environment should leverage their talents and capabilities while teaching them the core operations aspects that are typically learned through ­apprenticeship.

Some innovative techniques to consider when blending Gen Z talent into an existing organization include:
• Encourage Gen Z new hires to mentor senior experienced leaders: Gen Z talent has comfort in dealing with today’s big data and analytics environments using advanced analytical tools which are critical for the success of today’s and tomorrow’s supply chains. Allow these new employees the opportunity to be a coach to experienced senior leaders.
• Leverage tech platforms for feedback in talent development. While Gen Z may be able to make an immediate impact on the organization, companies need to address their desire to learn through an apprenticeship model.
• Allow Gen Z talent to lead: Leaders worry about derailment of new/inexperienced talent through risky assignments. Rather than worrying about the risk, emphasize the exploration, learning and teaching aspect of such assignments. Gen Z can use new tools and technology to bring valuable insights, while the “tenured” talent can bring the expertise to teach them as well as refine insights and translate them to executional realities.

An analytics-driven approach to building a next-generation supply chain will be a competitive differentiator for many retailers. Creating the right data-driven culture will require not only an investment in the right analytical tools and models but an equally significant investment in the right talent to turn these insights into action. Senior leaders can jump-start the transformation by encouraging the development of analytical teams within the current organization and identifying opportunities to hire young analytical talent. New blended teams using an insights-that-matter approach to deliver fact-based analysis will supercharge and transform the next-generation supply chain.

Kumar Venkataraman is a partner with A.T. Kearney. He is based in Chicago and can be reached at [email protected]. Sameer Anand is a principal with A.T. Kearney. He is based in Chicago and can be reached at [email protected].