SSA Notebook | Fall 2015

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Can Walgreens Increase its Customer Base by Outsourcing Delivery?

recent Fortune article reports that Walgreens is partnering with Postmates, an on-demand delivery services app that started with restaurants. This will be available in all cities where Walgreens has a presence and Postmates operates. It’s a win-win partnership: Walgreens differentiates itself and Postmates provides customers more service options and better pricing (fees surge at peak delivery times). Supply chain planning and data analytics will be critical to the success of this new operation. For example, Postmates will need a staffing plan to support more sporadic demand throughout the day (as opposed to restaurant times). In addition, data will provide insights for understanding consumer buying patterns, critical mass, which products sell the most, and how all of this ties to demand planning. Finally, Walgreens and Postmates could leverage predictive analytics for product recommendations and route optimization.

The Advantages of an Employee-Centered Operations Strategy

Zeynep Ton, an adjunct associate professor at MIT’s Sloan School of Management, has devised a heuristic ranking system for customers and investors to determine which retailers provide the best jobs and demonstrate the best performance. In this analysis, a retailer’s overall score was determined by taking the geometric mean of employee satisfaction, customer satisfaction, and productivity. Retailers with what Ton calls a “good jobs strategy” have the highest scores, “a strategy in which everyone — customers, employees, and investors — wins.” The thesis is that investments in employee training and adequate labor creates more productive employees, and more efficient operations overall with less waste and greater profits. Companies with happy and engaged employees (like Costco and Whole Foods) will outperform competitors (like Safeway or Food Lion). This analysis provides an interesting way of demonstrating the relationship between employees and economic value.

How Smart Products — and the Data Created From them — will Fundamentally Transform the Manufacturing Value Chain

Many of today’s cars constantly communicate with their corporate headquarters, allowing manufacturers to understand exactly how they are being driven — they are smart products. This Harvard Business Review article defines a “smart product” through three components: physical (such as mechanical parts), smart (i.e., software, data storage, and sensors), and connectivity (such as ports and networks that enable communication to the cloud and parent company). Smart products provide unprecedented amounts of data about their usage, and the authors share how this will “alter every activity” in a company’s value chain. For example, “GE’s Brilliant Factories initiatives uses sensors to stream information into a data lake, where it can be analyzed for insights on cutting downtime and improving efficiency.” In marketing and sales, remaining connected to the product and tracking its use shifts the focus to maximizing product value over time, rather than a discrete transaction.

How Investment Companies are Investing in Data Capabilities

recent article in the Wall Street Journal explains how investment firms are taking a data-driven approach to insight. In an interview, Matthew Granade, Point72 Asset Management LP’s Chief Market Intelligence Officer, said, “Investing now isn’t just about earnings estimates and 10ks. It’s about satellite imagery, sensors and mobile devices. The more you can process those things, the more edge you’ll have.” Data from non-traditional sources, like satellite imagery showing how many cars are in parking lots of large retailers or helicopters flying over oil storage facilities with infrared cameras to detect their volume, can be extremely valuable. Investors, hedge funds and trading groups can all leverage new sources of data and advanced analytics to drive better business decisions and gain advantage.

How Big Data is Changing the Modern Farm

This Business Insider article highlights an important change in the farm industry. Alongside crops and farmland, famers are now monitoring the slew of computers and data that is available to them. Real-time data can now be used to make better and quicker decisions on how to optimize land and grow better crops.  Data is also redefining the role of a farmer from laborer to more of a manager. Understanding new software (like sensor applications that can adjust nitrogen and potassium levels in the soil in different patches) and technology (like self-driving tractors using GPS signals that are accurate to less than an inch of error) is key to growth in profitability in the low-margin business of farming. Although “agriculture has been slower and more cautious to adopt big data than other industries,” Silicon Valley is taking notice.

Big Data for New Business Models: A Lesson from Kroger

With loyalty card data collected from over 56 million households, Kroger has been personalizing coupons, stocking inventory, and designing store layouts based on local preferences. The ability to draw on shopper tastes, habits, and price sensitivity is valuable — and Kroger knows it. According to a recent WSJ article, “Kroger Co. sees data analytics not only as a competitive advantage in selling diapers, cereal and soda pop, but also as an important line of revenue in and of itself.” With its new data subsidiary, 84.51˚, Kroger is embarking on a common business for tech companies (e.g. Facebook & Google) that is cutting-edge for grocers. Kroger is selling its insights and analytics services to advise suppliers like Hershey Co. on media buys, marketing, and pricing. As grocery store margins remain thin, Kroger’s ability to reshape its business and utilize its key asset (data) will help it maintain advantage.

Operational Excellence, Real-Time Data Review, and Literal Mining

Canadian mining firm Goldcorp Inc. makes the best use of its operational excellence program to remain competitive in a declining environment, according to this article in Mining Global. “We have supervisors underground that are able to see exactly how the mine is operating at any given time,” said Todd White, Senior Vice President of Business Excellence. Real-time review allows Goldcorp Inc. to face challenges that arise much more quickly. Issues are often resolved within the hour, rather than over the course of several hours. The success of the program hinges upon technology; the capability of live data review facilitates “seeking out incremental improvements and identifying and eliminating hurdles to optimal production.” Being able to collect and interpret data, and then get it to the decision-makers who need it gives Goldcorp its competitive edge.

Exclusive Content on Modern Leadership from Stephen Miles, CEO of The Miles Group

Stephen Miles, CEO of our sister firm, The Miles Group (TMG), offers frank, pertinent insights on modern leadership. TMG develops talent strategies through CEO successions, executive transition, board succession, and Chairman/Lead Director transitions.

Offsites: the Cure for Struggling Teams — and the Key to Making Good Teams Great

In a recent post, Stephen Miles shares why team development matters and the importance of team offsites. According to Miles, great teamwork can be taught. Just as individual executives can be coached, trained, and developed to tap their highest potential, teams can, too. Investing in teams — just like investing in individual executive development — can have significant payoffs for an organization, and is essentially required in today’s highly matrixed organizations. The Miles Group identifies the offsite as the single most valuable tool for creating high performance teams. The offsite meeting — where team members can come together away from the distractions of the office — can result in a true transformation in team alignment, accountability, communication, and trust.

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