Stable but not really booming ..

Dear friends at #LinkedIn,

Over the years, our society has moved towards online shopping and has become addicted to 24-hour delivery service. This started with ‘chunky’ items like books (second-hand at first) or DVDs. Over the years, this trend crept into clothes, household products, and also into the food industry, where restaurants and supermarkets joined in as well.

The key role in these online stores, was ‘order picker’, the people who actually go around the warehouse to pick out the items being ordered, and getting it packed for delivery as soon as possible. In my personal experience, I visited 3 of such online delivery services, (a) for non-food consumer products like clothes, cosmetics, and sporting equipment. Another was (b), only for household items like food, drinks, detergent, etc. And the last (c), which was for office supplies, including hand-held products for factories.

Clearly (a) and (b) were #B2C, and (c) was #B2B only .. or was it ?

The pressure on the B2C organizations was focused on maximizing daily operational yield, as they served huge volume of customers, and their strategy is often to keep pushing the limits, and simply refund any customer, ‘if they complained”. In most cases, the B2C customers do not really bother to complain. Disgruntled customers simply adjust their orders to avoid items that did not meet their expected #Value, such as squashed fruits. This helps the B2C organizations organically prune their portfolio, without even realizing it.

On the other hand, the B2B organization must hold #Value else their customers will simply leave. As such they tend to monitor #Quality and are less focused on their daily operational yield.

All 3 organizations were struggling in some way. So let's take a quick look ? Let’s analyze the B2C and B2B separately, and try to uncover what was going on, and how to proceed.

B2C organizations, (a)?and (b) :

·??????? Extremely hierarchical and top-down management style, where most of the pickers were migrants, working on minimum wage, often having huge issues on their minds, and only wish to earn something to help them get by. In these instances, there was almost negligible bottom-up engagement. Employees are initially attracted to the vibrant company culture, and the opportunity to earn 10 Euros an hour with no experience required. This was often seen as a wonderful opportunity, not to be to be missed out on. Often the first week is great, being assigned to a trainer, and having the opportunity to work with no targets. Then the next phase kicks in, and every picker is monitored and pushed to meet their daily delivery performance. Many burn out after several weeks, having #RSI, and quit. But there is always a queue of people waiting and willing to work, even if only for a few weeks of salary, then quit.

·??????? Employee motivation and engagement are very low, thus the quality of service is also low. The only focus is daily operational yield, keeping the target on the lowest #Cost and #Time for the organization’s benefit.

In general, both of these 2 organizations were doing very well during the #Covid period and have stabilized their phenomenal growth since then. At both these organizations, I have seen many opportunities to improve, learn from past (or current) issues, and make steady progress. And often many of the ideas come from the employees themselves, hoping to receive some form of appreciation in return. But most ideas proposed by employees were often (always) shot down. But why do you think this happened ? Then ask yourself, #WhatWouldYouDo to help both these B2C organizations get back on track with their phenomenal growth ? or is this not possible anymore ?

B2B organization, (c) :

·??????? There was much less hierarchical type of management, most employees were local, and received a normal salary with benefits.

·??????? This organization was once a warehouse, where trucks would come to collect a full container load, then leave to distribute the items to various customers themselves. And to reduce cost, the warehouse decided to cut out the middle-man, and deliver directly to the B2B customers themselves.

·??????? Now they had to manage much smaller orders to individual customers. This was actually looking more like the B2C model, except the customers were not families at home addresses, but companies.

·??????? This was a great idea, a new business model, but they were not prepared (enough) for the explosion. Management needed to bring in Data Analytics to help them manage the complex processes with customer orders and #SupplyChain. They also reviewed their physical layout, and redesigned their business for smaller #SKUs

Yes, though they are doing better and will eventually become stable and possibly even grow, so #WhatWouldYouDo to help this organization do even better than this ? as eventually they will be just another online store ? ?with similar #Cost structure and #Value proposition, the same as many others in the same industry correct ?

Look forward to hearing your thoughts and questions.

With kind regards,

Aroop Bhattacharjee

#theprofitengineer

#TOC (Theory of Constraints) #Mindset #DataAnalytics #LeanSixSigma