LP Magazine

JAN-FEB 2019

LP magazine publishes articles for loss prevention, asset protection, and retail professionals covering shrinkage, investigations, shoplifting, internal theft, fraud, technology, best practices, and career development.

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THE EVOLUTION OF LP TO SUPPLY CHAIN OMNI-CHANNEL EXPERTS 30 JANUARY–FEBRUARY 2019 | LOSSPREVENTIONMEDIA.COM EDITOR: Objectives on the store side are often pretty clear. It's a theft problem, shrink problem, or operational discipline issue. What are the challenges on supply chain side in your experience? SCROFANI: I think there are four dominant challenges that have become strategic pillars that supply chain executives must continue to address—compliance, visibility, risk mitigation, and efficiency. First, you want to have compliance standards at all areas of your operation that will benefit you. So you'll hear about Six Sigma standards, Kaizen projects, gray-space management, or another term that rallies the organization around success. So compliance is a pretty big deal. Visibility can cost millions of dollars. For example, you put your team together waiting for volume to arrive. You have this projected volume, and it doesn't show up at the location. You have 2,000, 10,000, 20,000 cartons waiting to be unloaded, and you have people literally standing around getting paid, and your burn rate is through the roof but still waiting on the shipment to arrive. Visibility can become a rather large pain point for many areas of the company. Novelty items that are late, lost, stolen, damaged will create a feverish pitch of discomfort. Imagine a new-generation smartphone missing its launch date. Technology that breaks down in the middle of an event can be catastrophic. Lastly is efficiency. Can we get better, faster, and smarter at what we do? How do you take a company to a Six Sigma standard, where they are really firing off on all cylinders? Those four pillars are the biggest headaches that most logistics or supply chain executives have today. EDITOR: You have become a very hands-on, work-your-way-up supply chain expert in the business. How have things changed over the last several years? SCROFANI: Obviously, technology has gotten better and faster. The ability to say omni-channel comfortably, and be right, has really proven to the consumer that they can buy anything they want at any time, anywhere, and have it delivered any place they want in an expeditious or extremely reasonable window of time. So I think that has changed dramatically. What omni-channel has forced though is that you are now tasked to make really good decisions quickly. Before you had some time on your side, and you had some manual intervention. For example, lead times for some origins and destinations were as high as nine or ten days. Where today your system is telling you, "Nope. The item is moving now." You've got four days, two days, ten hours, four hours, which is a complete shift in paradigm. So I would say that time has compressed, and speed has increased and forced good decisions to be made at times immediately. Now, the reason I highlight "decisions" is because some of the time in wearing an LP hat, you have to make a decision on what you're going to do when as it relates to detaining or prosecuting a suspect. In supply chain asset protection, the same applies. However, as you are now freight-centric as the focal point for taking care of the customer, you are challenged with some of the times making decisions about releasing or not releasing freight. Or the parcel package is somewhere in your pipeline that you may have to pull back, stop, or let go, and continue to build your criminal case around that shipment. So that is a very different way of attacking business today. And I don't think it's going to get any slower. In fact, I think it'll get faster. But what I believe is going to be required is that the technology is going to have to be smarter and asset protection friendly. We are seeing machine learning, artificial intelligence, and blockchain strategies that can, over time, be applied to really smart maneuvering of not only how the data gets filtered and purified, so you can make a good decision, but also how the system can make a good decision for the supply chain AP professional. This will allow for the filtering of defects to draw out incidents that will ensure you're really only going after criminality versus defect management. I think that's where eventually over a long period of time, we could end up in a successful way. EDITOR: Give us a short description of what omni-channel is and what challenges it creates. SCROFANI: I'll do my best because it's still complicated to me. When most of us started out, we were accustomed to just logistics delivery, which was very linear—[distribution center] to store one and then to store two. Then we began to use multichannel—store or online. Now we're in an omni-channel world where the transaction is at the center of your retail universe. The sale can happen anywhere, the delivery anywhere, and returns anywhere. Now try to put that combination on a white board with 300,000 SKUs, 500 stores, and forty warehouses while inventory is also in-transit in multiple modes of transportation, customers are dynamically buying and returning online and in stores with store locations in different states under different climates and economic conditions and lead times. I would say the transaction has really grown in complexity to where you have to be able to not only retain the customer through that one transaction but absolutely deliver to that customer's expectation and at the same time a phenomenal experience. So if the customer wants to buy something now, you have to get it to them any way that you can, the fastest way that they want with no damage and at a reasonable cost. And if they don't like it, you have to give them the easiest way to return it to have an experience that is unforgettable. At the same time, I am trying hard as a retailer to bring them into my store many times and not just once. So that experience that I allowed the customer to have on their smartphone, desktop, [point-of-service] stand, or on the salesfloor with somebody working a tablet, I have really amplified that to make them want to come back to this

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