Even if you are not a history buff, you’ve likely heard about how British Prime Minister Neville Chamberlain tried to avoid war with Germany in 1938 by appeasing Hitler’s demands for the German-speaking Sudetenland of Czechoslovakia. Rather than preventing war, however, that agreement only emboldened Hitler who soon took over all of Czechoslovakia and then invaded Poland the following year, starting World War II. What does that have to do with supply chain? I’ll get to that in a minute.
The other side of the story involves Chamberlain’s successor, Winston S. Churchill. When Hitler’s armies conquered Norway, Denmark, Holland, Belgium and France, Britain stood alone against all of the might of the combined German and Italian military. Many in the British cabinet wanted to further appease Hitler by asking for peace terms. Churchill would have none of that. He stood bold against Hitler and for two years the British Empire alone fought the Axis powers until the United States enter the war after Pearl Harbor. In the process, Churchill saved the Western world from tyranny.
What does this have to do with supply chain you again ask? Quite a bit, actually. For while history does not actually repeat itself, contrary to the popular expression, it does follow the same patterns over time. For example, one form of tyranny today is represented by Vladimir Putin’s actions in the Crimea and Ukraine. He marched his armies into the Crimea much like Hitler marched into Czechoslovakia and has continued to supply military aid to the rebels in eastern Ukraine. No leader has been bold enough to stand up to him so far, although US-led sanctions are causing him problems at home. The European countries, led by Germany and France, have tried to appease Putin with peace talks. These have failed miserably because appeasement never works against tyranny. The EU is afraid to challenge Putin too strongly because much of their fuel oil comes from Russia, so—you guessed it—their supply chain would be significantly impacted.
There has always been a kind of tyranny at work in supply chains. This kind isn’t political, though, it is financial. Originally it was the tyranny of the huge manufacturers. They were so big and had such enormous marketing budgets that they could create markets for their brands that consumers clamored for and thus retailers were forced to comply. But then a few bold retailers such as Sam Walton and Jeff Bezos built their own huge retail organizations that turned the tables on the manufacturers and created their own supply chain financial tyranny.
Today, financial tyranny in the supply chain rests with the consumer. They are now in charge of the shopping process and the supply chain must respond. The question is whether you will be like Chamberlain and try to appease the consumer with small changes such as adding ecommerce sites and mobile apps, or whether you will be bold like Churchill and transform your business model to truly provide the seamless omni-channel shopping experience that consumers crave?
Like 1938, the retail and consumer goods world is at a crossroads where small, timid steps will not appease the benevolent consumer tyrant. Bold steps are needed not to oppose the consumer, but rather to create such appealing and pleasing shopping experiences that the consumer will go from tyrant to loyal customer.
This boldness will not come easy. It will require new business models that forego the “push-based” product and channel centricity of the past, which focused on revenue and efficiency, for a new customer-centric model that focuses on melding seamless shopping experiences with profitable operations. This will go way beyond the transition from “push” to “pull” represented by demand-driven supply chains to an agile and integrated planning and fulfillment model that will build customer engagement and loyalty profitably.
This will not be for the faint of heart. It will require bold leadership and strategic investment in re-imaging the role of the store in the path to purchase, removing internal siloes for a single view of the customer, and implementing integrated planning and fulfillment technology to support these initiatives. The question is: faced with the tyranny of the consumer-driven marketplace, will you be a Chamberlain or a Churchill?