Creating customer value using SCM retail technologies and systems

Summary

在这段对话中，REI的供应链商品和技术副总裁Amit分享了他在信息技术和供应链管理方面超过20年的经验。他讨论了REI如何通过其分销中心和商店网络，以及与供应商的合作，提供全渠道零售体验。Amit强调了技术在提高库存可见性、优化订单履行和增强客户体验方面的作用。他还提到了REI如何通过其会员所有制合作模式，专注于共享价值而非股东价值，以及如何通过循环商务和二手装备销售来推动可持续性。此外，Amit还讨论了REI在疫情期间的应对策略，包括如何快速适应变化，提供路边取货等新服务，并在供应链中断期间保持客户满意度。最后，他分享了自己作为MIT供应链管理MicroMasters项目校友的经历，以及这些课程如何帮助他在职业生涯中取得成功。

Takeaways

• 📚 Callum Betts 和 Laura Lega 是 MITx MicroMasters 供应链管理课程的课程负责人，他们在 MIT 运输物流中心参与全渠道和可持续性相关研究。
• 🏆 Amit Kothary 作为 REI 的供应链、商品采购和合作品牌技术的部门副总裁，拥有超过 20 年的信息技术经验。
• 🛍️ REI 作为会员所有的合作零售商，强调户外生活的重要性，并通过实体店铺、在线商城以及循环商务提供户外装备和体验。
• 🔄 Omnichannel 策略通过提供多种履行选择（如线上购买店内自提、直接发货等）来增强客户体验，但同时也增加了技术、流程和库存管理的复杂性。
• 📈 技术在 REI 的分销网络设计中发挥关键作用，包括新分销中心的选址和网络流量的模拟，以满足业务增长和客户需求。
• 🌐 疫情期间，REI 利用其 Omnichannel 能力快速适应，如通过在线零售和推出路边取货服务来应对门店关闭的挑战。
• 🔧 技术系统的选择是 REI 持续考虑的问题，包括使用集成的 ERP 系统或最佳实践解决方案的组合，以满足不同的业务需求。
• ♻️ 可持续性是 REI 的关键议题，通过循环商务模式（如二手装备销售）来减少碳排放，目标是到 2030 年减少 55% 的碳排放。
• 📈 REI 利用数据分析来优化库存、顾客承诺和总成本服务，同时最大化客户体验。
• 📊 通过 MicroMasters 项目，Amit 扩展了供应链知识，建立了专业网络，并将其应用于工作中，特别是在 Omnichannel 优化解决方案的共同创造和创新上。
• 📨 顾客退货体验是 Omnichannel 策略的重要组成部分，REI 通过技术简化了退货流程，提高了客户满意度。

Q & A

如何理解REI的全渠道体验对顾客价值的影响？

REI的全渠道体验通过提供多样化的购买和履行选项，如在线购买、店内自提、家庭送货等，增强了顾客价值。这种策略不仅满足了顾客对灵活性和便捷性的需求，而且通过无缝的购物体验，增强了顾客对品牌的忠诚度。

REI在技术系统方面如何应对全渠道策略带来的挑战？

REI通过集成ERP、仓库管理、订单管理系统、销售点系统等技术系统，确保了对库存的实时可见性，以及对订单履行的优化。这些系统共同工作，支持REI在全渠道环境下提供一致的顾客体验。

REI如何利用技术来优化其分销网络设计？

REI使用网络设计和建模软件，结合客户数据、产品流、存储需求和可持续性目标，来评估和决定新的分销中心的位置和设计。技术帮助REI在满足增长需求和顾客期望的同时，优化了成本和服务水平。

在新冠疫情期间，REI如何调整其供应链流程？

面对新冠疫情带来的挑战，REI迅速调整了其供应链流程，包括临时关闭实体店、增加线上订单处理能力、推出路边取货服务，并在供应链中断时通过“通知我何时有货”功能来管理顾客期望。

REI如何量化和跟踪其可持续性目标的进展？

REI通过收集和分析来自不同数据源的信息，包括能源使用、废物管理、产品制造和分销过程等，来量化和跟踪其可持续性目标。此外，REI也在探索合作伙伴关系和技术解决方案，以提高数据收集和报告的准确性。

REI在选择供应链系统时是如何权衡ERP系统和最佳实践解决方案的？

REI在选择供应链系统时会考虑ERP系统的集成优势和最佳实践解决方案的专业性。对于标准化和非差异化流程，REI可能会倾向于使用ERP系统以简化集成。而在需要差异化和客户接触点更近的领域，REI可能会选择最佳实践解决方案来提供更专业的服务。

REI是如何处理drop ship（直发货）模式下的库存和订单履行的？

REI通过与drop ship合作伙伴建立合作关系，扩展了产品种类并满足了客户需求。在处理库存和订单履行时，REI面临的挑战包括获取合作伙伴的实时库存信息、协调不同的服务水平以及管理退货流程。REI需要与合作伙伴进行紧密的技术集成，以确保顾客体验的一致性。

REI如何通过技术提高供应链的透明度和效率？

REI通过实施先进的供应链管理系统，如ERP和WMS，以及利用云技术、API和微服务等现代技术，提高了供应链的透明度和效率。这些技术的应用使得REI能够实时监控库存、优化订单履行，并快速响应市场变化。

REI如何确保其供应链的可持续性？

REI致力于通过多种措施确保供应链的可持续性，包括使用可再生能源、实现零废物目标、减少包装，并在其分销中心实现LEED认证。此外，REI还在探索如何减少上游供应链的碳足迹，比如通过使用清洁能源和提高制造过程的能效。

REI在疫情期间推出的路边取货服务是否会继续提供？

REI很可能会继续保持路边取货服务，因为这种服务为顾客提供了便利性，并且已经逐渐成为顾客的期望和习惯。尽管疫情限制放宽后，顾客可能更倾向于亲自到店购物，但路边取货作为一种增值服务，仍能满足顾客对便捷性的需求。

REI如何衡量其供应链技术创新对业务的影响？

REI通过评估技术创新对顾客体验、订单履行效率、库存管理、成本节约等方面的影响来衡量其供应链技术创新的业务价值。此外，REI还会考虑技术如何帮助公司实现其可持续性目标，并在长期内提高竞争力。

Outlines

00:00

😊 Introduction by the Co-Hosts

Callum Betts and Laura Lega, co-hosts for the event and course leads in MIT's MicroMasters program in supply chain management, introduce themselves and express their excitement about the day's discussion. They highlight Amitko Kami, Vice President of Supply Chain Merchandising and Co-op Brands Technology at REI, who will share insights from his 20-year experience in IT.

05:06

📈 Omnichannel Strategy Challenges

Amitko Kami elaborates on how REI's omnichannel strategy aims to provide seamless customer value across channels, despite the growing complexity from the surge of new choices. He shares REI's goals in managing inventory, ensuring customer satisfaction, and optimizing overall supply chain costs.

10:06

🏬 Evaluating Supply Chain Network Expansion

Amitko Kami details the data-driven approach in selecting Tennessee for REI's new distribution center. Technology plays a vital role in assessing customer demographics, demand patterns, and fulfillment needs while ensuring sustainable practices to reduce carbon emissions.

15:07

🔄 Supply Chain Disruption Solutions

REI had to swiftly adapt its operations during the pandemic, shifting entirely to online retail when stores closed and introducing curbside pickup. Amitko describes how they leveraged their optimization models and inventory visibility to respond to disruptions and ensure timely deliveries.

20:08

🚲 Responding to Pandemic-Induced Demand Shifts

Amitko discusses how unprecedented demand for outdoor products, like bicycles, required fine-tuning inventory models and assembly processes. He shares how they optimized the fulfillment network by adapting technology to navigate assembly capacities and supply shortages.

25:10

📦 Circular Commerce and Returns Management

Amitko underscores the importance of customer satisfaction and reverse logistics in managing returns, while circular commerce offers an eco-friendly solution. He describes how REI ensures consistent customer experiences through comprehensive product data and sustainable business practices.

30:10

🌍 Creating Customer Value through Circular Commerce

Amitko explains how REI leverages returned items and gently used gear to create customer value and reduce carbon emissions by over 50%. Technology helps categorize product quality, manage resale pricing, and integrate fulfillment channels for these items.

35:12

📚 Amitko's MicroMasters Experience

Amitko shares how the MicroMasters program broadened his knowledge, improved his collaboration with colleagues, and provided a vocabulary for connecting with business partners. He encourages current students to network and build connections through events like this.

40:13

📝 Audience Engagement and Closing Remarks

The co-hosts thank Amitko for his valuable insights, emphasizing how technology and omnichannel strategies have expanded audience knowledge. They encourage learners to continue engaging with their supply chain studies and apply innovative solutions.

Keywords

💡供应链管理

供应链管理是指在生产和销售过程中，对产品从原材料采购、加工、运输直至最终销售的整个流程进行有效管理的一系列活动。在视频中，Callum Betts和Laura Lega作为MIT的供应链管理课程负责人，讨论了供应链技术及其对客户价值创造的重要性。

💡全渠道零售

全渠道零售是一种零售策略，它将线上购物、移动购物和实体店购物等多种购物方式结合起来，为消费者提供无缝的购物体验。视频中提到，REI作为一个户外装备零售商，通过全渠道策略，允许顾客在不同的渠道购买和退换商品，增加了顾客的购买选项和灵活性。

💡信息技术

信息技术在供应链管理中扮演着核心角色，它包括用于管理和优化供应链流程的软件和硬件系统。视频中，Amitko Kami提到了他在REI的工作中，如何利用信息技术来支持供应链的订单管理、商品采购、品牌合作和产品开发。

💡客户价值

客户价值指的是企业通过其产品或服务为顾客提供的利益和价值，它通常与顾客的满意度和忠诚度相关。在视频中，讨论了如何通过全渠道体验来提升客户价值，包括提供更广泛的产品选择、更灵活的获取产品的方式，以及建立与品牌的长期关系。

💡逆向物流

逆向物流指的是产品从消费者返回到生产者或零售商的物流过程，这通常涉及到退货、维修、翻新或回收等活动。视频中，讨论了REI如何处理逆向物流，包括退货的便利性、产品退回后的处置决策，以及如何通过技术提高逆向物流的效率。

💡可持续性

可持续性涉及到在不损害未来代际满足自身需求的能力的情况下满足当前需求的发展。视频中，REI强调了其可持续发展的目标，包括减少碳排放、使用可再生能源、实现零废物，并通过循环商务模式销售二手装备来减少对环境的影响。

💡电子商务

电子商务指的是通过互联网进行的买卖商品或服务的活动。视频中提到，电子商务的增长导致了更高的退货率，这给供应链管理带来了新的挑战，尤其是在处理退货和逆向物流方面。

💡企业资源计划（ERP）

企业资源计划是一种集成的信息系统，用于管理企业运营的核心部分，如财务、人力资源、供应链等。在讨论中，Amit提到了ERP系统在整合数据和提供供应链管理功能方面的优势，同时也指出了其在适应新技术和趋势方面的局限性。

💡优化引擎

优化引擎是一种软件系统，用于分析数据并找到最佳的业务决策方案。在视频中，Amit讨论了优化引擎如何在REI的供应链中用于平衡成本和服务水平，以及如何在疫情期间调整这些模型以应对需求的激增。

💡直接发货（Drop Ship）

直接发货是一种零库存零售模式，供应商直接将产品从仓库发货给消费者，而不经过零售商的仓库。视频中提到，REI利用直接发货扩展了其产品种类，但也带来了库存可见性、客户承诺和服务水平等方面的挑战。

💡循环商务

循环商务是一种商业模式，它强调产品的重复使用和循环利用，以减少浪费和环境影响。视频中，REI通过销售二手装备的循环商务模式，实现了减少碳排放的目标，并为客户提供了更具可持续性的选择。

Highlights

Callum Betts 和 Laura Lega 作为 MITx MicroMasters 供应链管理课程的课程负责人，介绍了他们在 MIT 运输与物流中心的全渠道和可持续性相关研究。

Amit Kothary，REI 的供应链商品和合作品牌技术部门副总裁，分享了他在信息技术方面超过 20 年的经验以及在 REI 的工作洞察。

REI 作为会员所有的合作零售商，强调户外时间对于美好生活的重要性，并致力于激励和使每个人能够体验户外生活。

REI 社区拥有超过 2000 万终身会员，近 15000 名员工和 168 个地点，提供户外装备、服装租赁以及户外体验。

Kothary 讨论了全渠道策略如何成为提升客户体验和价值的关键驱动力，并强调了全渠道履行选择的复杂性。

REI 使用技术来优化库存可用性、客户承诺和总服务成本，同时最大化客户体验。

在网络设计和模拟软件的帮助下，REI 决定在田纳西州开设新的配送中心，以提高配送速度并优化服务成本。

REI 致力于通过使用行业领先的可持续性技术和特征来减少碳排放，目标是到 2030 年减少 55%。

COVID-19 大流行期间，REI 必须快速适应，从全渠道零售商转变为一夜之间的纯在线零售商。

REI 利用技术推出了路边取货等新服务，以应对大流行期间的健康和安全指南。

Kothary 强调了在大流行期间保持客户体验的无缝性和无摩擦性的重要性，并介绍了 REI 如何通过技术实现这一目标。

REI 发现通过销售二手装备来减少碳排放，与生产类似新产品相比，可以减少约 50% 的碳排放。

REI 重视循环商务，将其作为实现可持续性目标的关键战略，其中退货是循环商务的重要供应来源。

Kothary 分享了他在 MIT MicroMasters 项目中的学习经验，强调了该项目如何帮助他在供应链领域扩展知识、建立网络，并与业务伙伴建立联系。

REI 计划继续提供在大流行期间开始的服务，如路边取货，以满足客户的便利性和偏好。

REI 正在采取措施减少其碳足迹，包括使用可再生能源、实现零废物项目，并在上游供应链中寻找减少碳排放的机会。

在选择供应链系统时，REI 考虑了 ERP 系统和最佳实践解决方案的优缺点，并根据是否能够为客户带来差异化来做出选择。

REI 通过提供直运服务来扩展其产品种类，但这也带来了库存可用性、客户承诺和退货处理的复杂性。

Kothary 鼓励对供应链技术感兴趣的学生加入 MIT MicroMasters 项目，并建立专业网络以推进他们的职业生涯。

Transcripts

hi everyone welcome thank you for

joining my name is callum betts i'm

honored to be your co-host for today i'm

a course lead in the mitx micromasters

program in supply chain management i'm

also involved in omni channel and

sustainability related research here at

mit center for transportation logistics

and i'm honored to have my co-host here

my colleague laura lega

hi kellan hi everyone and welcome i'm

laura i'm also course leading the

micromaster in supply chain management

program you probably have seen us

already and i'm involved in omnichannel

sustainability and online education

research at the mit center for

transportation logistics today we are so

fortunate to have here with us mr amitko

kami

um amit is the divisional vice president

of supply chain merchandising and co-op

brands technology at rei

and he has over 20 years of experience

in information technology

with that he will share recent insight

from his work at the company so we are

very glad to have you join us today um

so welcome amit

thank you

all right before

um

we get started um with the discussion

let's get event with a quick poll we'd

like to learn more about what you're

hoping to get out of this event and so

let me launch that

poll number one now please

awesome so the poll question why are you

here today um just a few different

options you know i want to learn about

supply chain technology and systems i

want to learn about maybe rei and the

outdoor industry

hopefully we have some micromasters and

some sem students here and you don't

miss any live events that's i'm always

awesome

um while we do that i'll share a little

bit about the agenda for today and so

for the next few minutes we'll have a

minute and write a little background

what he does and how it relates to our

topic today we'll then ask some

questions that we have prepared and then

the last 15 minutes we'll be saved for

your questions and so please use that

webinar q a that little button on the

bottom that webinar q a feature to ask

your questions and be sure to log be

logged in with a name and we won't be

reading any anonymous questions

and we'll also share a few more polls

during the event so be prepared to

participate

and let's check in on our results of

that first poll

okay

so

i can see that most of you want to learn

about supply chain technology and system

and

you want to see how it can improve your

supply chains so that's awesome we will

cover all the topics that are here so we

are very happy that you are interested

on that

and with that in mind i want to admit uh

to get started so i don't know if you're

ready i mean to start we would love to

start by learning

more about your background

yeah sure

um i'll start a little bit about myself

um i've been working in supply chain

related technologies for over 20 years

now

uh i have been with rei for a little

over seven years

in my current role at rei i support

teams that work on supply chain order

management merchandising co-op brands

product design and development uh and

our erp system

these technologies are foundational for

arya's transformation

it is an exciting space to be in for

sure

so little bit about rei

many of you probably know arya already

and i'm hoping some of you are even

co-op members

a quick overview for those of you who

may not be familiar

rei is a member-owned cooperative

retailer based in the united states

at rei we believe time outside is

fundamental to a life well-lived

we exist to inspire and enable life

outside for everyone

today the rei community has over 20

million lifetime members nearly 15 000

employees and 168 locations

rei

sells outdoor gear and apparel we offer

rental equipment

resupply which is our circular commerce

offering and also outdoor experiences

like travel group activities and classes

being a member owned cooperative or what

we refer to as the co-op is fundamental

to rei it allows us to focus on shared

values and not share value

this connects nicely to the theme for

today's event about creating customer

value

and i wanted to share a very short video

about co-op membership

can play the video please

the more we get out there

the more we discover

that there's a community

with room for everyone

and a membership that never expires

that goes wherever we go

that loves what we love

hey

always welcoming us

outside

rei

better is out there

thank you

so one way to think about that video is

that it shows the ideal customer

experience

at rei our customer is the co-op member

who is engaged in outside activities

so as supply chain professionals how do

we create customer value for all of

these members

how does the omni channel experience

fulfill on the vision that we just saw

in that video

awesome well thank you amit we're super

happy to have you here today and thank

you again for sharing your time and your

knowledge with us today and we're also

super proud to have a sem micromasters

alumni here to share an experience today

it's very exciting for us

let's dive into our main topic and

connect me with that question that you

left us with there how does omnichannel

experience bring value to

customers or in your case co-op members

from my personal experience at rei you

can buy in rei stores you can buy at

ri.com and have it shipped to you um you

can buy online and go to the store and

have it picked up and all these kind of

different type of channels

so we would like to know first is what

are some of the unique challenges this

omnichannel strategy presents

compared to like a pure ecommerce or a

pure brick and mortar retailer

maybe from a technology and systems

perspective and has this

strategy help create customer value

yeah thanks kalyn sure let's dive in

uh the omni channel strategy is a key

enabler for driving the customer

experience and customer value

the various fulfillment choices that you

just described earlier online in store

across all of the channels

those used to be a differentiator in the

past

but now as we are seeing digital and

store experiences uh continue to blend

together and digital is driving

significant growth so in that situation

uh these are almost becoming table

stakes now

and with that the complexity continues

to grow and it's not just for technology

but it's for people processes from all

of those perspectives

the primary driver for this added

complexity is the sheer number of

additional choices and decisions

that will be made both by the customers

but also by the retailer

you reference the pure e-commerce or

brick and mortar

models and retailers there

so in those models the decisions are not

easy but relatively straightforward you

have a single pool of inventory that the

customers can choose from

in both of those models you have a

single primary channel that is

generating most of your demand

and you have relatively limited options

to fulfill this demand from

so enter the world of omnichannel and

the number of the variables just expands

in a non-linear fashion

i'll share some numbers from rei

perspective um 20 million members we

have three three soon to be four

distribution centers we have 168 stores

we have more than thousand vendors

so with all of these the complexity just

grows

and there are key uh themes that i would

talk about there are three of them

the first one being inventory and

availability

second is the customer promise and third

is optimizing the total cost to serve

while maximizing the customer experience

so in each of these three themes there

are a number of foundational decisions

that you need to make

which is going to drive how your network

and customer experience is going to be

set up

so let's take the first theme of

inventory and availability

some of the key questions here are

how do you decide on available to

promise inventory

do you have dedicated and separate

inventory pools by channel one for

e-commerce one for stores or do you have

a shared inventory pool

also when we have stores the inventory

picture in the stores is changing

throughout the day as walk-in customers

transact

and do you have any additional sources

of inventory outside of your network so

for example if you are partnering with

your drop ship partners uh that creates

additional complexity because they may

not have the inventory pools dedicated

to you they may be serving multiple

retailers so getting the inventory and

availability right is the foundational

piece which is going to drive all of the

downstream customer experience

then when you have made all of these

decisions it comes to the customer

promise

as the customer is transacting what are

the different choices for the customer

that's going to be driven by if you have

all of the stores do you ship from all

the stores like we do

what are the different options whether

it is shipping to your home shipping to

store picking up from a store or even an

off-site location

and then what are the different levels

of service that you offer do you offer

next day two-day shipping

and then based on all of these

combinations what is the date that you

are going to promise to the customer

that's the most important

aspect here in terms of setting the

right expectation

for the customer to receive the product

and once you have both of these set up

it really comes down to optimization

now you

have so many of these foundational

decisions that are going to lead you to

a number of different constraints that

you would need to optimize against

you have shipping costs from different

locations you have processing costs at

the distribution centers and the stores

you have the capacity both

individual capacity at the location

level and then you have the aggregate

capacity and throughput of your network

when you have stores the product is

selling through at the store locations

at different rates and that's going to

influence

how you manage your inventory life cycle

in terms of the markdowns or

stock outs and things like that

so i think i just rattled through a

bunch of decisions there so all of these

decisions create a very interesting

challenge for technology

we need to have systems in place that

will have reliable accurate and near

real-time information about all of this

inventory

and then we need to have optimization

engine and models in place that can

dynamically respond to various

situations as we go through the year we

have different events we have typical

holiday season you have any special

events or you can run into any of the

external constraints that you did not

even see

ah pandemic was a great example which i

know we are going to talk a little bit

more in details

so you need to have technologies and

systems in place

to also support the operations inside

your buildings whether it is

distribution center store operations

so collection of systems that work

together is a critical success factor in

getting omni channel right

its erp warehouse management order

management system points of sale

all of these are various building blocks

and eventually

your digital properties whether it is

your website or mobile app

those are going to consume this

information and craft engaging customer

experiences it's really quite

challenging to integrate all of these

systems in near real time and make sure

that you can deliver on a great customer

experience

so as any retailer when you start

bringing this omni channel strategy and

experiences to life the initial

experiences may feel transactional at

times they may also feel disjointed

across the channels i go to a stores i

see one thing i go to your digital

property the inventory availability

picture may not seem consistent and it

could be disjointed that's the early

stage of omnichannel

but as the capabilities mature as you

have more systems technology and

processes in place and when you get it

right the end result that we are

aspiring for is a seamless and

frictionless customer journey

and the customer value that this entire

model creates is in a wide selection of

products and services

in flexibility for accessing those

products when and how the customers want

them

and hopefully they build a lifelong

relationship with your brand

thank you amit for those great insights

and very detailed one i i think our

audience would love them

on creating a similar omni channel

customer experience that's amazing

we also know that companies need to

eventually redesign the distribution

networks and this could be because of

disruptions capacity issues or even to

provide improved customer service as is

or satisfy change in demand

so connecting with what you just said uh

recently the company announced that

you're opening the new and fourth

distribution center so we wanted to know

um what role did technology play in

evaluating the network design and making

decisions in terms of um what's the new

additional capacity we would need in the

network and also understanding like i

think it's going to be located in

tennessee correct me if i'm wrong how

did you make that choice so we would

love to learn more about that

yeah that's a great question

so as you said companies need to be

constantly reviewing their supply chain

networks to ensure that they are set up

to meet both the growth that is

happening in the business but also the

ever-changing customer needs and

technology and data play a critical role

in modeling the network and also helping

inform with the decision such as the

location selection as we described where

do we open the distribution center what

is the product flow mix that is flowing

through you know the existing network as

well

and at rei we use our distribution

centers to serve both the stores

as well as e-commerce and digital orders

so that adds even more complexity when

we want to make sure that the right mix

of product is flowing through these

buildings

uh in addition we are also a specialty

retailer

so our number of days of supply in any

given location is pretty low especially

when you compare it to a big box

retailer so in stocks are super

important for us and the proximity has a

huge impact in maintaining the healthy

in-stock levels inside the stores

and then technology absolutely played a

pivotal role in evaluation of the

network design it all starts with

customers first and utilizing the

technology and data that we have um to

understand the key markets the

demographics to strategically place a

distribution center that is close both

to their stores

as well as to our customers

so throughout all of our systems we have

a ton of data

around where our customers and members

live

where the demand originates where it is

actually fulfilled from

what's the product and the category

makes uh that the customers are

purchasing

what's the time taken to deliver the

product uh

after the order is placed to the

customers and what's the replenishment

cycle and time frame to get the product

to the stores

so we have this ton of data

but we obviously need tools

on top of that so this data coupled with

network design and modeling software

is critical in selecting the location

and also designing the flow

and the other piece that i will add

there is the technology

doesn't stop when we uh select a

location but now that you have added a

new node to the location the complexity

of the network grows even more so you

now have even more variables so you need

to have the end-to-end agility and

flexibility in the supply chain to

respond to

any changes whether it is demand

customer behavior you name it

and then we need to have the technology

in place to deliver operational

efficiency simplicity inside the dc's

all the way from material handling

equipment to warehouse management

software to the user experience that you

are going to see

so answering the question about how did

we decide to open this distribution

center in tennessee

this is the classic um location

selection optimization problem that i'm

sure you are studying in the design and

other courses in details so there are a

few considerations and constraints that

i will talk through so we took all of

these ah into consideration and

optimized against those

the first one is the network capacity

and throughput so given our growing

demand both in stores as well as in our

digital channel what's the total

capacity

that we need in terms of just the

storage as well as the throughput

through the dc's and the stores that was

uh one of the key considerations

uh the second and really important point

is around the speed to customer

so with now this expanded network we can

offer various uh levels of service

faster shipping to our customers such as

two-day shipping

uh just to put it in perspective in some

numbers

the tennessee distribution center

is going to have about 5.6 million

existing members that are residing in

the area that would be served by the

distribution center

out of our 168 stores 70 stores can

receive the product from this

distribution center so this

represents a significant increase in the

coverage in number of members that we

can reach with a two-day shipping range

with just standard shipping

um then the third element there is

around the cost to serve so we want to

optimize the overall cost across the

network

and also have the required agility

and i think the fourth and most

important aspect for us from our impact

agenda perspective is around

sustainability

uh i know

ctl is doing a lot of research

specifically on that sustainability

frame so we are looking to leverage

industry leading sustainability and

technology features both inside the

building as well as we are going to get

closer to the customers

and with that we will be able to support

our goal of

reducing our carbon emissions by 55

percent by 2030. so those were the four

factors and constraints that we applied

in our model and then that led us to the

decision of opening the location in

tennessee

that's super fascinating especially the

concept of

you know using a facility for both

channels in some sense you know

replenishment of stores as well as the

online like a true omni channel

you know distribution center if you will

i want to kind of pick up on me are two

ideas that you mentioned so one is the

idea of like flexibility and agility um

and then the other idea mentioned

earlier is the pandemic obviously being

a significant disruption

so these kind of come together in the

sense where you have to use you know

some of these concepts some of these

systems

to adapt to this disruption right

disruption of the pandemic

i mean so kind of pivot this is your

conversation to disruptions you know the

past few years especially with the

pandemic i've seen a lot of them

in our conversation before the event you

mentioned responding to the pandemic

with arya having to close its doors

early on and then reopen them as

restrictions ease was kind of a

significant challenge and so can you

share a little bit about that experience

and the role the technology played that

flexibility that adaptability to this

disruption

yeah definitely

um i think pandemic as for everyone was

a true test of how resilient our

processes and technologies were

we had to assess the situation and

utilize the tools that we had in our

toolbox to respond to varying challenges

that each of the different phases of the

pandemic presented

and in some cases we did not even have

the tools available um so we had to

really build them quickly we had to

advance some of uh the development

because they were part of a road map or

backlog that we were

looking to go after

so before i talk about how we responded

to the pandemic and how we made those

adjustments uh let's take a step back

because i think it is very important uh

to understand the context and the

maturity of our supply our supply chain

uh processes as well as technologies to

see where we were

in hindsight we were fortunate to have a

number of omni-channel building blocks

in place prior to pending

and we were able to build or solve this

jigsaw puzzle by utilizing them

so you could say that we were fortunate

but then it was not by accident

we have been working on our omni-channel

fulfillment strategy for several years

prior to pandemic

so we have the inventory visibility

across all of our channels whether it is

distribution centers stores dropship

vendor partners

so we can use this expanded inventory

pool to better service the customer

needs

we also have the ability to use our

stores as fulfillment notes

i think as you mentioned earlier the

customers can buy online pickup in store

they can ship to store from rdcs we have

wide variety of these fulfillment

options

and we are also able to offer a wide

selection of products to our customers

from our dropship partners

so when we implemented all of these

different fulfillment options and

choices for our customers

the key the glue that held everything

together

was an optimization engine which

optimizes the number of countless

choices this network and these methods

create

so we want to be able to optimize the

total cost to serve while

exceeding the customer expectations

and we had the privilege of a really

sophisticated omni channel capability

with so many optimization levers and

this operation was coming even before

pandemic

so when we were hit by the pandemic

obviously we had to take a number of

different actions so i'll walk you

through three different scenarios

the first one is the omni-channel

operations through various phases of

pandemic as you said first phase we had

to close all the stores then you could

open them but you obviously had to

follow a lot of the health and safety

guidelines

so i'll walk you through all of those

operations

the second one was we had to create

new offerings such as curbside

to respond to the pandemic

and then the third one is

as you have heard in the news and media

all the time supply chain disruption

supply chain shortages that continues to

be the theme as we are hopefully coming

out of the pandemic so how do we respond

to that and what are the new

capabilities or customer service

adjustments that we have to do to

respond to those supply chain

disruptions

so let's talk about the first one the

different omni channel operations

in the first phase the stores had to be

closed overnight and we went from this

omni channel retailer we had to become

an online only retailer pretty much

overnight

and while digital is growing our store

still represents majority of our demand

so we have to now take the optimization

models that were all set and tuned

after a lot of analysis to optimize the

total cost to serve and manage all of

those constraints we had to make the

necessary changes now to balance the

capacity and throughput of the

distribution centers because all of our

demand was essentially being served out

of those three distribution centers

during that phase

so those constraints became really

important in this phase

so now obviously with all of this demand

going through the digital channel we had

to make the adjustments to make sure

that the customer promise the date that

we are promising to the customers the

options that we are promising to the

customers are updated to reflect how the

operations are keeping pace with this

surge in the demand

and then

obviously the stores were closed so we

had to make the necessary adjustments in

our systems and processes to make sure

that we are not reserving inventory

for the store channel which would impact

the choices or availability

for our customers who are transacting

primarily in the digital channel now

so that was the first case and then as

we entered the subsequent phases of the

pandemic now we had the ability to

open our stores and utilize them for

fulfillment so then we were able to use

them to provide some relief for our

distribution centers as well as

productively utilize the inventory which

was within the four walls of the store

and more of that inventory was available

across the channels because we had fewer

number of walk-in customers given all of

the restrictions

the other interesting aspect here is

um

pandemic drove uh increases in demand in

a lot of categories right

everybody wanted to get outside and try

to do certain activities to maintain the

health and all of that so bike is an

example that was one category the demand

for which just took off exponentially

during this phase

and now this presented a number of

different challenges

because by

along with just the inventory there is

assembly process that is required and

that assembly process takes place both

partly in the dc

and then the last set happens

inside the stores

so now we had to optimize this

fulfillment not only based on the

inventory and the availability across

the locations but we also had to take

into account the capacity and the

bandwidth available

for assembly and various services within

those locations so we have to tweak

all of those optimization models and use

different levers

another interesting point with bikes is

pre-pandemic most of our bikes used to

be shipped to the store uh we didn't

have the ability to ship the bikes to

home because they need assembly

servicing and all of those things so now

you have fewer options so the

network that you have which is

replenishing the products to the stores

comes with its own uh constraints and

own challenges so that was another

interesting pivot that we had to make

during this phase

and then

as we were living through that phase

obviously we had to meet all of the

health and safety guidelines

for our customers and also for our

employees so that led to creation of new

fulfillment options we have seen a

number of retailers offer the curbside

pickup for the health reasons during the

pandemic

so we were able to stand this up

relatively quickly it was really just a

matter of weeks before we were able to

respond and create that offering and all

of this was possible because we had

those uh buy online pickup in store and

ship to store both processes and

technologies in place it is very hard to

imagine how we could have stood up

something like curbside so quickly if we

did not have those building blocks

and then i think the last element that i

described earlier is around the supply

chain shortages disruptions shipping

delays backlog of the

ports and all of that

so where are we seeing the impacts uh

from all of those issues

it is certainly impacting the accuracy

and timely delivery of our future supply

and the inventory that is coming into

our network

so if you are a retailer like us that

promises back orders or pre-orders

against this future inventory in

anticipation

that it is going to be available

and manage all of the dates

well good luck with that it's really

been a hard problem to solve

so we had to take multiple measures the

first thing was to preserve that

customer experience so we took measures

to scale back our

back order capability to respond to

these uncertainties and all of the

variability that we are seeing

we wanted to make sure that we

prioritize the seamless and frictionless

customer experience that i talked about

earlier we wanted to prioritize that

over and above capturing any additional

demand

so we also accelerated um the

development of some new capabilities so

we now have a feature um on our site

which is called notify me when available

so if the product is not available you

can sign up for notifications

when it will become on hand and you can

purchase that it effectively allows you

to get on a virtual waiting list for all

of the products so in order to create

this customer experience you need uh all

of the underlying data integration

whether it is the purchase order

information the advanced shipping

notification the dates the traceability

and visibility through all of the supply

chain so that we can look at those dates

and create these types of customer

experiences so all of that was really

critical in building and bringing this

capability to life for our customers

thank you amit and as you say it was

definitely not about just being

fortunate but also about being prepared

and i found very interesting that even

though you were very much prepared to

deal with the changing landscape

impacted by the disruption you are also

very resilient enough to develop new

offerings and we always communicated

with your members and

you never lost the focus on the customer

experience while you were describing

this so that's amazing and i i

appreciate you sharing that with our

audience

so we want to keep the event interactive

and we want to hear from the audience so

i would love to launch the second poll

and this one is about uh returns a topic

we're very interested on and i'm sure

you're

like you in the audience are also

interested about that because i've seen

some questions already in the q a

feature about return so thank you for

those

we want to know from your side what are

the main reasons that

customers returns product at your

company or if not at your company what

are the main reasons that you return

products for it could be wrong products

damaged products or

those probably didn't meet your

expectation or you intentionally did it

to just try them on and see what comes

next

okay so thank you i see this is

populating already

so while you all respond i would love to

go back to a meet and we will touch upon

this topic

you know that this is one of the areas

where we researching its returns and

reverse logistics and

most retail supply chains are designed

and optimized for the forward flow of

products from manufacturer to an end

consumer

and at the same time accepting returns

is we know not a new phenomenon but we

know that there are also a new new

dynamics of higher rate of returns and

mainly driven by e-commerce growth and

we also know about the complexities of

getting something back from a customer

that

has never visited the store before

so we would love to know from amid what

has been your experience with

circularity in retail with a reverse

flow of products and of course how does

technology fit into it and

as you always do bring us the

perspective of the customer value

yeah

definitely uh there are three aspects uh

of returns one is the customer

experience first and foremost as you

described

uh then the second is the reverse

logistics and then reverse flow of the

product throughout our network and the

last one is around the circular commerce

so we previously had talked about how

omnichannel fulfillment as you said from

a forward perspective shapes

the customer experience and what are the

various challenges and complexities

within that

but the omni channel returns experience

is equally important

the ease of return transaction

regardless of where you had made the

purchase whether you had buy bought the

product online where you bring it back

to the store vice versa all of that is a

very big driver of the customer

satisfaction

and from a technology perspective it

creates different challenges so when we

talk about omni channel fulfillment you

need to have the unified view of

inventory so that the customers can

transact now you flip it on reverse and

then you are looking at all of the

purchases and

orders and the interactions that the

customer had made so if you don't have

the ability to have a single view into

all of the customer interactions it

becomes

really challenging if you have all of

your point of sale and all of the

transaction depository over there you

have all of the order history ah from

your digital properties so if you are

not able to combine those that

definitely creates a lot of friction in

that experience

and then the process needs to allow for

flexibility you should be able to start

return in any channel i should be able

to start the return

on the digital channel create the

necessary documentation information that

may be required and then have the

ability to send the product back and

ship it to let's say your processing

center distribution center whatever the

case may be or bring it back to the

store or drop off at a different

location

so developing that unified view of

orders and allowing the customers to

transact against that

definitely

creates a lot of challenge

and just to put it in perspective

majority of returns for our online

orders

were still brought back to our stores

pre-pandemic so when we were hit by

pandemic again we had to respond to that

that was another area where we had to

really uh stand up some capability

really quickly was around the self

service returns because the returns

capability on our digital properties was

fairly limited um as the majority of the

returns were going back to the stores

anyway so we had to pivot and create

that self-service return capability

which we are continuing to

mature and eliminate the friction from

that return journey as well

so once the customer has interacted and

created that return the reverse

logistics and the flow of the product uh

also leads to a number of different

decision points so i create the return i

drop off the product when should the

refund be issued to the customer is it

when um the product is dropped off for

your with your carriers or when you

receive and

process the return i think that's

probably the biggest factor from a

customer experience perspective that

they're looking for

but then when you put your supply chain

practitioner hat on you need to figure

out where you want this product how do

you want this product to be

dispositioned lot of that product is

available for

resale because some of it is unopened

new some of it might be open box and all

of that so

do you want to bring all of that product

into a central location to process and

disposition and then fulfill it from

there that's one model that we

see in the industry but the other

interesting aspect is

do you want to keep that product in

within that particular local market

because there was definitely a need and

demand for that product within that

region so if you keep it locally within

the market you might be able to

get it to the other customers faster and

also optimize your inventory management

so i think that's the

other aspect so how you create the

optimization on the fulfillment there is

a similar way to create the optimization

on the reverse logistics side also

and then you talked about the overall

circular commerce um that is a very

important uh topic for us because as i

said uh for rei sustainability is one of

our key impact agenda

uh so the

circular commerce the sale of the used

gear definitely creates a great

opportunity for us uh from a

sustainability perspective

based on um the data that we have around

preparing the used gear for resale

versus creating a similar comparable

new product we see about 50

reduction in the carbon emissions when

you talk about the used gear sales so

that circular commerce from a

sustainability perspective is a key

strategic imperative for us and returns

are a big source of supply for all of

that circular commerce lot of our

use gear supply is coming back from the

returns

um

but technology wise it is really

challenging we are to support this

end-to-end process

by having the right technology support

in place

because there are a lot of different

complexities and considerations that

come in so

predominantly starting with the product

information how do you manage the

different quality

and the disposition of the product is it

unopened is it open box is it lightly

used heavily used how is that going to

be presented to the customer so that

they can make the right choice

and obviously based on the disposition

and the quality of the product the

pricing has to be said accordingly

and then eventually it's the fulfillment

and then that is driven by some of the

factors that i talked about earlier in

terms of where you are bringing your

returns back is it central is it through

your distribution center is it through

your dedicated uh stores that are for

your used gears or in some cases it

could be well a 3pl logistics provider

or a third party service provider so

that fulfillment also creates a lot of

complexity

and we are still in the infancy in terms

of our business model for the circular

commerce so obviously we have a lot more

opportunity in front of us for maturing

the business processes and the models

but also from a technology perspective

uh it's really hard to create that uh

support for the end-to-end process so

there is a lot of opportunity in this

space to innovate for students anybody

else who is interested

circular commerce and sustainability are

probably the two biggest areas of

opportunity for us

that's fascinating there's so many

passing ideas there to unpack

for me the sustainability piece is very

interesting in the

the result that you guys found or the

research you guys did with finding 50

less for selling a used product versus a

new product is very fascinating so much

so that upstream

supply chain is so challenging to

decarbonize or to reduce emissions from

and so this is one way to kind of

address that up front right at that

customer experience that's fascinating

i'm going to have to to dive into that

for sure maybe we'll have some quick

good questions on that at the end

um but before we proceed we want to um

take a look at our poll results we could

share that poll result number two this

is a poll on what are the reasons um

your company or maybe you yourself on

return products and it looks like um the

majority

majority kind of picked two you know

it's a damage and defective product or

product did not meet expectations i

think that makes sense i'm a little

actually surprised to see the delivery

expectations didn't meet that you know

we're all kind of accustomed to this

you know new same day or you know

high-speed delivery i'm in the

e-commerce world and

that that not being every reason to

return is kind of interesting to see so

um hopefully there's some good comments

there in the chat i think i saw a few

pop up as well

i'm awesome

um so i'm just doing a quick quick time

check i think we're going to jump into

our final question before we get into

some q a for

the audience there i see a number of

questions in the q and a's that's

awesome but before we do so i want to

jump into our final question with the

mit um and we mentioned previously that

emit is a credential holder or a

micromaster's alumni which is super

awesome to have him here

so we'd love to know what inspired you

to take the program and how you've been

able to use it um what you've learned in

your career after completing it

yeah i'm really proud of being a member

of the first ever cohort of the

micromasters program

i think the structure of the program

which covers the end-to-end supply chain

um the quality of the content and the

research at mit cpl i think those were

the key factors that attracted me to the

program

and this has helped me in a number of

ways but i would share three

quick highlights

first was it broadened my supply chain

knowledge

so as i mentioned earlier that i have

been working in the technology field

within supply chain for a really long

time but my scope was fairly limited i

was being focused mainly on the omni

channel as well as the distributed order

management space and this program helped

me see the big picture of supply chain

all the way from

network design uh to analytics

technology all of that

second and i think probably the most

important one was it helped me connect

with my business partners and the supply

chain practitioners using a common

vocabulary so it's not like as a

technologist i'm talking about like

requirements capabilities just from

systems perspective but having the deep

understanding of the theory of supply

chain and its practical applications

helped me partner with my stakeholders

so that we could co-create and innovate

versus trying to understand each other's

terminology and language

and

the omni-channel optimization solutions

that we talked about earlier those are

directly based on some of the concepts

that you learn in the supply chain

design and the technology courses in the

program

and lastly it helped me build my network

and create connection with respected

experts in the field uh whether it was

as a role of my student i participated

as a cta for some of the roles uh for

some of the courses as well as through

events like this

and even pre-pandemic in seattle area we

had meetups of all of

or several of the micro master students

taking various courses to build those

local connections and learn from each

other

so i think that's where it has been

really helpful for me to apply the

learnings um that i had so i definitely

encourage the students to

build such connections build your

networks and also take the next step and

complete the master's program which i

wish i could do

awesome i mean thank you for your

encouraging rewards and for sharing your

experience and your greatest takeaways

for courses we are very excited and very

proud to have you here with us showing

us what you have learned

along your professional and educational

journey so that's amazing um we will run

now a last poll before we go to the q a

from the audience so you all have seen

that we asked you first what were you

looking for at this event but now we

want to know what did you find most

interesting out of our event

so what's that probably expanding the

knowledge of supply chain technology

learning about rei and the retail

industry and maybe new ideas to improve

your own companies or your own daily

jobs

um so we while we give you a minute to

complete that pull maybe kellen we can

go to the first questions

yeah there's tons of awesome questions

in here thank you everyone for

participating uh maybe just picking um

our first one here from louis chong i

apologize if i pronounce your name wrong

but as the pandemic comes to an end um

admit your question is for you will rei

continue to offer services that started

during the pandemic so maybe like that

curbside pickup for example

um and what are the considerations

you're taking into account when making

those decisions as the kind of the

pandemic hopefully at least you seem to

be on the tail end of that

experience so

yeah i think that's a good question and

i think we've seen this pattern even

earlier when a lot of these omni channel

capabilities were evolving that as you

offered new customer experience i think

that

just becomes the

customer habit and that becomes the new

trend right like the customers are so

used to uh all of these different

offerings now

uh so some of those offerings will

definitely continue again depending on

the customer needs so obviously you know

curbside pickup is a very convenient

option so we do see uh that customers uh

opt for that particular option also but

as the restrictions are

easing out there is definitely ah the

desire for the customers to come into

the stores and then ah interact not just

with the product that they had purchased

but with

all of the other selection that we have

and i think one of the key strengths for

aria is also the knowledge that we have

inside our stores with our green vests

the employees as we call them because

they are really the experts in their

fields so definitely the differentiator

and a key ah engagement lever for our

customers is also to interact with those

experts so i think we will definitely

see a mix uh i'm sure there will be

occasions or use cases where the

convenience of the website pickup is

helpful so our customers will continue

to opt for that but when the customers

or the stores are open they would be

able to come in the store as well