While success in the medical field has much to do with skill, many times the technology needed to know what is going on inside the patient is equally indispensable. As anyone that has recently visited the doctor’s office will attest, once you’ve proven the ability to afford the service and spent the requisite time in the waiting room, they immediately hook you up to the machines to take your vital signs.
Foremost among these initial bio-inquiries are temperature, blood pressure, heart rate and oxygen level. All of these must be within a certain tolerance or additional testing will likely be required. So, why are these four indicators so critical? Well, in addition to being easy data to obtain, they give immediate insight into cardio-pulmonary performance and the presence of illness or infection.
Supposing the patient was the current eComm business environment and the four key medical indicators were translated as follows:
- Temperature = Customer Satisfaction Index
- Blood pressure = Order Fulfillment Efficiency
- Heart Rate = Sales Tempo
- Oxygen Level = Product-level Profitability
If eComm business units that are heavily subsidized by a successful store side or investor class underwent preliminary testing, how would their vital signs look?
|Temperature||Elevated due to reliance on free-ship promotions and accelerated service|
|Blood Pressure||High during peak periods and always challenged by SKU profiles and mix|
|Heart-rate||High with unlimited digital connectivity|
|Oxygen Level||Low from stress in maintaining the other three key indicators|
If an eComm unit lost its lifeline of financial support or wished to reduce subsidies, how would it survive? Simple, by increasing the self-generated O2 . Step one in this effort is to measure and understand the impact of product mix and customer proximity on profitability. For example, as the industry moves toward a two day delivery imperative, customer proximity will become an essential factor in limiting oxygen-sucking premium transportation.
Just as with the medical professionals, eComm logistics leaders are very creative and capable of designing networks that manage inventory positioning, peak fulfillment demands and non-standard freight service levels. What is often missing is the “machine to take your vital signs”. While “machine” is a simplistic word used to broadly describe a process by which essential sales and operations data is connected and presented, you get the point.
The key component of this machine is data engineering. Linking the freight and fulfillment costs to the order profile and subsequent allocation sets the stage for item-level profitability modeling. The further addition of contribution hurdles enables exception highlighting of under-performing products and assortments. Coupled with additional dimensional diagnostics, merchants and operators can triage product groups to optimize profitability or even discontinue web availablility.
Can you see and cross-functionally share item profitability?
Can you assess promotional activity in near real-time?
With eComm – and omni-channel – being primary drivers of future growth for most retailers, now is the time to establish your manage-to metrics.
|Long-term health awaits those who can effectively monitor and institutionalize their critical vital signs…|
|those who don’t, well….|