Home Depot, Lowe's hint at digital plans
and more news for digital executives, by journalist Mitch Betts ▸ developments at FedEx and UPS ▸ CxO jobs and career news ▸
|Sep 14, 2018|
Newsletter by Mitch Betts © Ampersand Reports 2018, all rights reserved.
Photo: Home Depot Inc. media image gallery
The CEOs of hardware rivals Home Depot and Lowe’s sketch out dramatically different tech blueprints
Home Depot: A personalized B2B website
for professional contractors is on the way
CEO Craig Menear outlined how he will spend $11 billion to upgrade the customer experience at Home Depot Inc. stores, during a presentation at a recent Goldman Sachs global retailing conference. In addition to store and supply-chain improvements, Menear said: “We will continue to invest in the digital experience both in personalization for categories as well as personalization for customer segments.”
Home Depot can already modify what customers see on its website, based on whether the customer is profiled as a newbie, an experienced DIY installer, or a professional contractor. The next stop on this personalization path: A dedicated B2B website for professional contractors, tailored to their particular business. Menear explained:
Later this fall, we will pilot that capability with a select group of customers and then make modifications and tweaks with the intent of rolling out a full B2B website experience next fiscal year. This is about identifying the customers and what their specific needs are, and bringing to life for them an experience in the digital world that is tailored to their particular business — whether that's a plumber, an electrician, a property manager — it will be specific to the key segments within their business.
Other takeaways from the presentation:
Home Depot is investing in “automated lockers for pick-up” of online orders, “so that our customers can come in, they can scan a bar code, they can grab their product from a locker, and transaction complete. They won't need to engage with one of our associates at a service desk, to speed-up that transaction and make it super-efficient for the customer,” Menear said. In turn, that means Home Depot spends less on staffers picking & staging orders, so they can handle more customer-facing tasks.
CFO Carol Tomé noted that “we have the first blockchain experiment in our company in finance, where we have a distributed ledger authorization between ourselves and one of our suppliers. We are able to watch merchandise as it flows from the manufacturing plant all the way to the stores. Why does that matter? From time to time we have disputes with our suppliers. They say they shipped 100 and we say we only received 80 and then we negotiated out, but in a distributed ledger environment there will be no disputes because we both are watching the flow of product. It's extraordinarily exciting.”
Lowe’s: Store associates will get mobile devices
with the data they need to answer questions
At the same event, Lowe’s Companies Inc. CEO Marvin Ellison identified numerous areas needing improvement — including the C-suite. Ellison has made several appointments there, but said he’s still searching for a new CIO with deep retail experience.
As a newcomer to Lowe’s, Ellison’s list of complaints was long, saying Lowe’s past sales results have been hampered by self-inflicted wounds, including inefficiencies in the supply chain and stores; a “bureaucractic organizational structure” that slows decision-making; and “ambiguous” business metrics. “We are not satisfied with our level of service … whether that is in-store, online or on the phone,” he said. Furthermore, “we do not have a culture of expense discipline at Lowe’s.”
Regarding online sales, Ellison said he wants to make incremental improvements over the next two to five years to “improve our navigation, our search, our checkout, our mobile app, our pure e-commerce function,” with the overall goal to “combine our stores and our digital platforms as one ecosystem.”
Ellison offered what sounded like marching orders for the next CIO: “We are looking at how we can enhance our environment with technology, because today we just throw payroll at every problem, and that’s not sustainable and you never get to the root cause. And so instead, we are saying [that if] we have an issue with being out of stock [for example], let’s look at the algorithm for replenishment, let’s not just throw that inventory at the store, let’s not just throw more payroll at it.”
Another goal: To simplify (or eliminate) the tasks that associates must do in the stores — or automate those tasks, if possible — so the associates can spend more time providing service directly to customers.
To that end, Ellison disclosed one concrete IT initiative: mobile devices for store associates that pull key data from corporate systems.
One capital expense we will be rolling out: mobile devices to all of our stores this year. We have already funded it. And that’s going to be revolutionary for us, because we are still very prehistoric in how our associates pull data on what’s on order, how we track in-stock, how we determine the number of items we have, how we look at sales data based on items. … So, the associates can have real-time data at their fingertips without having to run to a terminal to determine if something is in-store, online, on order, what’s the price, how many units we have… It’s going to be a capital expense that we think we get a quick return on.
Startup to deliver routing app to FedEx drivers
FedEx Ground, a unit of FedEx Corp., turned to a four-person Seattle startup to provide its last-mile delivery vans with a mobile routing application.
PackageRoute Inc. developed the routing app, featuring tight integration with FedEx Ground data, to help managers and drivers efficiently deliver 8.9 million packages per day (on average) to businesses and homes in North America. The app, to be released in the fall, will be offered to about 4,000 FedEx Ground contractors at a cost of $20 per route per month, according to the startup’s website.
The goal is to replace the paper manifests, laminated maps and markers now seen in FedEx Ground trucks, at a time when package deliveries from online retail sales are booming. The PackageRoute app updates, plots and organizes route data on iOS and Android smartphones.
FedEx Ground packages are delivered by drivers that the company classifies as independent contractors (FedEx provides the delivery addresses for the routes). “The independent contractors have largely remained under-served in utilizing current smartphone technologies to manage their pickup and delivery operations,” said Pankaj Nauriyal, CEO & founder of PackageRoute, in a statement. “The app addresses major pain points experienced by the contractors throughout their workday and helps bring efficiency, convenience and accountability to their operations.”
Why didn’t FedEx develop the routing software in-house?
“There have been several lawsuits brought against FedEx Ground (which they have had to settle) by their independent contractors claiming employee status. If FedEx Ground builds this in-house (which they easily could) and provides it [to drivers], then the contractors start looking even more like employees in the eyes of the courts. Hence FedEx must maintain an arm’s-length relationship with its contractors,” Nauriyal said in an email to “Digital Business” newsletter.
More context: FedEx said it will expand FedEx Ground U.S. operations from five to six days a week — not just for the holidays, but year-round — due to the growing demands of e-commerce.
The rise in demand and volume at FedEx has been dramatic and consistent for more than 10 years. For example, the record volume day in the history of FedEx 10 years ago was 12 million shipments. Today, FedEx handles more than 14 million shipments on an average day.
FedEx said the expansion is made possible by investments in automation, robotics, real-time route planning, sorting, and delivery technologies that enhance the agility of the global FedEx network. Some examples:
Robotic trailer unloading systems
Trailer load analytics to monitor the trailer load quality and utilization
FedEx Ground yard management systems, which interact with GPS tags on each trailer and create geofences around FedEx Ground facilities, automatically notifying the control center when a trailer arrives and departs
Data science & analytics to enhance real-time decision-making for network engineering, scheduling, and customer needs
The arch-rival: Meanwhile, United Parcel Service Inc. (UPS) held a webcast to discuss the future business benefits of its business & digital transformation. UPS is focused on four growth priorities: international markets; B2B and B2C e-commerce; the healthcare & pharma market using UPS’s residential delivery network; and reducing cost & complexity for the small- and mid-sized business market. A key element is greater automation at sorting faciltities:
Today nearly 50 percent of our nearly 35 million sorted packages per day are processed using our new more-automated facilities. When we complete this phase of our Global Smart Logistics Network enhancement by 2022, 100% of eligible volume in the U.S. will be sorted using these new more highly automated sites. Seven new ‘super hub’ automated sortation facilities will be opened during the period, with 30-35% higher efficiency than comparable less-automated facilities.
Talent: jobs, appointments, careers
The Travelers Companies Inc. in New York named Mojgan Lefebvre as EVP & CIO, succeeding Madelyn Lankton, who will retire this month after 36 years with Travelers. Lefebvre was at Liberty Mutual, serving most recently as CIO for its Global Risk Solutions business.
▸ Related: CIO Leadership Live video interview with Mojgan Lefebvre at Liberty Mutual
Other recent CIO appointments: Julie Ragland at Navistar International Corp. in Lisle, Ill., replacing Terry Kline, who announced his retirement; Christopher Griffith at United Insurance Holdings Corp., in St. Petersburg, Fla.; Mark Amey at Alameda Health System in Oakland, Calif. (primarily to implement electronic health records); Jennifer Charters at Flagstar Bank in Troy, Mich.; Edward Diver at data center firm Digital Realty in San Francisco.
More appointments of digital executives:
Dick's Sporting Goods in Pittsburgh named Vidya Jwala as chief e-commerce and supply chain officer.
Kansas City Southern recast CMO Brian Hancock as chief innovation officer, to “lead the development of KCS’ innovation and technology strategy.” The company also named Michael Naatz — currently the CIO — as CMO (replacing Hancock).
First Horizon National Corp. in Memphis, Tenn., named Dawn Morris as EVP & chief digital banking and marketing officer.
Standard Industries, a New York-based global industrial company, appointed Rich Robinson as CTO, “overseeing all technology strategy and global information technology functions.”
Job openings for digital executives: