Don't Let Empty Shelves Be Your Store's Silent Killer

[00:00:00] So I would argue if you're a supplier or if you're a retailer, are you systemically measuring on-shelf availability? That's a very important metric, just like sales and profit and labor and all the other kinds of key performance indicators we do. You better figure out how to measure it. You better figure out how to set a goal. And if you're not meeting the goal, you better figure out why you're not.

[00:00:22] Hello and welcome to the Next Level Supply Chain with GS1 US, a podcast in which we explore the mind-bending world of global supply chains, covering topics such as automation, innovation, unique identity, and more. I'm your co-host, Reid. And I'm Liz. And welcome to the show. Reid and I just had an amazing conversation with Mike Grain. He has been in the industry for 45 years in supply chain.

[00:00:47] He's really focused his career on-shelf availability, which many of us have heard of. But we got in a great conversation about the difference between on-shelf availability and in stock and how retailers really need to be thinking about those things very differently. And the importance of inventory accuracy and using technology to help with inventory accuracy, whether it's robots, data, et cetera.

[00:01:11] And also how using AI to help analyze all of this data and make better decisions is something that more and more organizations are using. Hey, Mike. Welcome to the show. Thank you for inviting me. I appreciate it. We are so excited to have this conversation. We have been talking about you and your work. I know that you've talked to other GS1 US folks. You know about the standards and all the supply chain stuff.

[00:01:36] But before we dive in, tell us a little about yourself, your background, and what you're doing now. Well, first and foremost, thank you very much for inviting me. I do appreciate it. It's been a terrific collaboration working with GS1 for all the years. For the audience, my name is Mike Grain. I have lived literally in Northwest Arkansas since 1989. I've been part of retail supply chain for literally over 45 years.

[00:02:03] I started with Procter & Gamble in 1982 in Cincinnati. And I thought I would be with P&G in Cincinnati for my whole career. And after a couple of years in Cincinnati, they moved me to Fayetteville, Arkansas. I got to do that, Liz, for about, I guess, 25 years I was with P&G. And then I had enough years to retire early from P&G on a Friday. And I joined Walmart on a Monday.

[00:02:28] And I led a lot of their on-shelf availability work, which I know is part of the topic that we're going to talk today. Been working very closely with GS1 since we really started working with Walmart in 89. Great relationship with them. And frankly, we couldn't do what we've done without the GS1 organization. So a lot of credit to your organization for all the work that they've done. And I'm sure we'll get into some examples. But I am now left Walmart in 2019. And now I'm an independent consultant.

[00:02:55] And I've got people, really good companies like Kroger Technologies and Procter & Gamble and folks like that who are still trying to drive their technology to drive on-shelf availability. And so I'm busier than I've ever been having more fun than I've ever had. So I really do appreciate taking the time to spend some time with you guys. That's fantastic. Thank you, Mike, for spending the time with us today. And I know our audience is definitely going to benefit from this conversation.

[00:03:20] As you indicated, on-shelf availability and retail evolution, we all know that retail is constantly evolving. And given your background, which is just some of the top, top players and drivers and innovators, and yes, I do remember in 1989 very, very vividly. What is the insights and issues around on-shelf availability today? Like, where are companies making advancements?

[00:03:50] Why is it so critical? Why are we still focused on this? How come we haven't solved this? What's happening in this space? I think that's a great question. And it's a question that really requires some unpacking of why this is even important. And I'm going to take you all the way back, and I'm very blessed to be able to work actually with Sam Walton during the early days of the P&G-Walmart relationship. And he told me this quote, but then I saw it later on, and I think it's really apropos.

[00:04:17] And that is there's only one boss, the customer. He or she can fire everybody from the chairman on down simply by spending his money elsewhere. That was a quote he released way before I started working with him. But the reality, Reed, is it's more relevant than ever, okay? If I go into a Walmart store or a Best Buy store or a Target store and they don't have what I want, I have the ultimate shopping tool right here.

[00:04:44] I get to pull out my phone and use that customer's Wi-Fi or the retailer's Wi-Fi to order it from one of their competitors. Talk about a slap in the face, right? Yeah, seriously. Exactly. At the end of the day, the customer is the boss. And Sam was very smart when he said that. And Doug McMillan, the more recent CEO of Walmart, says it very simple as well. There's not a lot of loyalty. There's no loyalty if you don't have what they want.

[00:05:11] There's no loyalty if the store is dirty, if the bathrooms are dirty, if the merchandise isn't stocked correctly, if it's not priced competitively. You will be out of business. Customers want products. They want to know they can get them. They want them competitively priced. And they want them when they want them. And if they don't get them from a retailer, they will use this and they will get it from somebody else. So bottom line is on shelf availability is more important than ever.

[00:05:37] And you see customers continuing to have to think other ways. The traditional Walmart store or retailer store and all these other retailers are doing the same thing are offering products for customers. Come in, they grab a shopping cart, they put stuff in the shopping cart, they're leaving. Well, thank you very much that in the past, thanks probably most part to customer demand and things like COVID, people didn't want to go shop in a store anymore.

[00:06:04] So you see things called buy online, pick up in store where the particular brick and mortar stores are actually a fulfillment center. Okay. And there's nothing worse than ordering something from a store only to say, I'm sorry, we didn't have it. That disappoints people all the time. So these retailers are all trying to figure out how they don't disappoint customers while creating a shopping experience that allows them to do this.

[00:06:32] As a matter of fact, there's a new term called research online buy in store. That's where I'm looking for a specific item. I'll log in and see what, how many have gotten this store before I'll get my car drive to them. There's a lot of retailers that expose their on hands. There's a lot that don't because they don't trust their on hands because there's nothing worse than saying, yeah, I got three. And then the customer gets there and there's one there. So I'm definitely one of those people. I'm not going to name the name of the home improvement store, but if there's less than 10 listed,

[00:07:01] I don't show up because they can't find it. Exactly right. Exactly right. Retail is hard. Mr. Sam used to say, Mike, retail is detail. And there's absolutely truth to that. But on a store like a Walmart store or Target, we're talking about several hundred thousand items that they're making available for the customers. You have to know where it is all the time. How many do I have and where is it located to meet that customer need? That's exhausting.

[00:07:28] I mean, you've got to be on top of that stuff or, yeah, I got three and you come all the way in there. And that big box retailer says, I'm so sorry. Our website's wrong. We don't have any. I can't find them anywhere. That kind of experience is not good. And in defense of the retailers, this is incredibly difficult. Because if you think about a traditional Walmart, Target, Best Buy, Nordstrom's, Macy's, any of these stores, they're big. They're big.

[00:07:57] And it doesn't take much for a person like myself to walk in, grab something off the shelf, put it in my cart. Maybe I get to another area. Oh, wow. I want that instead. I don't have the budget for both. Let me put this back. And I put it in a different spot. And it's moved behind something. We tend to be very critical because, you know, there's only one of me in the world. And you need to service me correctly or else I'm going to be, you know, a distraught customer. But in all sincerity, it is very, very hard.

[00:08:26] And then you may have it in stock, but it might be damaged. And the list goes on and on. And it's very finite. And then you think from the business side, well, if we carry too much, then we're not efficient with our cash flow for our business and our stockholders. It is. I do not envy them in any way, shape, or form. It's not easy. And the question you asked originally, why would you care? You care because, again, according to industry studies, this is IHL.

[00:08:55] It's a little bit outdated, but I think it's still relevant, which is inventory distortion. Part of which is overstocks, but a big part of it is out of stock. $1.7 trillion cost to the industry. That is a big, stinking number, right? And so when you look at those kind of things, I got one more stat to walk you through because these are some eye-opening ones, which is Amazon Prime members. That's probably you and me.

[00:09:20] Facing empty shelves are 52% more likely to pull out their phone and buy it from Amazon and buy it online, which is embarrassing. I'm leveraging the retailer's website and Wi-Fi to order it from their competitor. But the last one's really amazing. 24% of Amazon's current retail revenue comes from customers who tried to buy it in stores first. Wow. That's just wow. That's just a wow. So this is a big problem for the industry.

[00:09:48] But the other one is go back to what Walmart said is these customers are going to fire us if I don't put that product available for them on the store. So do I have everything they want in the store? Or, Reed, am I disappointing you because you're looking for that ladder and you come in and it says I have two on the website? I can't find any. Yeah. And then you're just frustrated so you pull out the phone and you're like, okay, I'll wait two days so you can't get it to me now anyway. Correct. 100% right. 100% right.

[00:10:16] It brings me back to something, Mike, you said a minute ago about there is no loyalty anymore. There's not a customer loyalty. I think in the old days, I'm now dating myself, people were loyal to retailers. Okay? Walmart is my store. Target is my store. Kmart is my store. That's my store. And people would probably say they're my store. Now, they are more loyal to brands.

[00:10:44] Apple is my phone of choice. Samsung is not my. I mean, so it's all kind of brand. So, and consumers and shoppers are more loyal to the items that they buy than the retailer they buy it from. And so, you can disappoint me a couple times. And then finally, I'll find an alternative, a way of getting that product. I have stories of people who are literally did three days of research online. So, they knew exactly what television set they were going to buy. The size of it. The refresh rate.

[00:11:13] Was it LED or LCD or what exactly it was? Okay. I want the Samsung 55 inch with this refresh rate, et cetera. I go to retailer X who said they have it and they don't. And they go, hey, I got this great Vizio. No, I did three days of research. I know exactly what I want. I'm committed. Don't tell me that you can give me something else because I know what I want. And so, I will find what I want. I'm not going to switch. I don't care what kind of a deal you provide me. So, that is, in fact, a big deal.

[00:11:42] And it's every single day. Sam Walton said it. It'll be true long after we're all gone. You either take care of your customers or they will fire you. In a nice way, they'll take their money somewhere else. That is why this is important to retailers. Because A, on-shelf availability and sales are important. But number two, consumers and shoppers have more choices than anywhere to be able to buy the product. So, if you don't take care of me, I'll get it from somebody else. Thank you very much.

[00:12:10] And if I'm a retailer, I'm going to be scared to death trying to figure out how to take care of these customers' needs. Otherwise, they will shop somewhere else. So, what are the strategies retailers can take to get ahead of this so that they can meet their customers' expectations with what's on-shelf and what's available, you know, the website versus in real life? Well, herein lies the problem. On-shelf availability is a term that everybody uses it.

[00:12:38] And I think if you ask 10 people, you may get five different interpretations of what it is. So, let's unpack that for a second. Most retailers talk about in-stock. In-stock is typically a calculation based upon two numbers. On-hand, which means how much does the system say I have. Let's say it says I have five. And the daily demand, which is my anticipated sales forecast for that item that day. Let's say that one's five. So, I have five.

[00:13:07] And it says I'm going to sell five. I am in stock. Great. Not a problem. Here's the problem with that. It doesn't tell you that it's available for the customer. It could be sitting in the back room on a shelf somewhere. It doesn't mean it's available for the customer to buy, number one.

[00:13:24] Number two, on-hand accuracy is an industry problem that has really been highlighted over the years, especially with the advent of RFID, saying my inventory is somewhere between 45 and 65% accurate. So, on-hand, how many do I actually have? There's a difference between how many I physically have and how much the system says you have. Read your example. I went in to buy that product from that hardware store. It said they had four, and they don't have any.

[00:13:52] That's an on-hand accuracy discrepancy. So, on-hand is not a very accurate number. And daily demand is by definition a forecast, which may be closer to accurate, but let's say it's 75%. So, I'm taking on-hand, that's an inaccurate number, and how much I think I'll sell, which is an accurate number, to say how much I have in the building. So, there's all kinds of problems with in-stock. If I can interrupt here, back in the olden days, as you said, Mike, I'm just taking your words, right? Not mine. Back in the olden days.

[00:14:22] Back in 1989, it was only available in the store. You could do a mail order catalog, and that's M-A-I-L, all right? So, we're ordering through the mail, but there was no online. And even when online came about, it was either you were an online, like Amazon, or you were in-store, like Walmart or Target. But now, it's a blurred world.

[00:14:46] And COVID totally blew this up, especially for the grocery stores, where I have to take care of my online orders and my in-person orders at the same time from the same facility because it's BOPUS, the buy online, pick up in-store. That is really hard to run the algorithms on. It is really hard to run the algorithms on.

[00:15:06] And if I reserve inventory, so inside my building, I created, this is for the online orders, and this is for the in-store shopper orders. I'm taking something that I'm already not very good at, which is how many do I have in the full building, and I'm making it even worse, right? I'm just creating different pockets of inventory, et cetera. Okay, so I'm going to reserve this online stuff over here in case I get an online order, but I'm going to disappoint you who came in and looked for that product in the store. How many do you have?

[00:15:36] Well, it says I have seven, but I don't have any here. Well, that's because they're all in reserve for a potential online order. That's that balance you got to have. That's huge. Here's the other big thing. If I've got 125 or 150,000 SKUs, I really want to know what's available for the customer to purchase, okay? That is utopia of what I've got. That means every single item all the time, I need to know how many are available for a customer to purchase

[00:16:03] or for an online picker to purchase and pick, if you will, on behalf of a customer. How do you measure that? That's a real, real problem. And by the way, you mentioned before this is a problem for the retailers. Guess who else it's a problem for? It's a problem for the suppliers. Because if I'm Procter & Gamble or Samsung or Hanes or anybody else, if my stuff is sitting in the back room, it's not on the shelf for a customer, my sales get hurt.

[00:16:31] And if somebody's coming in to buy this product and they can't find it, they may switch to one of my competitors. So this is not a retailer issue. This is a total supply chain. Retailers, suppliers, solution providers, et cetera. Everybody should really care about this quite a bit. And it's also the way we go about it. We say on shelf. Some people like to walk through the store and browse and touch and feel. Other people want it in a smart locker or brought out to their car.

[00:17:01] It's still the same inventory, but it's a different experience. I remember eight years ago, smart lockers being out, but they didn't take off. COVID hit. Boom. Now it's preference by a lot of people. Well, and here's the other thing. If I am a young mom with two small kids and I order something, do I want to put my kids out of their car seat, put them into a shopping buggy, go all the way in the store just to get my stuff from a locker

[00:17:30] and take it all the way back and just put the kids back in the seat? No, I'd rather pull up to the store, hit a button and have them put it in the back of the trunk. So I don't even have to mess with that. So I see the direction is actually not pickup lockers because you're making me park. You're making me navigate the parking lot and all the things of that. Heck, just put it in the back of my car. And even, and again, this is a Walmart thing, but I've got a couple different options. Option number one is I ordered online. I'd come to your store.

[00:18:00] I popped the trunk. You throw it in there and I go home. Option number two is you will literally deliver it to my house, even put it in my refrigerator for me. That's their Walmart in-home program. And obviously that is growing of neat. By the way, that's how I shop. I get online and my wife and I figure out, okay, exactly what do we need to order? We place it and they have a key to my garage code and they've got a camera on.

[00:18:23] They come put things in my garage, put the cold stuff where it belongs, put the frozen stuff where it belongs, put the ambient stuff where it belongs. Sam Walton said it. We are here to drive down the cost of living for everybody, saving people money so they can live better, right? Well, guess what? Now it's saving people money and time because time is a commodity just like money is and it's saving me time. And so why wouldn't I want to take advantage of that? And I think people who don't figure that out are going to be on the short end of the strip.

[00:18:52] Going back to like, what can retailers do to get ahead of this? What strategies can they put in place to ensure whatever the right calculation is, right? Of OSA, they have product to serve their customers. I think that's an outstanding question because everything that we've talked about up to this point in time is philosophical until it's like, so what? What do I do about it? So number one is if the things are important to you, and I learned this years ago, you know, working in business.

[00:19:21] If it's important to you, you have a measurement for it and you have a goal for it and you're measuring against your goal. And if you're not meeting your goal, you put action plans in place. If the first thing is I have to have product available for my customers, it has to be on shelf. Do you have a systemic way to measure that? And do you have a goal and are you tracking against it? That to me is the number one thing. And I think you'll find some retailers do that. Some retailers don't do that.

[00:19:49] Retail is detail. That's my takeaway right now. Yeah. Retail is definitely detail. I'll give you a success story. This was actually not a retailer. This was actually a supplier. Okay. And what you see here is an orange line that basically said 95% is our goal. Everything should be measured against the goal and where you're not meeting the goal. You have to have action plans. The dark blue line on the bottom was last year's on shelf availability.

[00:20:19] The line on the top was this year's on shelf availability. You can clearly see this particular company said, we got to get serious about making sure our stuff's on the shelf. And while 95% is still 5% of it's not on the shelf, at least I'm measuring it and I'm absolutely improving it. By the way, this particular CPG company actually has now exceeded 95% and has now moved the goal to 97% and 98%, which is good for them. But the point is they have a way of measuring it.

[00:20:46] They're systemically measuring it and where they're not meeting goals, they're improving it. Now, here's the interesting thing. When they can prove that they've increased the on shelf availability, there's a direct correlation to their sales going up. Right? There's a direct correlation to sales going up because the product's now available there. Because if it's not there, somebody is going to choose something else.

[00:21:08] So I would argue if you're a supplier or if you're a retailer, are you systemically measuring on shelf availability? If not, that's a very important metric, just like sales and profit and labor and all the other kinds of key performance indicators we do. You better figure out how to measure it. You better figure out how to set a goal. And if you're not meeting the goal, you better figure out why you're not. And there's thousands of reasons why you're not. But the bottom line is you've got to measure it.

[00:21:35] And if it's important to you, you've got to make progress and measure against it. Yeah. And the key is measuring on shelf versus in stock. That is a detail that I think a lot of folks are just kind of, yeah, we have inventory. How are you measuring your inventory? Is the inventory in the back office? Is it in the front? Is it in returns? Is it in damaged? Like the inventory is everywhere. Exactly right. Is it available for the customer or the order picker to actually select?

[00:22:05] That's the question. And that's a real hard thing to measure, but you better figure out how to do that. So let's shift just a little bit and keep this going because there's so much to unpack here. And I love the retail is detail. And as you were talking about having 95% on the shelf and their sales went up, it made me think of a saying that I had an old boss. He said, time kills all deals. And it's so true. It doesn't matter if it's a six-month-long sales cycle or a six-minute sales cycle.

[00:22:33] If you're expecting six minutes and it took eight, you're going to get 70% abandonment. It's just the way it goes. What technology trends are you seeing with this? You mentioned RFID, radio frequency identification, the tags and so on. We're seeing computer vision being leveraged, walk in, walk out, grab and go type of solutions. But I'm interested, like, what technology trends are you seeing that are helping with on-shelf availability?

[00:23:02] For a given product in the store, let's take a store like a Walmart or a Target, multiple commodity. It's got food. It's got consumables. It's got apparel. It's got general merchandise. It's got automotive tires. Basically, you name it. It's got it, right? There's a number of different ways you do this. Algorithms are very, very effective. So if it's something like bananas or milk or Tide detergent or paper towels, I'm selling 12, 16, 12, 12, 10, then go 0, 0, 0, 0. Well, guess what?

[00:23:32] That product's not on the shelf anymore because this is by hour. I can't go from selling 10 to 12 an hour to zero. I don't care if your on-hand says I've got 500 in the building. Something happened, right? This is outside the norm. So send somebody there and look at it. Oh, guess what? We are out of stock. Let me go ahead and fulfill that. And when they fulfilled it, guess what? Sales take back off again. Okay? So during hour five and six, on-shelf availability was zero.

[00:24:02] In-stock was probably 100% because it said you had some, right? But it was all sitting in the back room. So there's an example that a retailer and a supplier both benefited because we got an alert saying it was a problem. We fixed the problem and it took back off again. Okay? That's one. That works really well with high-velocity items. Things that are selling 10, 12 a day or an hour, et cetera. Other items like this, this is a store audit. Things like dental floss, you're not going to sell 12 an hour.

[00:24:32] So we have a couple different methods to do that. One is store audits. There are crowdsourcing audits that allow people to go in and take pictures of shelves and say, this is in stock or it's not in the stock. The other one is there's a lot of retailers out there. If you've ever been like a stop and shop or a Woodman's, you see these great big automated robots going up and down the sales floor. They are basically taking a picture of every item, every skew and saying, is it out of stock?

[00:25:01] Is it low stock? Is it the wrong product at the wrong location? Is the price wrong? All this other stuff for all 150,000 skews in the store. And then you deliver to the associate three or four. Here are the 10 things that you need to go fix based upon what the robot just saw. Okay. So it stops allowing people or forcing associates to have to scan stuff and it frees them up to go, Hey, the robot just finished aisle number one. Go and fix these three or four problems.

[00:25:29] Now, the problem with other products like apparel is robots look at a bunch of clothes. They can't tell you how many small you've got, medium you've got, large you've got. They can't really see color. They can see a little bit of color, but they can't count. They have no idea of counting. So radio frequency identification or RFID is used in a lot of retailers and even retailers like Walmart and Target and folks like that.

[00:25:57] They're using RFID to literally replace the ability. And here's how I collect inventory. I wandered over there. And just like RFID works in a toll road environment, every one of those garments have an RFID tag on it. It tells me how many colors, how many size, et cetera. It gets my inventory instead of 60% accurate or 40% accurate, more like 95% plus. Huge potential. And by the way, RFID is absolutely exploding.

[00:26:25] More of my business right now is focused on RFID in the retail supply chain than anywhere else. But the point of all this, pick one of these that you want. But most retailers, it will take a combination. A single one of these is not going to work. And so you got to pick an assortment of these to basically be able to tell, do I have the product on the shelf or do I not? That makes a lot of sense. And we've heard similar stories from others. There's no silver bullet.

[00:26:51] You're going to have to have an ecosystem of solutions to kind of help and focus in on what are your biggest rocks first, where you can get your biggest returns. You know, I look at the first one, the algorithm, where it's like you're seeing all these sales and then it goes to zero. It's simple, but it's detail. It's just acknowledging it. Because if I ran a little fruit stand and I have bags of fruit that I brought and I put them out on the stand and they sell, I replenish the stand. Right.

[00:27:20] I was in a store recently, a store I'd never been into before. And I walked in and I was really surprised because they said, if you need any help, let us know. I just want to let you know we're restocking right now. Now I have most of it in the back. So if you don't see it, let me know. I didn't see it. I let them know. And sure enough, they had it. But if they didn't communicate that to me, I would have walked out. And usually if you're a customer and you can't find somebody and you ask somebody, do you have any of this?

[00:27:49] Let me go check in the back is usually a kiss of death, which says you'll never see them again. So most people don't even ask the question. Forget it. I'll just go somewhere else. It's not worth waiting around for that. Something should have told you that you are out of stock before I got here to buy it. Right. You've got to be able to do that. So this is a lot of hard work. And the reality is all of these things we talk about are only predicated on one thing. It's in the building somewhere. Okay.

[00:28:19] If it's not in the building, now we've got a supply chain issue. That becomes even more complicated. And I'm sure we'll get into some of those examples. But the bottom line is there's only certain things that the store associates can do. If it's not in the building, there's nothing they can do about it. Okay. We talked about the four walls, but what about other things that the retailers should be aware of when managing their supply chains upstream?

[00:28:44] And then because I work for GS1 US and because you are a proponent of the standards, why are standards important in that entire conversation? For a couple of different reasons. Reason number one is the supply chain is absolutely critical. The shopper has product on the store. The shopper gets the product for Walmart. Walmart distribution centers should submit things from the retailer DC to the stores.

[00:29:11] If you go back all the way up, somebody's cutting down a tree to make the paper towels, to manufacture it, to distribute it, et cetera. In order for product to move that way, merchandise to work from raw materials all the way to the shopper. Guess what? Information. And I put accurate in parentheses, accurate information and timely information have to go back throughout the supply chain. I'll be honest with you. I've been doing this for 45 years.

[00:29:39] This is the biggest opportunity I believe that we have in the supply chain. How do we provide real-time information from shoppers making decisions to buy the product all the way through the supply chain? And by the way, the only way that happens is with standards. I want to tell you a brief story because you'll laugh at this. In 1989, I started working with Walmart. We did $23 million of business between P&G and Walmart.

[00:30:06] Reid, would you like to know how we transmitted that information back and forth? I would say mail or best fax. Fax machines. Now, we'll have to educate some of our audience on what a fax machine even is. Facsimile transmission. Facsimile. Facsimile transmission. Facsimile transmission. Fax machines. $23 billion between Procter & Gamble and Walmart was being done on fax machines.

[00:30:31] Which is, in essence, you're copying a piece of paper, sending it across telephone lines, and printing out the copy. It's not digital. It's just copies to copies. It's copies to copies. So P&G would be waiting for the fax machine. And as soon as it came off the fax machine, by the way, Walmart on the other side is keying in the P.O. And they hit in. And it goes to the fax machine. So it can create that copy sent to a P&G copy so they can take that piece of paper and key it in from start. Very inefficient.

[00:31:01] Lots of errors. All kinds of real bad stuff that happens to this. But we decided we're going to move to this brand new technology called EDI, electronic data interchange. And what they did was they said, here's how we want our EDI purchase order to look. Here's the format that we want you to give it to us so we can actually do this. Right? And I went, time out. GS1. I didn't even know it was called GS1 back then.

[00:31:27] But there are standards about how we should transmit purchase orders and invoices and all that stuff together that are already established by GS1. Who's GS1? Because here's the problem, Walmart. If you send me your purchase orders this way and Kmart sends it to me in another way, I got to figure out how to take all this stuff and put it into one system. Can't we just leverage the standards?

[00:31:51] So thank you, GS1, for EDI standards for things like purchase orders, invoices, advanced shipment notifications, payments. All that stuff was a good thing is GS1 had those standards ahead of time. So we were able to leverage those. Because GS1, fortunately or unfortunately, always has to be ahead of the industry setting up standards for how things work. I call it the rules of the road. Those rules of the road are very critical to make sure everybody understands how we do this.

[00:32:21] We would be an absolute mess without GS1 and standards. My compliments to GS1, I don't say that just because I'm on a GS1 podcast. You guys are continually out front. You're now thinking about how do we do things like serialized item information and transmitting that throughout the supply chain. That's the next big opportunity here.

[00:32:41] And if suppliers don't know what serialized item is, you better learn because it's going to be the next big thing of being able to actually identify sellable units and not just UPCs. Wow. That was a lot. It was a lot. But one, we want to just thank you for your support because you look at the slide here. We got transportation, distribution, manufacturing, retail. They all have their own systems. Some of them have been around for over 100 years. Some of them are just coming online.

[00:33:10] You know, why don't you do it like this? Why don't you do it like that? And so you brought up fax machines and I used to work for Xerox back in the day and put a couple of fax machines in police cars, believe it or not, Liz. And that's how we would take. Yep. Yeah. Some interesting cutting edge stuff. But it was back in those days, too, where we didn't have Internet protocol. We had networks, but not Internet protocol. And then what is Internet protocol? Standard. It's just a standard. It's all it is.

[00:33:38] But people got together and started leveraging it instead of building their own proprietary this and that. And it enables scale. And we're seeing it. We just need more people like yourself, Mike, to just kind of lean in and be like, hey, listen, this is great. We can go back to industry and say, hey, spend a quarter of a million dollars or a million dollars so that you can accommodate these guys and they're the biggest player. Or we can all put our heads together and be like, hey, let's do this or let's update this standard. Because guess what?

[00:34:07] Internet protocol, when I started in that, we ran into a numbers problem, too. There weren't enough addresses for IP addresses for devices because we went to this Internet of Things. Now everything is connected. I mean, back in 1994, Mike, you probably had one IP address in your house. Today, the average is over 20. Over 20 in the house. I mean, it's like it's crazy. Every TV is now connected. Smartphone is connected. Laptops are connected. iPads are connected.

[00:34:38] The camera is sitting outside. Your ring doorbell. Your oven. Who would ever thought? And I will tell you how many times I'm like, oh, we're driving home. Let's turn the oven on so we get home and we can throw the pizza right in it. So it is crazy. We always have to evolve and adapt, but we need to kind of drive it together and be that rising tide for everyone to still partake. Mike, this has been amazing. Amazing. I've absolutely loved having you on the show today and getting into this, but we are running out of time.

[00:35:07] We end with a couple of questions and I'll start with mine and then Liz can go to hers and we'll wrap this up. But I personally, and I'm sure Liz the same way, would be very interested in knowing what is your favorite technology that you're leveraging today? Either personally or professionally. How about if I give you one of both? I just bought my lovely wife a new car. She had a 2015 car and she loved it. And it was just time.

[00:35:33] I just felt like that's her Christmas present because I can't think of anything else she needs, right? We got a GM car that's self-driving. So you literally hit the button. It drives itself. It sears itself. It slows down. And what really blew our minds, if there's nobody on your left-hand side, it signals and changes lanes and goes around people. Wow. I mean. Cruise control to the next level. Oh, it's. Yeah. Yeah.

[00:36:03] A hundred percent. But, but just from a technology standpoint, maybe in technology all my life, just all of the various things they had to do before they were comfortable saying that that's okay to do. And I'm still, I'm still like that watching it because I'm not like, I'm not taking my eyes off anything. Cause this thing's crazy. Cause it will literally slow down. If somebody's slowing down in front of you, put the signal on. If there's nobody over there pass and then speed up.

[00:36:26] And it's like, Whoa, one that's not as cool, but just as important from a work standpoint is the ability to say, we are not going to think about a UPC in quantity, which we've been doing for 60 years. We're going to start doing things called serialized items. RFID already takes advantage of that. Well, let me give you a read, a real live example. Let's say my on-hand accuracy is 100%.

[00:36:56] Okay. A hundred percent. My on-hand, I know exactly what I have. It says I have three televisions in my store right now. Here's my question. How many of those televisions are available for you to buy? If you come in, how many, you know, no, no. Well, you would assume three, but let me tell you, one of them could be on the wall showing customers demo.

[00:37:20] The second one could be on a display with some DVD playing the third one, a customer just returned cause it wasn't working right. So they moved it back into claims. So I've got three TVs in inventory. I got none to sell you. So leveraging this, every item standby. So this whole serialized item information is the next breakthrough thing. And again, GS1 has already come up with this thing called EPCIS, which allows you to do that.

[00:37:50] You introduced it 20 years ago and everybody's like, yeah, whatever. We don't need that. People are now going, Hey, we think we need that. Right? And so literally every single item throughout the entire supply chain will have a state and a status, which makes it available to sell or not available to sell. Retail is about knowing exactly what you have and where it is all the time without having people go collect the data for it. That's the future. And your standards are going to allow us to be able to do that.

[00:38:17] So self-driving cars and serialized item information, including if your audience hasn't heard of it, the GS1 Sunrise 2027 initiative, where you can start to replace the UPC with more intelligent information is a game changer. And I'm so happy that GS1 is working on these things ahead of the industry. It's been my pleasure to be part of this. Liz, you got an easier one for me than that one. That's got to be, that's a hard one. Well, I don't know.

[00:38:44] I don't know, but I just want to say something real quick about the self-driving car. So I have 15 year old twins, both who have their permits and I'm not sure who I would trust more. My 15 year old, each of them or a self-driving car. It really makes me think like human error, right? That's anyway. Well, so my question is pretty simple, especially as we're moving into the new year. What do you want to learn? Like what's exciting and what do you want to learn in the future? That is a great question. I think I want to learn, and it sounds really self-serving.

[00:39:14] I want to learn how long is it going to take for retailers to figure out they've got to change. Okay. How many of these retailers are just trying to survive this year? Or if I just make it five years, I'm watching the ones that are making constant change and innovation that who want to be around 50 years from now. People I'm working with, people like Walmart and Kroger who are going, we're doing well as a company.

[00:39:41] That puts more urgency that we've got to continue to refine what we're doing. Why wait for our sales to start tanking before we do something about it? So I really get excited about the industry, but I see some retailers really going, I want to be around 50 years from now. I want to learn, Liz, how long is it going to take them? If we fast forward 10 years from now, there's a whole bunch of retailers out there that won't be here around. So are they going to make a decision now to invest? Even though things are good,

[00:40:09] you cannot rest on your lures because the customer will fire you. And when the customer fires you, hard to get them back. This is amazing. Mike, thank you so much for being on the show and spending the time with us today. We really appreciate it. We wish you all the best and we look forward to crossing paths with you again. Thank you so much. I've really enjoyed spending the time together. Always a pleasure to work with my friends at GS1. And if I can do that for anything for you guys in the future, just let me know. Thank you for joining the Next Level Supply Chain with GS1US.

[00:40:38] If you enjoyed today's show, you can subscribe to our feed or explore more great episodes wherever you get your podcasts. Don't forget to share and follow us on social media. Thanks again, and we'll see you next time.