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Supply Chain

Survive Supply Chain Shifts with Increased Digitization

Andre Persaud

Andre Persaud

Executive Vice President of Retail at Rite Aid

Andre Persaud Rite Aid

When the pandemic hit, it didn’t take long for pain points to rise to the surface in the supply chain. Businesses were forced to adapt and face the challenge of meeting consumer needs, which took precedence over working capital needs.

Quartz Network Executive Correspondent Britt Erler sat down with Andre Persaud, Executive Vice President of Retail at Rite Aid to discuss the supply chain shifts he’s witnessed and the effects businesses and suppliers can expect going forward.

Andre offers guidance on:

  • What to expect with supplier relationships moving forward
  • The changing norms in supply chain
  • Major shifts necessary to improve supply chain readiness

Quartz Network: Can you share some background on your role at Rite Aid and how it’s changed due to the pandemic?

Andre Persaud: Let’s start with the role. My official title is EVP of retail. What does that mean? It means that I have responsibility across the organization for anything retail, which includes supply chain stores, loss prevention, facilities, etc.

How has the role changed? That’s a pretty interesting question because I joined Rite Aid a month before the pandemic started. So apart from getting to a new company, building those relationships, and jumping in, I think there’s three things that I would say. One is, from more of a personal perspective, I have noticed a deep appreciation of what our teams have done both in our supply chain and in our stores. It gives you a completely new perspective of what it means to take care of consumers and customers.

As far as how the role has changed., I think it’s two things. One is, you have to really throw out the playbook that you were coming in to do and pivot to really understand what you need to do to move the business forward.

Nimbleness was two. I think it’s also about having an understanding of knowing when to push and when to pull. It’s such a difficult year as far as all the extraneous circumstances on the organization. In any industry, just having that fine balance is really important.

Quartz Network: What do you envision for relationships with suppliers moving forward?

Andre Persaud: I think there’s a couple things. One is that it means you really do have to shift to what I would call true partnerships. It really becomes less about a financial-first discussion and more about nimbleness together.

Also, contrary to how folks may have looked at in the past, it’s not about narrowing your suppliers. It’s more about broadening your suppliers just because of the need for nimbleness. Their thing, which I believe is changing, is cost sharing. To help that nimbleness, how do you have more cost sharing, which really leads to the big C-word. Collaboration and being a lot more collaborative with your suppliers moving forward.

Quartz Network: What supply chain norms have you seen change across the industry and what trends do you see emerging?

Andre Persaud: The first thing this pandemic taught us is that meeting consumer needs outweighs working capital needs. What that means is that, as you think about going forth, how are you going to make sure that you are prepared to meet consumers needs because they change so quickly? It comes back to this whole concept of nimbleness, being strongly supported by data and how quickly trends shift.

With people social distancing and staying at home we’ve seen a significant shift in the consumption of cough and cold products. And this is across the industry. We’re not agnostic to this at all.  

What has changed is how you flow that through your supply chain and how you partner with your suppliers. You have to really think about that differently now. That’s just one example of many that has shifted, but the broader part here is that certainly the pandemic has identified pain points.

Some pain points people knew about and were wanting to work through while others were unknown. So, it’s really brought forth the need to move the supply chain with pace and nimbleness going forward.

Quartz Network: What shifts need to happen in the supply chain industry to increase readiness?

Andre Persaud: The first thing is continued digitalization. That’s everything from how to get the last mile there much quicker right through to how to do more omni channel fulfillment through your distribution centers. The harder part is anticipating unintended consequences.

Today, I think everyone in supply chain is living with this backlog of freight coming out of Asia right now, which has meant that your costs have doubled. So fast forward, what’s the next unintended consequence that comes out of this? It’s really about really anticipating those.

The other thing, I believe, is going to be having much broader contingency planning in place. Not necessarily what happens when a building shuts down, but more broadly about where you bring in product from, how much you’re going to have. Really think about placing big bets going forth. Some of that is going to be intuitive, but I think every organization has to really think through what they are going to stand for and where are these big bets going to be placed?

Lastly, I think flexibility really outweighs everything in this process. You have to be able to be flexible moving forward.

Quartz Network: Are there certain technology disruptors within supply chain that you think need immediate attention?

Andre Persaud: Just like every other part of technology, the traditional route of building infrastructure, CapEx, and technology investments have shifted significantly. You’re getting a lot more niche players, more startups that are coming in with solutions that are really weak that you can wrap your head around real quickly. Maybe, in the past, where something may have taken a year to stand up and get implemented, how do you get that cycle down to a couple of months on a test and learn. Really moving forth in a modular perspective. That’s one.

Two, is this ability to really think from the shifts and ask, “Where do I go next with this?” Meaning, how do I continue to think about the integrating the business across all assets digitally?

Quartz Network: Are you concerned about the economics of supply chain.

Andre Persaud: I do. I think every company looks at supply chain differently. Everything from, it’s a cost center, right through to a profit center.

Every company has also prioritized or deprioritized supply chain in their history. From my perspective, there’s a significant need for technology and CapEx investments moving forth. The organizations that placed those bets five years ago, have clearly won more than others in the last year. That’s very evident.

Part of this is that the traditional IRR modeling of return probably gets thrown out the window, because some of these investments now really become table stakes. It’s not that it’s a nice to have, it’s a must to have.

The simplest example I can think about is, you don’t think twice about putting a brake system into a car—it’s a must to have. I think that’s what some of these investments means, which also means that there is no time more than the current. That supply chain needs strong partnerships with their CFOs to really help bring this to light, bring this forward, and get the necessary CapEx to move supply chain forth to pace.

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