logistics wins (and loses) a sale
If Charles Dickens were the author of this column, it might be titled "A Tale of Two Supply Chains." From an economic perspective, these may be more like the worst of times than the best of times. But as a summer shopping experience illustrated, at least one thing hasn't changed much since the time of the French Revolution. Both wisdom and foolishness still abound today—at least when it comes to the way companies have responded to the challenging retail climate.
Here's how the tale unfolded:
Just as summer finally arrived in the Northeast, with temperatures topping 90 degrees, the family's old, reliable refrigerator finally gave out. After 17 years, including a decade of "combat duty" with three teens in the house, the low-end, economy-model appliance had served the family well. But given its age (and the fact that several hundred dollars' worth of food were at risk of spoilage), we decided not to seek repairs. It was time to retire the old war horse and bring in a new soldier.
So it was off to the store—or to be precise, several stores. As with most any purchase of this type, some comparison shopping was in order. We had agreed beforehand that given the exemplary track record of our 17-year-old refrigerator, it made sense to go with another basic model. No fancy stainless steel façade. No built-in ice and water dispenser. Just a regular, old-fashioned refrigerator.
First stop: Home Depot, which offered plenty of options and had a good supply of inventory on hand for next-day delivery. As the helpful sales representative explained, all we had to do was pick our preferred delivery time for the following day. At the appointed hour, the crew would show up to deliver and install the new appliance and take away the old one. It was all very simple.
But we weren't ready to sign up. For purposes of comparison shopping, we felt obliged to make at least one more stop before any deal was done. So, it was across the street to Best Buy.
The first thing we noticed was the absence of shoppers—the store was almost eerily quiet. The second thing we noticed was a scarcity of staff on hand in the appliance department to assist customers—it seemed downright odd to have to seek out a sales representative when there were so few other shoppers around. The third thing we noticed was that Best Buy carried the same refrigerator we had just seen over at Home Depot, at a price that was $70 (or about 10 percent) lower.
It seemed the comparison shopping was about to pay off. At least it did until we inquired about delivery times. The sales associate had already begun entering the purchase into her computer when we mentioned there was a critical need for next-day delivery.
"Oh. Yeah. That makes sense," she said. "You certainly can't go without a fridge in weather like this. Let's see (long pause), it looks like the next available delivery slot for your town would be (longer pause) next Thursday." Not this Thursday, which was two days away, she clarified, but next Thursday, which was nine days away.
"What's up with that?" she was asked. "Well," she replied, "things have been slow, and we've had some layoffs and consolidated our distribution centers. It's delaying everything."
Along with delaying everything, it cost Best Buy at least one sale.
In the end, Best Buy's loss was Home Depot's gain, but that's not the point of the story. The lesson here is that when it comes to logistics, there's a lot more to it than price. How fast you can get the goods to the customer is sometimes the overarching consideration ... especially when it involves the delivery of a refrigerator on a sweltering summer day.
