As Colin Yankee of retailer Tractor Supply explains, it takes more than just stocking the right essential goods to grow your business during a pandemic.
In the midst of the COVID-19 pandemic, retailers have been at the forefront of keeping us supplied with the goods that make our lives feel as normal as possible. But not all retailers have fared equally well in these difficult times. Some are on the verge of collapse, unable to withstand the one-two punch of mandated store closures and the e-tail tsunami, while others have pivoted successfully and actually grown their business. Brentwood, Tennessee-based Tractor Supply Co. is one of the latter. Thanks in part to a formidable supply chain operation, Tractor Supply has managed to keep essential goods flowing to America’s “out here” locations throughout the health crisis while racking up double-digit increases in sales.
Executive Vice President and Chief Supply Chain Officer Colin Yankee is responsible for that supply chain, overseeing merchandise planning, inventory management, vendor operations, transportation, and distribution operations. Yankee gained valuable supply chain management experience during stints at Neiman Marcus and Target. Before starting his civilian career, he graduated from the U.S. Military Academy at West Point, New York, and served as a captain in the U.S. Army. He holds a master’s degree in supply chain management from Michigan State University.
Yankee recently spoke with CSCMP’s Supply Chain Quarterly Editorial Director David Maloney about Tractor Supply’s wild ride over the past year.
Tractor Supply has stores in most parts of the United States, but some readers may not be familiar with your company. First of all, your main line of business is not really tractors, is it?
It is not. Tractor Supply has been operating since 1938. It started out as a mail-order tractor parts company for small farmers, but the business has evolved over the past 80-plus years. Today, we operate over 1,900 stores in 49 states that cater to the rural lifestyle. We had about $10 billion in revenue this past year.
We sell everything people need for what we call the “out here” lifestyle. Our product lineup ranges from workwear and footwear for people out on the job site to animal feed for both livestock and pets. We also carry truck tools and hardware parts, all the way down to make/model-specific parts for a particular piece of equipment. And then we have all kinds of seasonal goods. So, while in a couple stores, we actually do sell tractors, we also sell basically everything you need to live out in the country and be self-sufficient.
A lot of your stores are located in rural areas, but I live in the suburbs of Pittsburgh, Pennsylvania, and there’s a Tractor Supply store about a mile from me. So you’ve made inroads into urban areas as well.
Yes, we have. As the suburbs have expanded out into the country and as our store footprint has increased, it has changed the nature of some of our stores and created a need for a very localized assortment mix. In Texas, we have a store that’s out near several oil fields, so we will cater to that customer. Or you may be in the suburbs of Pittsburgh, and we’ll have more of a pet and garden type of assortment.
That obviously presents some supply chain challenges.
It does. The hyper-localization means that we need to keep close tabs on the assortment level at each store and what the inventory position is at each of the distribution centers. You also have to factor in the highly seasonal nature of our business. It is very weather-dependent, and inventory is deployed for stores based upon the time of the year. But that can be surprisingly complicated. For example, we have a distribution center (DC) in Kentucky that services about 290 stores stretching from Ohio to Louisiana. Because spring arrives at different times in different parts of that geographic region, that one DC services spring goods and winter goods all at the same time.
Like all businesses, you’ve had to adapt very quickly to a new normal since the arrival of COVID-19. How has the pandemic affected your company and your supply chain?
We’ve had the good fortune to be designated an essential business, so we’ve been able to continue operating throughout the pandemic. We first started monitoring the whole COVID phenomenon back when it was still contained in China because we’re a direct importer from China. At that time, our main concern was how it would impact the flow of our goods into the United States for the spring and summer selling seasons.
But then in March, things really started to hit home here in the U.S. For us, that meantnavigating an array of local requirements in order to continue our operations. At about that time, we saw sales start to surge because we were selling animal food and pharmaceuticals and items that people were stocking up on in those early days. The surge in demand and the need to replenish those stocks had a ripple effect throughout our supply chain.
Then as customers started spending more time at home and in their backyards, they began to focus on improvements to their homes and property. We saw the spring and summer home-improvement goods really take off. We had two consecutive quarters of 30%-plus sales increases. That obviously put a strain on our DC network and our supplier base.
You mentioned direct imports from China. Did you have to change any of your sourcing because of the pandemic?
We did. This experience really exercised some muscles that already existed. We are constantly re-evaluating our sourcing, and COVID is really just a new chapter in what’s been an ongoing effort over the past couple of years. For context, we have adopted a total-landed-cost view for evaluating our assortments, so that includes product cost, where we source from, freight terms, miles, and packaging. We look at all those things as they relate to the flow of goods to the DC and ultimately to the store and to the customer’s doorstep.
And because we have a highly seasonal business, we’ve been adapting our supply chain over the last few years to give us more sourcing flexibility—specifically, the flexibility to source a product overseas initially and then replenish from a more domestic supply base. We’ve moved some production to the U.S. and Mexico.
We conducted many of those same evaluations in response to COVID. But it wasn’t just through the lens of cost; it was through the lens of reliability and supply chain resilience.
Your company has been out in front in its efforts to leverage data to fine-tune its operations. How has COVID affected the way you process and use that data?
From a supply chain perspective, our big focus has been on applying data to help coordinate activities across the value chain—from our planning team, to our suppliers, to our carriers, through the DCs, and into the stores. In particular, we’ve been trying to use data to solve a couple of problems. The first is how to get earlier visibility into vendor production and transportation issues and then use that information to be more proactive with respect to re-allocating inventory, shifting our transportation plans, and adjusting DC staffing levels. The second is figuring out how to communicate that information across the organization, with our suppliers, and with our finance organization—and ultimately, how we can use it to be the best supplier we can be for our customers.
Your business has had to adjust to people staying at home, or at least not venturing into stores as much as they used to. How has the resulting shift to online sales changed your supply chain operations?
We’ve been on a multiyear journey to “activate” inventory everywhere, in both our stores and our DCs. We now have the ability to give customers the option to buy online and pick up in every one of our stores. Each of our distribution centers not only supports store replenishment but can also fulfill direct-to-consumer orders. So, we have that opportunity to use inventory wherever it sits in a variety of ways.
What we saw with COVID was the acceleration of trends we thought would take two or three years to play out. The timeframe got compressed down to two or three weeks in some cases, as customers started leveraging “buy online, pick up in store” a lot more in order to reserve inventory and have a contactless transaction. We were already offering curbside pickup at all of our stores, but that volume definitely picked up. And then, customers have been using our same-day delivery options out of all of our stores.
At the same time, we’ve seen about a threefold increase in the daily volume of direct-to-consumer orders fulfilled out of our DCs, and they’ve handled that very well. We’ve had to increase our staffing—both in our stores and in our DCs—to support the shift to digital fulfillment.
What are some of the trends that you’re tracking?
We think that the trends we saw in 2020 with customers engaging more digitally and spending time in their homes and with their families are going to continue through 2021. We are preparing for that. We are also seeing a lot of disruption in the import market right now with equipment imbalances in trade lanes between Asia and the U.S. So, we’re looking at how to adjust our ordering patterns and shift our sourcing.
We also see continuing demand for online fulfillment, so we’re continuing to invest in our fulfillment capabilities out of our DCs and expanding our ship-from-store capabilities. I think that’s going to stay with us for 2021, 2022, and beyond.
You mentioned at the 2020 Gartner Supply Chain Symposium that every company should be looking at industry leaders to help show them the way. Who for you is that industry leader?
I don’t think there’s just one for us. One thing I love about supply chain is that there’s an openness to sharing in the profession. Supply chain professionals understand that supply chain success derives from a combination of all of their capabilities, not just one tool or system or piece of automation. And because of that, there isn’t one leader that we look to when we go to benchmark our operations. Instead, we use our network of retailers, carriers and their customers, suppliers, software providers, and automation providers and their customers to find great reference points—companies that excel in specific areas of supply chain management.
For example, we’ve recently had conversations with a pure apparel retailer about order-management system logic for fulfillment. We’ve done some compare-and-contrast exercises on organizational design with a company in the beauty space. We’ve shared our perspective on transportation visibility in sales and operations planning with a food and beverage company that was looking at our operation as a benchmark.
So, while I think imitation may be the sincerest form of flattery, it would be a terrible idea to pull from just one example when you’re looking to benchmark in your supply chain. I think there is something we can learn from everybody. And there is something we can teach everybody, and that’s one of the great things about the openness of the supply chain profession.
The venture-backed fleet telematics technology provider Platform Science will acquire a suite of “global transportation telematics business units” from supply chain technology provider Trimble Inc., the firms said Sunday.
Trimble's other core transportation business units — Enterprise, Maps, Vusion and Transporeon — are not included in the proposed transaction and will remain part of Trimble's Transportation & Logistics segment, with a continued focus on priority growth areas following completion of the proposed transaction.
Terms of the deal were not disclosed but as part of this agreement, Colorado-based Trimble will become a shareholder in Platform Science's expanded business. Specifically, Trimble will have a 32.5% stake in the newly expanded global Platform Science business and will receive a Platform Science board seat. The company joins C.R. England, Cummins, Daimler Truck, PACCAR, Prologis, RyderVentures, and Schneider as a key strategic investor in Platform Science along with financial investors 8VC, Activant Capital, BDT & MSD Partners, Softbank, and NewRoad Capital Partners.
According to San Diego-based Platform Science, the proposed transaction aims to enhance driver experience, fleet safety, efficiency, and compliance by combining two cutting-edge in-cab commercial vehicle ecosystems, which will give customers access to more applications and offerings.
From Trimble customers’ point of view, they will continue to enjoy the benefits of their Trimble solutions, with the added flexibility of the Virtual Vehicle platform from Platform Science. That means Virtual Vehicle-enabled fleets will receive access to the Virtual Vehicle Marketplace, offering hundreds of new and expanded applications, software, and solution providers focused on innovating and improving drivers' quality of life and fleet performance.
Meanwhile, Platform Science customers will enjoy the added choice of Trimble's remaining portfolio of transportation solutions which will be available on the Virtual Vehicle platform, the partners said.
"We believe combining our global transportation telematics portfolio with Platform Science's will further advance fleet mobility and provide our customers with a broader portfolio of solutions to solve industry problems," Rob Painter, president and CEO of Trimble, said in a release. "Increased collaboration between the new Platform Science business and Trimble's remaining transportation businesses will enhance our ability to provide positive outcomes for our global customers of commercial mapping, transportation management, freight procurement, and visibility solutions. This deal will result in significant synergies along with tremendous opportunities for employees to continue to grow in a more-competitive business."
The acquisition comes just five months after Platform Science raised $125 million in growth capital from some of the biggest names in freight trucking, saying the money would help accelerate innovation in the commercial transportation sector.
Nearly one-third of American consumers have increased their secondhand purchases in the past year, revealing a jump in “recommerce” according to a buyer survey from ShipStation, a provider of web-based shipping and order fulfillment solutions.
The number comes from a survey of 500 U.S. consumers showing that nearly one in four (23%) Americans lack confidence in making purchases over $200 in the next six months. Due to economic uncertainty, savvy shoppers are looking for ways to save money without sacrificing quality or style, the research found.
Younger shoppers are leading the charge in that trend, with 59% of Gen Z and 48% of Millennials buying pre-owned items weekly or monthly. That rate makes Gen Z nearly twice as likely to buy second hand compared to older generations.
The primary reason that shoppers say they have increased their recommerce habits is lower prices (74%), followed by the thrill of finding unique or rare items (38%) and getting higher quality for a lower price (28%). Only 14% of Americans cite environmental concerns as a primary reason they shop second-hand.
Despite the challenge of adjusting to the new pattern, recommerce represents a strategic opportunity for businesses to capture today’s budget-minded shoppers and foster long-term loyalty, Austin, Texas-based ShipStation said.
For example, retailers don’t have to sell used goods to capitalize on the secondhand boom. Instead, they can offer trade-in programs swapping discounts or store credit for shoppers’ old items. And they can improve product discoverability to help customers—particularly older generations—find what they’re looking for.
Other ways for retailers to connect with recommerce shoppers are to improve shipping practices. According to ShipStation:
70% of shoppers won’t return to a brand if shipping is too expensive.
51% of consumers are turned off by late deliveries
40% of shoppers won’t return to a retailer again if the packaging is bad.
The “CMA CGM Startup Awards”—created in collaboration with BFM Business and La Tribune—will identify the best innovations to accelerate its transformation, the French company said.
Specifically, the company will select the best startup among the applicants, with clear industry transformation objectives focused on environmental performance, competitiveness, and quality of life at work in each of the three areas:
Shipping: Enabling safer, more efficient, and sustainable navigation through innovative technological solutions.
Logistics: Reinventing the global supply chain with smart and sustainable logistics solutions.
Media: Transform content creation, and customer engagement with innovative media technologies and strategies.
Three winners will be selected during a final event organized on November 15 at the Orange Vélodrome Stadium in Marseille, during the 2nd Artificial Intelligence Marseille (AIM) forum organized by La Tribune and BFM Business. The selection will be made by a jury chaired by Rodolphe Saadé, Chairman and CEO of the Group, and including members of the executive committee representing the various sectors of CMA CGM.
Economic activity in the logistics industry expanded in August, though growth slowed slightly from July, according to the most recent Logistics Manager’s Index report (LMI), released this week.
The August LMI registered 56.4, down from July’s reading of 56.6 but consistent with readings over the past four months. The August reading represents nine straight months of growth across the logistics industry.
The LMI is a monthly gauge of economic activity across warehousing, transportation, and logistics markets. An LMI above 50 indicates expansion, and a reading below 50 indicates contraction.
Inventory levels saw a marked change in August, increasing more than six points compared to July and breaking a three-month streak of contraction. The LMI researchers said this suggests that after running inventories down, companies are now building them back up in anticipation of fourth-quarter demand. It also represents a return to more typical growth patterns following the accelerated demand for logistics services during the Covid-19 pandemic and the lows of the recent freight recession.
“This suggests a return to traditional patterns of seasonality that we have not seen since pre-COVID,” the researchers wrote in the monthly LMI report, published Tuesday, adding that the buildup is somewhat tempered by increases in warehousing capacity and transportation capacity.
The LMI report is based on a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
That hiring surge marks a significant jump in relation to the company’s nearly 17,000 current employees across North America, adding 21% more workers.
That increase is necessary because U.S. holiday sales in 2023 increased 3.9% year-over-year as consumer spending grew even amidst uncertain economic times and trends like inflation and consumer price sensitivity. Looking at the coming peak, a similar pattern is projected for this year, with shoppers forecasted to drive a 4.8% increase in holiday retail sales for 2024, Geodis said, citing data from Emarketer.
To attract the extra workforce, Geodis says it will offer competitive wages, peak premium pay incentives, peak and referral bonuses, an expedited payment option, and flexible schedules. And it’s using an AI-powered chatbot named Sophie to serve as a virtual recruiting assistant.
“We acknowledge the immense responsibility we have to our customers to deliver exceptional service every day, and this is especially true during peak season,” Anthony Jordan, GEODIS in Americas Executive Vice President and Chief Operating Officer, said in a release. “Because peak season is the most business-critical sales period of the year for many of our retail clients, expanding our workforce is vital to ensure we have a flexible, dynamic team that can handle anticipated surges in demand.”