Fujitsu’s Greg Pincar On The Supply Chain and The Future Of Retail

An Interview With Martita Mestey

Listen to customers and store staff. They’ll tell you what they want, like and dislike about your stores, operation, products, assortment, shopability, price and convenience. That means you have to be out there in the stores, talking and listening.

As part of our series about the future of retail, I had the pleasure of interviewing Greg Pincar, Senior Director, Digital Manufacturing, Fujitsu North America.

Greg is Fujitsu’s Digital Manufacturing SME in the Americas. He has over 40 years’ experience in manufacturing, designing, re-engineering and managing manufacturing facilities using the latest technologies. His experience covers six continents and over 29 countries, and includes executive-level positions with companies such as Nestle and Wyeth Pharmaceuticals. During his time at Fujitsu, Greg developed Fujitsu’s Smart Factory framework and approach, leveraging Fujitsu’s technology and his experience on the factory floor. In his approach, he demonstrates where and how technology creates business value as well as how quickly it can be realized.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?

I started my career with Best Foods working in the Quality Control/Quality Assurance department at their largest manufacturing site in Bayonne, NJ. The head of quality for the site was promoted to the position of department head for our largest manufacturing operation that produced Hellman’s mayonnaise, pourable dressings and other products. Shortly after he started his position, he and the plant manager offered me the position of processing supervisor for the department. I was 22 at the time. Little did I realize that this would be the start of a fantastic, exciting career and a lifelong passion.

Can you share the most interesting story that happened to you since you started your career?

When I joined Wyeth Pharmaceuticals as vice president of the Global Operations Nutrition division, my responsibility was to build a global supply chain. At that time most of the manufacturing plants reported to the markets in which they were located. We were starting to build new capacity and were breaking ground for a new $185-million facility in Singapore.

You can imagine the culture shock for the markets as well as the sites. The sites were separate entities that did not communicate with each other, and functions such as procurement, demand planning, quality, IT, maintenance, etc., were totally isolated to the market they were reporting to. Changing that reporting relationship was critical and difficult.

I would hold quarterly global meetings with the plant directors and quality heads. I would choose a host site (e.g., Shanghai), set the agenda and have the sites share their stories. We would then work on our objectives, and I would create teams consisting of members from each site to work on specific projects. This started to build and cement relationships, create a true global supply chain and result in the sites sharing best practices.

All in all, the division had 11 manufacturing facilities in countries such as Singapore, China, Ireland, France, New Zealand, Indonesia, Philippines, Denmark, South Africa, the United States and Mexico and served 88 markets. We had a solid team and great people. The global meetings initially included only the site director and Quality, but every quarter we would invite someone in a different role (e.g., Finance, IT) to present and participate. The sites would take a lot of pride in hosting the meetings, which included an in-depth plant tour and presentation by the site’s management team.

Are you working on any new exciting projects now? How do you think that might help people?

“Industry 4.0” and “digital transformation” are buzzwords we often hear in the industry today. At Fujitsu, we’re making industry 4.0 and digital transformation real by developing offerings that incorporate business benefits, technology, people and process.

At both the executive and functional levels, we’re continuously working to demystify the concept of digital transformation. For us, digital transformation is simply the application of digital technology to business functions. We implement digital technology by developing a roadmap so organizations can gain a foundational understanding of the concept before helping them proceed in a way that aligns with their business goals and objectives.

We go to manufacturing plants, for example, and develop a working relationship with the onsite team to review the factory floor. We then host a discovery session, discuss the culture, the business metrics, their needs, common pain points and challenges. We then provide feedback, potential solutions and benefits.

We have created a model of the supply chain, starting with “1st Mile Connectivity” and ending with “Last Mile Delivery.” This model is extremely useful as we work with our clients, as every point is business-relevant and incorporates people, process and technology.

None of us are able to achieve success without some help along the way. Is there a particular person to whom you are grateful, who helped get you to where you are? Can you share a story?

I remain especially grateful for the opportunity the head of quality provided me when he moved to manufacturing at Best Foods. He gave me a chance to lead, and although I no longer directly reported to him in Quality Control/Quality Assurance, we maintained an excellent working relationship throughout my time at the company. I cannot express my appreciation to him enough.

How have you used your success to bring goodness to the world?

I believe in people. You work with them, provide opportunities, mentor and in some cases you have to provide constructive feedback, but you do it in a way that expresses care and encourages growth. One example that comes to mind is when I provided an opportunity for an employee’s son to become a mechanic. His mother asked me why I went out of my way. I told her he deserved a chance. I hope that, in some small way, that good will continue its journey.

Now let’s jump to the main questions of our interview. The Pandemic has changed many aspects of all of our lives. One of them is the fact that so many of us have gotten used to shopping almost exclusively online. Can you share a few examples of different ideas that large retail outlets are implementing to adapt to the new realities created by the Pandemic?

While the pandemic forced a large number of in-person shoppers online, the real question is: how much did the pandemic influence shoppers shifting to more online purchasing? Opinion and a wide range of different reports tend to agree that the pandemic shifted e-commerce sales as a percentage of total retail worldwide from about 14% to close to 20% today. Prior to the pandemic the year-over-year rate of change (e-commerce growth) was tracking at around 1.2%. Many experts expect that rate of change will return. That means that one in four retail transactions worldwide will be made predominately online.

Retailers are doing a number of things to adapt to the new reality that e-commerce is taking a bigger chunk of their transaction rates. Here are a few examples of the changes they are making as well as a few other factors coming out of the pandemic that are impacting retailers:

Getting serious about their web presence and their digital partner ecosystems: Many retailers miscalculated the importance of their e-commerce business, including the operations and technologies required to support the bulk of their business online. Propping up under-investments in the early days of the pandemic was difficult when revenues flatlined as stores closed. Even industries like grocery that flourished during the pandemic found that under-investment in their e-commerce capabilities impacted their margins. For example, labor costs to fill orders for curbside pickup cost more per order than the margin they made.

Recalculating the number and location of physical stores: Especially in apparel, many companies were way “over-stored,” meaning that with the majority of their inventory distributed across their physical store locations, when they had to shut down, they had no scalable or cost-effective way to get inventory to e-commerce customers in high volumes. Now the processes of “right-sizing” and “right locating” stores are being scrutinized much more carefully. The e-commerce “halo effect” is also a big consideration when looking at large population centers, demographics and same-day fulfillment capabilities.

Investing in fulfillment operations and automation: Retailers have shifted investments from physical stores to distribution centers, RDCs, DFCs, etc., and are automating them heavily.

Repurposing stores as partial fulfillment centers: Some retailers are converting floor space or adding on to existing stores for curbside and home delivery services. Micro fulfillment centers (MFCs) are scattered across large industries and chains, with some of the largest selling their fulfillment services to other non-competing retailers and even manufacturers growing their direct-to-consumer business.

Reducing store operating costs through automation: In-store automation continues to grow through such things as order pick assistants, self-checkout, mobile shopping and now cashier-free stores, such as Amazon Fresh.

Investing in private-label products: Private-label brands are gaining in popularity, providing consumers with products that are as good as name brands, but are offered at a lower cost and at higher margins. Private-label products are also getting better shelf positioning in stores and promotions online, causing vendors to feel the squeeze.

Demonstrating vigilance and ESG compliance: Consumers are becoming increasingly interested in sustainably manufactured and distributed products. Retailers now have to police not only their own operations, stores and resources, but also prove their suppliers and their suppliers’ suppliers are acting responsibility. This impacts not just products, but their make-up, packaging, handling, etc.

The supply chain crisis is another outgrowth of the pandemic. Can you share a few examples of what retailers are doing to pivot because of the bottlenecks caused by the supply chain crisis?

While there’s no “one-size-fits-all” approach to mitigating logistical challenges within the supply chain, there are processes, tools and technologies that can be applied and assessed when working toward solutions that consider business goals and needs. Here are a few examples to consider:

• Unifying operations and systems across the supply chain: The need for a plurality of systems and centers for supplying orders to stores or directly to consumers is being scrutinized. Why have separate operations when a consolidated operation can share inventory, resources and occupancy costs?
• Diversifying supplier networks: The pandemic exemplified just how fragile suppliers can be and how centralized buying from a limited number of vendors can be risky.
• Planning precision with respect to inventory and assortment: Instances of inventory swell, low-stock and out-of-stock items and having the right products in the wrong places were dramatically amplified during the pandemic. Many retailers took a hard look at their forecasting, demand planning, inventory, overall agility and order management strategies and applications. Implementing advanced analytics, machine learning and AI are considered table stakes now; they’re essential for modeling scenarios and predicting demand, allocations, pricing and more for every operation, product line and SKU.

How do you think we should reimagine our supply chain to prevent this from happening again in the future?

I do believe that the correct word is “reimagine.” Many companies will look to improve processes and technology, but we also need to ask ourselves critical questions like: Do we really understand our supplier’s capabilities and their suppliers’ capabilities? What are the limitations and capacity? Where we are single sourced? What are the transit routes and possible alternatives? How do we monitor demand and inventory? Where do we hold inventory? What is our customer’s behavior today, what influences it and how does it affect demand? What does an optimized supply chain look like and how can we model it?

What I am advocating is for companies to move to a detailed and extensive analysis of their supply chain capabilities. This includes demand and supply planning and the ability to respond to changes in consumer behavior. Technology coupled with process will help reimagine a supply chain, but only after companies have looked in depth at their supply chain components, mapped vulnerabilities and determined where risks exist now and into the future. At a minimum, we’ll be better prepared for the next disruption.

In your opinion, will retail stores or malls continue to exist? How would you articulate the role of physical retail spaces at a time when online commerce platforms like Amazon Prime or Instacart can deliver the same day or the next day?

The simple answer is that retail stores and malls will continue to exist, but their purpose and the experience of using them will be different than it is today. I predict that there will be fewer brick-and-mortar stores and malls in the future, but that the ones that remain will look to entice consumers with a social experience that cannot be replicated in an online environment.

Amazon is going to exert pressure on all of retail for the foreseeable future. New Direct-To-Consumer companies based in China are emerging that offer prices that are much cheaper than US and European brands. What would you advise to retail companies and e-commerce companies, for them to be successful in the face of such strong competition?

My first bit of advice is to be absolutely certain you have strong customer satisfaction and maintain it. Do not provide an obvious reason for your customers to look for an alternative. The other key word is “branding.” There will always be consumers who are extremely brand loyal. There will also always be consumers who want a bargain. Retail companies will need to position themselves as offering the best assortment, delivery and service consistently at a competitive price. Competition is a constant, regardless of where it originates.

Based on your experience and success, what are the five most important things one should know in order to create a fantastic retail experience that keeps bringing customers back for more? Please share a story or an example for each.

• Listen to customers and store staff. They’ll tell you what they want, like and dislike about your stores, operation, products, assortment, shopability, price and convenience. That means you have to be out there in the stores, talking and listening.
• Ensure store associate availability and friendliness. Make sure your staff are well trained, scheduled effectively to match customer arrival rates, not preoccupied with non-customer-facing tasks, always friendly and ready to help customers.
• Provide assortment, product availability and price. If you don’t have it, you can’t sell it. And today, if it’s cheaper online and in the exact color, size, flavor, etc., and you can get it delivered, then why go to a store?
• Maintain shopability, cleanliness and safety. Ensure spaces are uncluttered and well lit with easy-to-find items in a clean and safe shopping environment.
• Offer a frictionless experience. The process, from getting into the store through checkout, should be seamless.

There are a few more aspects, such as branding, immersive experiences (often digital), and evidence of ESG compliance and commitments (even in the store) that make an impression on customers. The tips above are the basics — you must do those things to remain relevant and to attract and retain customers. The immersive, digital and ESG aspects cater to the emotional value quotient of in-store shopping, part of the social experience which now extends and connects to on- and offline retailing. Online, socially engaged/driven retailing must carry over to physical stores. It’s also important to be aware that expectations of experience can be very different for each customer and can change quickly.

In a story I often tell, a large US home improvement retailer’s CEO (and founder) often spoke in modern-day parables when addressing staff, corporate, vendors, analysts, etc. His point was to convey a way of thinking and acting that helped the staff express the values of the company when engaging customers and each other. One of his most memorable sayings was: “We don’t polish the floors,” and that was, at the time, a fact. DIY stores in the beginning were effectively warehouses with cases of products stacked on pallets in heavy steel racking all the way to the ceiling. Lower down, products were packed onto shelves where customers could find them and made available at an unbelievably great price. For its time, it was a groundbreaking and truly original idea that customers could walk into an enormous warehouse and shop. Every night at closing, the store staff would get out large push brooms, scatter scoops of industrial concrete floor cleaner in their department aisles and sweep the floors. It took about 15 minutes for the closing staff to sweep the aisles and at the end of a long day or shift, it was not a happy task. At an all-hands company meeting, a staff member asked why the company didn’t invest in automatic floor polishing machines and have someone come in at night to clean the store. The CEO, as expected, said “We don’t polish the floor,” then explained why in this way:

“We are a DIY home improvement warehouse. Our customers expect us to look and feel like one. Warehouses have push brooms, forklifts and warehouse lighting, and that’s what customers expect to see and to feel. It also reinforces the idea that they’re getting a price lower than at their local hardware or department store. Polishing the floors costs money, and to keep our prices low, there are things we do and do not do to keep our customers happy and coming back to shop in our stores. It’s the experience and the prices they expect us to deliver.” He was correct.

Thirty years later, after the CEO retired, a new CEO decided it was time to clean up the store and make it feel like an average retail environment. The concrete floors were all cleaned and sealed, and now every day a floor scrubber runs up and down every aisle, just like every other warehouse store. Why did this happen? Because consumer expectations changed as more competitors adopted the “warehouse store” look and other retail segments, like grocery, apparel, footwear, sporting goods and others did too. Customer expectations change, and retailers must stay in tune with those changes.

My particular experience is in the grocery retail industry, and I’m passionate about addressing food deserts and addressing food insecurity. Can you please share a few things that can be done by the retail industry to address the problem of food insecurity?

I think the first step is for companies in the retail industry to partner either at a national or local level (or both) with one or more of the following organizations:

• Action Against Hunger
• Feeding America
• WhyHunger
• City Harvest
• Philabundance
• Rise Against Hunger
• The Hunger Project
• Second Harvest Toronto
• No Kid Hungry

Additionally, work to ensure employees stay engaged with organizations at a local level, and have that become part of the company culture by rewarding employees for their active participation.

Here is our final ‘meaty’ question. You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger.

I would start with grammar schools, teaching students to grow their own sustainable gardens, indoor or outdoor as space allowed. It can be rewarding and fun. Determine how to encourage neighborhood and community gardens, where people share, care and produce. Start small and build on what is successful. We may be surprised.

How can our readers further follow your work?

Connect with me on LinkedIn or reach out to me directly at greg.pincar@fujitsu.com.

This was very inspiring. Thank you so much for joining us!