Industries are unique. They have their own culture, values, work flows, nuances, and requirements. They are tribes unto themselves with specific value chains, subject matter experts, certifications, regulations, and customer requirements and expectations. When companies within industry segments seek out technology and data products, they always ask for “your industry domain experience.” There are very practical reasons for staying within this walled garden of experience. While the basics of running a business are common across all industries – IT, marketing, finance and accounting, operations, sales, human resources, government relations – there are industry particulars.
The retail, communications, and agribusiness industries are quite different in terms of operations, structure, and customer base. The retail business is about pushing volumes of product through a physical store and shelf space optimization to individual consumers. The communications (this includes telecommunications, wireless, cable and satellite) business is about Average Revenue Per User (ARPU) for network services provided to individuals, residential and enterprise customers. Agribusiness, which involves the production, packaging, and distribution of food, is a yield-based business with B2B and retail customers.
What do these disparate industries have in common? Location Data!
Craig Bachmann, Principal, ITF Advisors; Alex Coidan, Senior Research Manager, Tesco China, and Vince Restucci, Managing Director, Agri-Data Solution connect the dots between their respective industries. These three industry leaders share their perspectives on the common thread of location data that impact their businesses. While location data tentacles extend quite far, these comments are not intended as an exhaustive view of the connections, but instead a snapshot of some intersecting points.
Location Connection Comments:
Vince Agribusiness products are distributed through retail outlets like Tesco, Walmart, and grocery chains. The meat cuts on the counter shown in Figure 1 at Tesco’s Huaian store in China probably came from 28 different farmers. Do you know where they are, and how to trace back to them? In the U.S. for example, meat sold in grocery stores may come from a single producer or single feedlot. Globally, millions of dollars in daily decisions are tied back to location information that can now avoid mass recalls and a consumer panic.
Alex Meeting your customer demand and cultural preferences is critical to success. In China, each province is a country in its own right and our ranging has to reflect that. But sometimes the farms located in the North supply stores located in the East.
Craig For agribusiness to take advantage of location-based services, a communications infrastructure that supports rural communities is critical to supporting agribusiness’ information technology transformation to improve productivity and cost savings.
Alex There’s a big overlap between the retail and the corporate real estate businesses. Putting a store in the right place is critical. When a company spends $50 -$100 million on the purchase of the land, it wants to ensure a long term ROI on that real estate.
Vince A big global problem in agribusiness is farmland going away. This trend is a result of a number of factors from drought to market conditions to desertification. One factor that relates to site location decisions is the market demand for corporate campuses and condo and home development. Corporate real estate plays a critical role in decisions to take fertile farmland out of inventory.
Craig Delivery of network communication services from voice, video, and data to specific services such as location-based services, and feeding and caching the right media for an on-demand request are all location-sensitive, as are mobile workforce management from field operations to inventory management. As communications networks undergo an IP (Internet Protocol) transformation and move to IPV6, and Machine to Machine (M2M) communication accelerates, tracking of transactions becomes mission critical and will require both front office and back office transformations.
Vince Weather is the critical variable in agriculture; it trumps everything and impacts the supply chain. In addition, agriculture is fuel intensive. Location-based information and services available through mobile devices and information software are critical to assisting farmers in planning more effectively, to manage costs and transport crops from the farm to a storage facility or food processor, and deliver plant nutrients to specific areas.
Alex Mobile solutions can make my job much easier to collect and analyze data on locations on the road. And I’m always looking to innovate with the new data out there if it helps us identify places with potential Tesco customers.
Cross Industry Solutions: The Value Creation Link
A reverse loyalty program is one whereby the store is loyal to the customer, instead of the customer loyal to the store. In a reverse store loyalty program, the store would utilize location data on the source and origin of food, for example to alert customers to any concerns or recalls, thereby creating a proactive relationship with the customer. Providing the customer with their food spend data by store could also help the customer in managing their budget and fuel costs. A reverse loyalty program requires store location information (retail and real estate), the source of the food products (agribusiness), and distribution of the information (communications). Vince Restucci noted, “It’s the use of location to deliver real value back to the consumer as opposed to using it to sell more stuff.” Alex Coidan added, “Every good retailer should be focused on helping the customer. A reverse loyalty program as Vince describes would be an extension of the labeling initiatives currently being undertaken by Tesco stores to provide customers with more information on the source of their food.”
Creating customer experience strategies for converged communications (otherwise known as TV Everywhere, Anything, Anywhere, Anytime, the Digital Economy, the Connected Digital World, On Demand…) is another opportunity for cross-industry data analysis. As the mobile culture becomes the new norm with smartphones, tablets, and GPS devices, communications companies increasingly compete for customer loyalty, and they are all seeking to develop customer experience strategies. These will invariably depend on data analytics and delivering on the time- and place-demands of communications hungry consumers. A cable company in New York reduced the high probability of increased customer churn due to new competition, when it offered free WiFi along the LIRR (Long Island Rail Road) route to existing subscribers. Customers loved it! Craig Bachmann said, “customer experience is the competitive advantage in communications, and where to place data centers and fulfillment centers to support the promoted experience will become mission-critical decisions.”
What It Takes to Connect the Dots
The biggest challenge to connecting the location-data related dots within an organization, let alone cross industry, is skilled people in location-based analysis. There is no shortage of people trained on geospatial software. However, there is an incredible gap between business process and technology understanding. People who know how to create and apply location solutions to business problems are needed. “It takes years to train people in-house on the business intelligence of location decisions,” said Alex Coidan. Universities are not meeting business needs in this respect.
The other big challenge is industry and organizational culture. Agribusiness is 20 years behind other consumer packaged goods business when it comes to adopting information technology, according to Vince Restucci. While there is a demand for improved asset management, farmers don’t like to be tracked, so there is a cultural stigma around location-based information. In the communications industry, there is a rate base and 100 year embedded culture to overcome.
While retail and real estate are inherently location-based businesses, many managers and executives in other parts of the business do not have location-based KPIs and therefore resist adopting a location-based view to management. All agreed that demonstrating increased revenues from location-based analytics is the fastest way for management to embrace change.