Senior Advisor, Sycamore Partners
Retail & Innovation
The secret Santas of the holiday supply chain
Oh, the weather outside is frightful—and so is the national supply chain. Thankfully, Walgreens' inventory management team is working on clever solutions to keep your holiday shopping experience as seamless as possible.
Sarah Cason, Walgreens Stories
Empty shelves. Price hikes. Long delivery delays. Shopping this year, whether online or in stores, has been a jarring experience. A cascading number of issues—from COVID-19-related factory lockdowns to labor shortages to inflated shipping container prices—have disrupted the supply chain for months. The bottlenecks in turn have caused headaches for retailers who are accustomed to a steady stream of products flowing into their stores.
In response, customers have gotten a jumpstart on their holiday spending, pushing the supply chain even further beyond its limits.
All this extra holiday season stress is enough to make you think you earned a spot on the naughty list.
The elves behind the shelves
If you picture one shelf in a Walgreens store, can you guess how many different products are on it? Behind each item is an inventory management team member accountable for getting it there. The team itself consists of 42 demand planners, 27 supply planners and 25 data scientists, all of whom are responsible for coordinating the logistics behind different product categories.
“Our team forecasts what our approximately 9 million daily customers are going to buy across 200 million products, and then navigates how inventory will flow from our 4,000 manufacturers and suppliers,” says Kettlewell. “It could mean getting a product on a boat from Asia through customs and ports, then onto trains and trucks to our distribution centers, and lastly into our stores. It could also mean getting ice cream from the local dairy plant and onto its own trucks to our stores.”
One day in January 2020, one demand planner logged on to their computer at the Walgreens headquarters in Deerfield, Illinois, and noticed something strange. Personal protective equipment was selling out at Walgreens stores in San Francisco. Sales on masks were up 500% in a city with a high population of Asian people. He deduced that this could be related to shortages elsewhere, and indeed there were—in China.
Kettlewell could puzzle out that some sort of virus was unfolding because he and his team have spent the past several years sorting billions of data points. They have studied every sale, shipment and consumer trend to create a massive database of algorithms from which they can forecast patterns—and be alerted to changes in those patterns—down to the hour.
Because the team is so tuned in to every component of the supply chain, they are better able to pivot and address the extreme shifts in spending that COVID-19 has caused. Remember toilet paper and sanitizing wipe shortages? It was one demand planner’s job to, as Kettlewell puts it, “pull a lever” within their inventory management system to trigger a different action, like shifting to air freight to deploy wipes and masks to the stores that needed them most. Thanks to their ever-updating database of information, they can be nimble in responding to unpredictable changes in the marketplace.
‘We’ve broken all the rules’
Another pivot Kettlewell and his team have made is to work earlier in the year to plan ahead for big retail moments, like when the flu season returns or the holiday season begins.
“We started planning for flu season and discussing with our cough and cold product manufacturers in April. Usually we don’t do that until July,” says Kettlewell. “We've broken all the rules to keep up with demand.”
Additionally, the inventory management team supporting beauty products began collaborating with their counterparts at Boots—Walgreens Boots Alliance’s principal retail pharmacy brand in the UK—for Walgreens’ 2021 Gift of the Week promotion a full year ago. And now that some COVID-19-related shopping trends seem to be sticking, they have become even sharper at knowing what customers want in advance.
When a partner distributor that delivers frozen and refrigerated foods and staples such as Halloween candy was struggling with its own labor shortages, they became concerned with their ability to deliver candy to Walgreens stores in time for fall.
“We shifted more than 100 candy items into our distribution centers to give our direct store delivery partners some relief. Our warehouses took on the task in stride, and have shipped more than 9 million units of candy to stores to date,” he says. “It’s a network, and there’s not a lot of extra capacity in the global supply chain right now. It’s important to flex and help out when we can to keep our partnerships strong.”
Staffed with 10,000 team members, Walgreens’ 17 distribution centers have moved a record-setting volume of inventory from suppliers to consumers to meet demand this season.
“Every purchase order that comes into our distribution centers gets ranked to ensure that the most important items are flowing through,” explains Kettlewell. “Right now, that includes health and wellness offerings such as vitamins and over-the-counter COVID tests, as well as seasonal inventory. The monitoring, prioritization and earlier ordering help us ensure that customer promises are kept.”
Why there’s no place like Walgreens for holiday shopping
What can customers expect while holiday shopping this season? If all goes well, little to no difference inside Walgreens stores or when shopping online or through the Walgreens app. This is all thanks to top-to-bottom creativity. Regional merchandise managers have formed partnerships with local manufacturers and sought out more diverse suppliers to ensure a range of products will be available, such as toys for children. There’s also greater transparency when it comes to the availability of the products customers are seeking, if it’s something that can’t be sourced elsewhere.
“Walgreens has invested a tremendous amount in our IT infrastructure to help our customers know when, where and how much inventory is available, whether it’s through Walgreens.com, same-day delivery or curbside pick-up,” he says. “These were not things that were available last year. And we will not advertise something to you if we can’t stock it. Our merchandisers are keeping a close eye on making sure we are only stocking products if we can do so with a healthy supply to continue to meet customers’ needs.”
How to have the best holiday shopping experience at Walgreens
All is calm, all is bright—it also works as a mantra to not let the stress of the season consume you. To make the most of your holiday shopping at Walgreens, Kettlewell offers three easy tips for customers:
Working tirelessly to make a certain time of year extra special? Sounds like someone else we know.
In response, customers have gotten a jumpstart on their holiday spending, pushing the supply chain even further beyond its limits.
All this extra holiday season stress is enough to make you think you earned a spot on the naughty list.
Luckily, there are many people behind the scenes and on the ground at Walgreens who are working diligently to analyze trends in the company’s supply chain, predict and forecast inventory needs, and ensure an easy sorting process through distribution centers and timely delivery to stores.
Andy Kettlewell, vice president of inventory management, master data and advanced analytics, took a moment out of his 16th and busiest year at Walgreens to explain how he and his team will keep this holiday season merry and bright.
Andy Kettlewell, vice president of inventory management, master data and advanced analytics, took a moment out of his 16th and busiest year at Walgreens to explain how he and his team will keep this holiday season merry and bright.
The elves behind the shelves
If you picture one shelf in a Walgreens store, can you guess how many different products are on it? Behind each item is an inventory management team member accountable for getting it there. The team itself consists of 42 demand planners, 27 supply planners and 25 data scientists, all of whom are responsible for coordinating the logistics behind different product categories.
“Our team forecasts what our approximately 9 million daily customers are going to buy across 200 million products, and then navigates how inventory will flow from our 4,000 manufacturers and suppliers,” says Kettlewell. “It could mean getting a product on a boat from Asia through customs and ports, then onto trains and trucks to our distribution centers, and lastly into our stores. It could also mean getting ice cream from the local dairy plant and onto its own trucks to our stores.”
One day in January 2020, one demand planner logged on to their computer at the Walgreens headquarters in Deerfield, Illinois, and noticed something strange. Personal protective equipment was selling out at Walgreens stores in San Francisco. Sales on masks were up 500% in a city with a high population of Asian people. He deduced that this could be related to shortages elsewhere, and indeed there were—in China.
Kettlewell could puzzle out that some sort of virus was unfolding because he and his team have spent the past several years sorting billions of data points. They have studied every sale, shipment and consumer trend to create a massive database of algorithms from which they can forecast patterns—and be alerted to changes in those patterns—down to the hour.
Because the team is so tuned in to every component of the supply chain, they are better able to pivot and address the extreme shifts in spending that COVID-19 has caused. Remember toilet paper and sanitizing wipe shortages? It was one demand planner’s job to, as Kettlewell puts it, “pull a lever” within their inventory management system to trigger a different action, like shifting to air freight to deploy wipes and masks to the stores that needed them most. Thanks to their ever-updating database of information, they can be nimble in responding to unpredictable changes in the marketplace.
‘We’ve broken all the rules’
Another pivot Kettlewell and his team have made is to work earlier in the year to plan ahead for big retail moments, like when the flu season returns or the holiday season begins.
“We started planning for flu season and discussing with our cough and cold product manufacturers in April. Usually we don’t do that until July,” says Kettlewell. “We've broken all the rules to keep up with demand.”
Additionally, the inventory management team supporting beauty products began collaborating with their counterparts at Boots—Walgreens Boots Alliance’s principal retail pharmacy brand in the UK—for Walgreens’ 2021 Gift of the Week promotion a full year ago. And now that some COVID-19-related shopping trends seem to be sticking, they have become even sharper at knowing what customers want in advance.
When a partner distributor that delivers frozen and refrigerated foods and staples such as Halloween candy was struggling with its own labor shortages, they became concerned with their ability to deliver candy to Walgreens stores in time for fall.
“We shifted more than 100 candy items into our distribution centers to give our direct store delivery partners some relief. Our warehouses took on the task in stride, and have shipped more than 9 million units of candy to stores to date,” he says. “It’s a network, and there’s not a lot of extra capacity in the global supply chain right now. It’s important to flex and help out when we can to keep our partnerships strong.”
Staffed with 10,000 team members, Walgreens’ 17 distribution centers have moved a record-setting volume of inventory from suppliers to consumers to meet demand this season.
“Every purchase order that comes into our distribution centers gets ranked to ensure that the most important items are flowing through,” explains Kettlewell. “Right now, that includes health and wellness offerings such as vitamins and over-the-counter COVID tests, as well as seasonal inventory. The monitoring, prioritization and earlier ordering help us ensure that customer promises are kept.”
Why there’s no place like Walgreens for holiday shopping
What can customers expect while holiday shopping this season? If all goes well, little to no difference inside Walgreens stores or when shopping online or through the Walgreens app. This is all thanks to top-to-bottom creativity. Regional merchandise managers have formed partnerships with local manufacturers and sought out more diverse suppliers to ensure a range of products will be available, such as toys for children. There’s also greater transparency when it comes to the availability of the products customers are seeking, if it’s something that can’t be sourced elsewhere.
“Walgreens has invested a tremendous amount in our IT infrastructure to help our customers know when, where and how much inventory is available, whether it’s through Walgreens.com, same-day delivery or curbside pick-up,” he says. “These were not things that were available last year. And we will not advertise something to you if we can’t stock it. Our merchandisers are keeping a close eye on making sure we are only stocking products if we can do so with a healthy supply to continue to meet customers’ needs.”
How to have the best holiday shopping experience at Walgreens
All is calm, all is bright—it also works as a mantra to not let the stress of the season consume you. To make the most of your holiday shopping at Walgreens, Kettlewell offers three easy tips for customers:
- Shop early. “People want to celebrate this year! As hard as we are working to keep shelves stocked, it’s safer to do your holiday shopping now, especially for non-perishables or candy.”
- Take advantage of convenient digital services. “When in doubt, shop through the Walgreens app. You can see which store in your area has the items you need, and choose from a variety of ways to have it delivered or ready on arrival.”
- Try Walgreens owned brands. “With more control over our owned brands—from packaging to manufacturing to distribution—customers may see more of these on the shelves, including timely seasonal offerings such as holiday gifts and over-the-counter medications.”
Working tirelessly to make a certain time of year extra special? Sounds like someone else we know.