Is the pursuit of the “perfect” customer experience actually holding brands back from achieving true agility?
Agility requires a willingness to embrace calculated risks and adapt quickly to changing market dynamics. It also demands a shift in mindset, from a focus on rigid planning to iterative experimentation and continuous learning.
Today, we’re going to talk about how brands can navigate the ever-evolving retail landscape by prioritizing agility and leveraging technology to enhance the customer experience. To help me discuss this topic, I’d like to welcome Tom Schmitt, CEO at Radial.
About Tom Schmitt
As Chief Executive Officer, Tom oversees the leadership of Radial North America’s Managing Committee, bringing his strategic vision and operational expertise to our team. Tom joins Radial with over 20 years of executive leadership experience in supply chain logistics.
Most recently, Tom led commercial growth and rigor for Nikola Corporation serving as Chief Commercial Officer. Prior to Nikola, Tom spent 12 years at FedEx and serving as CEO of FedEx Supply Chain; leading Forward Air Corporation as President, Chairman and CEO; leading Canadian parcel and freight corporation Purolator as CEO; and also heading up the global Contract Logistics business as a management board member for DBSchenker. In addition, Tom has served on several Boards of organizations focused on various aspects of the supply chain. Tom holds an MBA as a Baker Scholar from Harvard Business School as well as a Bachelor of Arts in European Business Administration, First Class Honors, from Middlesex University.
Tom Schmitt on LinkedIn: https://www.linkedin.com/in/tschmitt1965/
Resources
Radial: https://www.radial.com
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Transcript
Greg Kihlstrom (00:00)
Is the pursuit of the perfect customer experience actually holding brands back from achieving true agility? Agility requires a willingness to embrace calculated risks and adapt quickly to changing market dynamics. It also demands a shift in mindset from a focus on rigid planning to iterative experimentation and continuous learning. Today, we’re going to talk about how brands can navigate the ever evolving retail landscape by prioritizing agility and leveraging technology to enhance the customer experience.
To help me discuss this topic, I’d like to welcome Tom Schmidt, CEO at Radial. Tom, welcome to the show.
Tom Schmitt (00:35)
Greg, great to be here with you.
Greg Kihlstrom (00:37)
Yeah, looking forward to this talking about this topic with you. Before we dive in though, why don’t you give a little background on yourself and what led to your new role at Radial?
Tom Schmitt (00:47)
Well, thank you. I’m pumped up to be with Radio. I’ve been here only for five months and a few days. still call myself a rookie here. Although this week, actually, I did see my last set of facilities across North America. So at least I’ve been to all of our operations at least once. So I’m a rookie with Radio and not a rookie to the industry. I’ve been in transportation, logistics, supply chain for three decades, including competing against Radial several times. When I was president and CEO of FedEx Supply Chain, I competed against Radial. At the time, it was still GSI Commerce and eBay Solutions. And then when I was at DB Schenker, leading their global contract logistics team, I also ran into Radial. So it’s good to be actually on team Radial versus competing against them. And I’m thrilled to be part of that team.
Greg Kihlstrom (01:42)
Yeah, yeah, I love it. And yeah, definitely. You’re the right person to talk about this, these topics today. So love this. So let’s dive in. We’re going to talk about a few things today. But I want to start with really what’s changing in retail. And certainly there could be a whole show of its own. But let’s talk about consumer expectations. And, you know, that’s certainly they are continually and constantly evolving.
And Radel did a survey recently that highlights this. What are some of the most significant shifts that you’re seeing and how consumers shop and what they expect from brands today?
Tom Schmitt (02:21)
Yeah. So, and you mentioned, Greg, there may be other aspects about what’s changing, which is more an outcome in the context of the political landscape. Also, we can dive into that a little bit later. From a pure consumer expectation perspective, it’s not rocket science. So our survey we recently did, there was a top three that came out. So when I go online and click, I want to have it now. So there’s something about delivery speed. The second thing is when you go online,
you’re looking for something very specific most of the time, you want to make sure it’s in stock. the availability of the product is a huge deal. then, depends on who you are and what it is you’re shopping for. The third item oftentimes is returns. And I was getting in several of our sites this week and it’s fairly common, especially in the fashion, health and beauty, where like, okay, yeah, I’ll just get these three and I’ll try them on and send those two back and then keep this one. So speed, availability and the ability to return certainly are the three podium positions.
Greg Kihlstrom (03:26)
Yeah, and you know, it’s interesting how those expectations in the customer experience and, you know, consumers may not use the term fulfillment or supply chain or maybe a little bit of supply chain because it’s been in the news so much. you know, they they don’t necessarily use the word fulfillment when thinking about the customer experience. And yet it’s become a pretty central component of the retail customer experience.
How do you see the role of fulfillment again, kind of evolving beyond traditional kind of a backend thing that kind of happens and necessary function to really a central component of the modern customer experience?
Tom Schmitt (04:07)
Yeah, I would say ⁓ if you want to headline this, Greg, you could actually say fulfillment is the experience. Fulfillment is the customer experience. Let me actually just take you back a little bit. So two weeks ago, I was in Memphis, Tennessee, which was home to me for 12 years when I was with FedEx. We had a celebration of Fred Smith’s life, the founder of FedEx, and there were probably about 20,000 of us in the FedEx forum celebrating Fred who invented an industry. Fred Smith in his early days with FedEx coined a phrase, the information about the package is as important as the package itself. And this is how online tracking started. Now, if you fast forward from talking in this case, the late 70s to 2025, and this is fairly ubiquitous whether you or I order an Uber or whether we are tracking our Amazon package. It is pretty amazing these days kind of the type of information that you get and the specificity including the proof of delivery with the picture where you see the package that you care about a lot in fact was delivered at 1.57 p.m. before the 2 p.m. deadline and here’s the picture on your front porch where you actually ask for it to be.
And so that level of fulfillment experience is very different from what it used to be. I was traveling this week. I was really looking forward to getting a package last night when I was coming back and was thrilled to see my proof of delivery at 2.57 p.m. and I knew when I was getting home it was sitting in my front doorstep.
Fulfillment early is the experience and a lot of companies going all the way back to this statement by Fred Smith, the FedEx founder to Uber, Amazon and many others in modern delivery. Veo is a good example. The Upstart that’s challenging UPS and FedEx where you can really have your finger on the pulse of your delivery at all times and it gives you a sense of peace, a peace of mind.
Greg Kihlstrom (06:17)
Yeah, yeah, yeah. I love that that phrase fulfillment is the customer experience. And I completely agree with you. You know, you had mentioned that from from the survey, you know, speed of delivery, product availability, free, easy returns are certainly key factors in buying decisions. How are brands taking those that that knowledge and really rethinking their fulfillment strategies? Like, what does that mean for brands that are really trying to stay competitive?
Tom Schmitt (06:47)
Yeah, so it’s a bit of ⁓ a left brain, right brain issue, right? So if you think about our brain structure, there’s the left brain, which is more the analytics, then there’s the right brain side, which is more the passion and the emotions that go with it. So brands obviously somehow need to make both halves of that brain come alive when they approach you successfully. So when you talk about right brain, it’s about the excitement that comes with you getting that particular product, right? Whether it’s the hottest running shoe on earth or whether it’s a fragrance that’s just setting itself apart. But the left-hand side, the analytical side is equally important. This is where, all fairness, it’s good, solid, rigorous process management math. You have to go through the so-called skews, like how many units of different items does this company carry?
Sometimes the answer is one and sometimes the answer is 70,000. In our radio fulfillment centers, we have customers that have exactly one item and obviously several of those or 70,000 different ones. Now with the 70,000 different ones, that math exercise gets a bit harder because it’s hard for you to have tens or hundreds of each one. And so if you go online and you want this particular item in red of that particular size,
and you have a kindergarten full of girls that you, or boys that you want to give this to, you might be ordering 30 of those and they’re going to be out of stock. But for the most part, it’s a replenishment. When’s that point of replenishment when you get down to a certain inventory level, you restock. Opposite, there’s also math in terms of profitability. You cannot fill an entire warehouse with like,
thousands of each of the items because that’s cost of inventory, that’s cost of holding. So again, this is when you how do brands do it? It’s a bit of art and a bit of science. It’s a bit of emotions and passion of is this a super exciting new hot product? And then it’s where the math comes in. Like how do I get this to the customer at the service levels that they expect undamaged, fully intact order accuracy, radio, I’m so super proud. Our team right now is running at 99.9 % order accuracy, meaning when you order from us a thousand times, 999 times, you get exactly what you ordered. And the one time we’re mad about the fact that we didn’t get it right. but this is how do brands do it? They figure out to make both of these halves fully satisfied. They have a process that actually works from a timing perspective, from order accuracy perspective from an in-stock perspective. And then obviously they have to have an exciting brand that makes you look forward to ordering it and getting it and using it.
Greg Kihlstrom (09:36)
So want to talk about I’ve talked with a few other guests on the show about the idea of, you know, peak season and sort of the blurring of the of the lines. mean, certainly we’re seeing other shopping occasions rise throughout throughout the year as well. mean, holiday season is still, you know, very, very important time and lots of activity. But, you know, with demand surges happening throughout the year, what?
best practices would you recommend for brands to manage this? You know, if not always on peak, almost always on peak.
Tom Schmitt (10:11)
Yeah. So a couple of things. One is let’s just deal with the typical good old fashioned peak. And I’m using again, an example of my FedEx days where we worked with all the large retailers and then they had all these ⁓ big promotions leading up to the winter holidays. And then they made all these promises that when you order by December 23rd, you’ll still get them on Christmas day.
And at some point we actually had a summit with the top 15 top 20 retailers in Memphis and we told them, ladies and gentlemen, we actually collectively going to disappoint because the promise is that all of you are making between FedEx, UPS and whatever regional carriers and USPS, you cannot get there. So let’s somehow deep peak this a little bit perhaps create incentives that if you order by December 10, you get an extra 10 % discount. So all of these tactics are still relevant, right? Because ultimately you want to commit and you want to make a promise and then you want to keep that promise. That goes back to that number two item I mentioned, which is the being in stock. So to your point, Greg, what are best practices? So when you’re in the fulfillment business, then you have a large warehouse. There’s a 100, 200, 300 teammates that operate this place. And sometimes during typical peak, this cat is number can be 3X or 4X. So it’s a challenge. You work with a raw class staffing agencies and you figure out kind of how you can compliment for short amounts of time what you have. So this is good, good operations. And again, you do two things. One is you try to deep peak a little bit by some of the tactics I just mentioned extra incentives for ordering very early. And the second thing you do is when you attract most of these warehouses, not all are multi-client warehouses. Not one building is taken up by one customer. Well, if you can figure out to get an online gardening company, if you can figure out to get a company that specializes on swimsuits. And so you basically say, okay, if this is the typical November, December peak for the gift giving kind of items. Can you figure out who we need to attract? Who’s more like in the gardening business? Who’s more like in the swimsuit business? So that you have a blend that actually keeps that level of pickiness in terms of what you have to accomplish in this building slightly more balanced. So this is one good tactic. Now that the world, you have to get 1 % better every single day in whatever it is you do, because the world keeps getting more agile and creates more challenges. So because on top of it, I just mentioned, OK, so we can, if there’s a holiday peak towards the end of the year, we can de-peak it by ordering early. If we can de-peak the building requirements by having some counter-cyclical offerings by some other customers check mark, check mark, these are good things, but then there’s all the sales. We have so many companies and customers that create specific mini peaks. That’s probably what you’re referring to. There’s the summer sale, there’s the spring sale, there’s the fall sale. And that creates extra challenges because you literally sometimes go 20X. because customers, you and I, we are trained towards those things. So we are attracted by these sales to begin with but now the company does it the second and third and fourth year in a row. Well, if you know there’s a June sale, you’re not going to order in April or May. so this thing becomes so predictable that it becomes even more peaky. So what do you do? You flex up and down. You work with world-class companies. You also plan together with your customers. This is where we communicate with two ears and one mouth ⁓ applies to both sides please help us help you. A summer sale, a spring sale, a special something sale may in some cases be a surprise to the consumer. It cannot be a surprise to your partner. This is team sport, right? So if you’re planning these types of special events, this is a joint planning exercise because we can set you up for success or we can set you up to fail with your customers. so I guess when you talk about best practices, deep peaking getting some counter-cyclical brands into the same buildings, and then team sport, partnering, working with world-class partners, but also with the actual brand that you’re working with to make sure that we are in exact block sets.
Greg Kihlstrom (14:57)
Yeah, yeah. mean, do you think that the is the future more peaky or in other words, are there are there going to be more peaks throughout the year or, you know, do you think there’s going to be some sort of I guess what what does the future hold from from your perspective?
Tom Schmitt (15:14)
I we’re not done yet. So when I talk with many of these hot emerging modern brands, these are in many cases, very kind of up and coming creative people with lots of ideas. And these ideas oftentimes have to do with wowing, delighting, surprising. I’m a big Swifty, so I like Taylor Swift. I’ve seen the Eros two or three times. So if you are a
Taylor Swift fan or even if you’re not, you probably are aware of her Easter eggs. Right. Like where she plans all sorts of little hints here and there. And then when you look at them collectively, they make up for the new album. There’s lots of creative brands. There’s lots of minds out there who like a Taylor Swift, like to wow, delight, surprise people. So I don’t think we’re going to get back to steady and boring. I do believe we have to get more and more flexible and more agile.
We have one company that we’re dealing with right now that their mantries get 1 % better every single day. You also have to get 1 % more flexible natural every single day.
Greg Kihlstrom (16:20)
Yeah, yeah, love it. So last topic I want to talk about with you, you you mentioned your five months into your role as CEO at Radial. So still relatively new. I want to want to talk a little bit more about this and you know what specifically about the opportunity excited you and how do you see some of those prior experiences you mentioned shaping your approach to leading the company, both internally with your team as well as externally with customers?
Tom Schmitt (16:47)
Yeah. So I mean, at some point there’s something about the 10,000 hours of practice where like if you’re a world, I’m not claiming I’m a world-class violinist or world-class anything. It does help though, if you’re practicing to a point where you will master a certain skill at a specific level. I write an email to all of my employees every single Saturday. And on the very first, the only exception to that regular Saturday email is
is the first day, my first day happened to be a Tuesday. And so then in that Tuesday email, I told all of my employees, you should expect two things from me. One is good intentions. I’m a well-intending person. I actually want to make a difference for all of us together and the people that we work with. And you should expect a certain level of competence. You should not expect perfection. So we always strive to get closer. I mentioned how operationally awesome this team actually is.
We are industry leading in order accuracy and on time performance. So what attracted me to it? I always loved the story of radio and I’m not sure Greg how familiar you are with that. So have to imagine you go 30 years back to the mid nineties and a young kid called Michael Rubin basically knocked at a whole bunch of world-class consumer brand stores and said, Hey, I can actually create a web store for you. Like, yeah, like you can do what now? And
well, you sell through all these stores, but they actually would, people would go online. They would do what now? They would go online and order and then I can hold these things. can arrange shipping and payment. And he basically was a trailblazer inventing this industry. And so I was very awed by that trailblazing story in this particular way, in this industry, somewhat similar to Fred Smith at FedEx reinventing the way economies work and
there was not a dedicated plane flying around boxes and packages. ⁓ Plane boxes and packages were if there was space available at the bottom in the cardboard section, right? I was always awed by that story of imagining and inventing kind of an industry. then I competed against it in multiple iterations over two decades. And then I got the opportunity to actually join the team. So it’s something that I’ve… Again, I’ve had my 10,000 hours of practice. I competed against them. I lost some, I won some, and I thought, okay, this is a great team to apply my 20 plus years of lessons learned.
Greg Kihlstrom (19:23)
Yeah, I love that. Well, what would your advice be to other CEOs that may be stepping into a new role or maybe even stepping into CEO role for the first time? know, how are how are things different now maybe than they might have been a few years back?
Tom Schmitt (19:38)
Yeah, it’s a good point. So I think there are some things that are almost like table stakes. So when you walk in, no matter how experienced you are, I love using that label. can communicate with two ears and one mouth. early on you are listening to your teammates. are, I mean, you’re doing it all the time, but at least initially soak it up.
In my first ⁓ four weeks, I was on Teams calls and in person with our top 25 customers one-on-one. So this we communicate with two ears and one mouth, over practice that early. So that’s a table stakes. I’ll get to what’s perhaps a little bit different in a moment. A second one is don’t confuse efforts with results. So there’s a lot when you get into something where people go out of their way and show how hard they work. And so this is where they work smarter, not harder. And then are you working on the right three or five priorities? And do the outcomes reflect the effort? And if not, kind of what can I do to increase the impact here? You also third, you make sure that the top five things that the company needs to be doing and the leaders that are doing those things, they are highly built and highly skilled.
in relation to that priority. If they’re not highly built or highly skilled, then you can motivate them on the will side. You can roll up your sleeves on the skill side. But if you have a top priority, we want to go into Canada as an example. But then you have a leader who’s neither built or skilled. That’s leadership failure. I just screwed up. I’m asking them to do something that they’re being set up to fail, fail us and fail themselves. That’s leadership failure on my side.
Some of these things, I think, are table stakes of just open-mindedness. You asked what changed? I do believe, and COVID certainly was an additional amplifier of that, this whole notion of empathy is becoming more important. When you run into a situation where there’s a huge crisis, could be a cyber attack or so, I think there’s always a moment to say, like, this sucks.
Like this is just not, this is just pay-for, this sucks. And ⁓ acknowledging that, mean, oftentimes I think the tendency for us left brain solutions focused people is you walk in and like, and here’s the great answer to the dilemma we have. That all has its place, but there’s something about, we lead with empathy, like, ⁓ this sucks. Like, I’m so sorry. And even when you talk to a customer and we just failed them again,
Right now we are succeeding with them 999 out of a thousand times. But that one time when I talk with them, I’m perfectly fine saying, I’m so sorry. Like, I’m so sorry. We’re better than this. So this leading with empathy, I believe the whole scare and kind of just novelty in a negative way factor for a century long time span now of a pandemic of COVID.
reminded ourselves and each other that it’s okay to be empathetic. We’re tough on expectations, we’re not tough on people personally. We’re saying sorry when we should before we go into problem solving.
Greg Kihlstrom (23:05)
Yeah, yeah, I love that. That’s that’s great. Well, Tom, thanks so much for joining today. Really appreciate your ideas and your insights. I’ve got one last question for you. I like to ask everybody on the show. What do you do to stay agile in your role and how do you find a way to do it consistently?
Tom Schmitt (23:21)
Well, again, the first thing I should say is we strive to get better every single day. We strive to be perfect, but in Nike’s words, it’s a race without a finishing line. I personally, I’m an active person. So I do get my juices flowing by sitting on a bike and just getting adrenaline up. I love music. I confess to the fact that I’m a Swifty but I do a lot of my best work to listening to some of the music that speaks to me and get some more senses going. So between the physical activity and a little bit of a right brain stimulation through music, I’ve got two bases covered here.
