Zebra Technologies Corporation (ZBRA) Earnings Call Transcript & Summary

So looking ahead Siva, as we transition our models and our forecasting process to sell-through-based forecasting, I think we really have a game changer on our hands, because we'll be able to much better since the shifts that are happening in the marketplace. And with that, we'll be able to much better respond with our inventory strategies and delivering inventory to our customers based on the shifting trends that we've gone through in the last 4 years, but we'll continue in the years ahead.

And that's an important point that people contemplate with often, which is, what is that I'm even forecasting, right? Am I forecasting the true customer signal or the translated signal to which I need to prepare my inventory, right? There is this constant ongoing debate about the forecasting philosophies of sell-through and sell-in, you as a manufacturer, it's more relevant. But still, if you have a distributor channel, do I take the distributor's order as a source of truth for me to forecast, or do I take the final sale and the real consumer consumption as the source of truth for me to forecast. The answer at 30,000 feet looks straightforward. Obviously, you need to forecast the consumer expectation or what the consumers want from you. But the way the value chain works, the way the supply chain works is incredibly dependent on how the distributors or how the ordering parties order? How did you go through that transformation, from saying, telling someone that, hey, you need to believe in the consumption number, you need to align your inventory to that?

Yes. I think the change management process has been super intricate, Siva. And I would say not all channels are ready for such a shift. So I would say, the more mature markets where you have a lot of data available, such as our department stores or the online channels, you can really make a shift like that, whereas the channels where there is more inventory in trade, it becomes more difficult. This is more the emerging economies. It becomes more difficult to shift to a sell-through forecasting approach and we stay with the sell-in forecasting approach. Now if you look at going through this transformation as a whole, right, it also becomes important to really connect with the customer-facing organizations, right? Because there are the targets of the organization, right, are critical to manage there. Yes. So it's quite an intricate dance, I would say.

It is an intricate dance and forecasting oftentimes people would be expecting, when are you going to talk about the algorithms and what algorithm worked and what did not work. To me, I think to a great extent, you'll also agree. The algorithm is the easy part, right? Yes, the data availability and so on and so forth are important. But the algorithm on getting the technology work is the easy part in any forecasting journey, oftentimes where we struggle, and then we went through this journey 5, 6 years back with Estée Lauder, and even today is, how are people adopting this, right? What is the metric? Is it as simple as is it made or is it some other? What is the baseline? Am I comparing it against what the customers are buying or what the distributors are ordering, right? And what is the incentive structure? You can forecast all you want, at end of the day, towards the end of the quarter, inventory gets pushed.

Right.

Right? Do you stick to the version of the truth that it got to be and then take a hit on the forecast accuracy, or do you just follow the curve and then say, you know what, I expect inventory to be pushed towards the end of the quarter, that's the behavior I might as well forecast it, right? So there are several such trade-offs that makes the forecasting initiative like this, be it for supply chain, be it for merchandising, successful or not but very, very often, we talk a lot about the technology and the feature function of the technology. And that's why I think there are so many projects out there even with good technology, doesn't end at to be a success, because people often overlook the complexities involved in these decisions. So tell us a bit about how do you measure whether it is a good forecast or a bad forecast? How do you measure a plan and adoption? Is the plan is willing to take the numbers? Or do they have better numbers?

Yes. I wanted to come back on a point that you just made, is I do believe that this sell-through-based strategy can only be delivered through technology, right? Because finally, our company needs a sell-in forecast to set inventory targets, right, and guide the markets on where our revenue expectation is, right, where we believe that sell-through is the purest form of consumer demand, right? So making this translation from sell-through to sell-in can only be done through technology. Manually, is almost impossible, right? So we had to implement this technology to make this shift, first of all. Now second, this transformation, together with our -- we do this together with our local partners and our local sales organizations, I would say, that we do the execution. And it's a big mindset shift to forecast sell-through versus sell-in, right? We've always, as a company, forecasted sell-in. And now we're moving to a sell-through signal. So there's a big change that we need to manage there. Then to your question, Siva, how do we measure if we are adopting stat to the right level, we've had to implement numerous but also simple to understand metrics so that planners can actually know what to adopt out of this stats, and where do they need to enrich it themselves to achieve the best possible results for the company. And I think that's really the journey where we're on today. As we're growing the accuracy of the stat together, right, my data science team, together with Siva's team, we're also working on where do we enrich that AI forecast, right, so that we can elevate the forecast accuracy for the company as a whole.

That's an important point. And I think it's a good opportunity to also talk to the audience a bit about the technology, how it works and then how it integrates with it. So you have a planning system that you use, right, which is the consumer of this forecast, right, and then which does subsequent inventory and other things. And the forecast itself is generated by Zebra's demand intelligence software and then passed on to the planning system. And here, there is an important question of forecast value add by the planners, and we get this question often, right? Do we want our planners to go through the millions of combinations that are sitting there and then revert the forecast that's generated by an AI model. It looks counterintuitive to force someone to do it until the AI model comes with a stupid answer and then you end up making a wrong decision, right? Then it becomes incredibly hard to say that you look at all million combinations or 50 million combinations in your case, versus some selective part of it, right? So how did you go about deciding which part of it is no touch for the planners and which part of it, there is an opportunity to enrich to come to a better forecast?

Yes. So one reason that we implemented this technology is because we had to save time for the planners, right? So our initial approach was just to adopt the stats for all our C&D items, our low runners. They're adding the bottom part of our revenue, right? The stats in the human forecast are, or manual forecast, I would say, the accuracy is more or less the same, and they're by far the largest part of our portfolio. It's the entire till. So why spend efforts manually forecasting these if you have a machine that can do it for you with the same result. So I think that was the first step that we made in our adoption journey. The second step that we made was we started to measure obviously, the difference between the automated AI forecast and the manual forecast. And wherever we saw that we were adding cycle-on-cycle and negative enrichments, right, or we were making this stat worse, we decided or we implemented a process that planners could simply just adopt the stat forecast with one click. And we would adopt to step forecast in our final forecast and with that, eliminating the negative value add, as you call it, in our forecasting process.

Great. So we would like to keep a few minutes for the questions, at least a couple of questions. So walk us through the results that you have seen through the year and tell us the significance of the numbers that we are seeing because a number can be misleading, right? You will -- when you walk down the aisle here, you will see people saying 30% better forecast, so on and so forth. Walk us through this a bit.

Yes. So over the last 2 years, we've seen our demand forecasting accuracy. It's a mix accuracy, we call it WFA. It has grown with 9%, and we mentioned this at a lag 3, which is, I think, an industry standard. So the mix accuracy at lag 3 has grown with 9%. A lot of this growth came from our Western markets, North America, Europe, Middle East, Africa, these are also typically the markets where we are able to transition to a sell-through-based forecast, whereas, as I mentioned in the beginning, we're still in our road map ahead, we're heavily focused on predicting, let's say, the rebound of the Chinese traveling consumer. And I think a couple of other things that I'd like to mention here is that new product forecasting is always a challenge, especially when you try to forecast items that are completely wide space, right? So you don't have a predecessor that you can take the trends from and it's completely wide space. So besides forecasting for emerging markets like China, we're going to put a heavy focus on new product introductions, right, and get a right forecast there. Our company brings about or turns over about 30% of its portfolio every year, right? So new products are a big part of our mix. And as we just mentioned, we're going to further drive our forecast evaluation, make sure that we only enrich the stat forecast there where it adds value and make sure that we stop detracting value from the stat or from the AI forecast. And we already see some very promising results there. For instance, in North America, that was our first global market that went live with this planning solution. We achieved 66% mixed forecast accuracy just last month, right? So at like 3 with a huge SKU complexity that's some massive, massive results. Our North Star is achieving a 70% forecast accuracy for the entire company. So North America is tracking well to that goal.

I want to say this in context. 66, why are you celebrating could be for that industry with that sheer complexity where you have 50 percentage variability month-on-month on the demand, right? If the demand is 50% next week, it's -- next month, it's 25%, and then it rebounds to 37.5%. So there is literally no method to the madness and 66% is incredibly powerful while the North Star is 70. Thank you very much, Frank, for this. We have 4 minutes. Maybe we can take 1 or 2 questions -- there is someone who is walking around with a mic or if you're loud enough, please put your hand up and then ask the questions, please.

My name is [ Adriana Kuri. ] I have a question because working in the [indiscernible] industry for a long time, and I can see the complexity for managing so many different brands with different innovation patterns and every brand manages their innovation differently. How do you plan or how do you start the implementation process for AI because I know you use data and predictive analytics. But then the next step is to go on a brand by brand or category by category basis. And then perhaps it comes to you globally. How do you manage the complexity and how would you start working on that to get to that global umbrella?

No, we will repeat the question. The question is, how do you go about starting with AI? What is the approach you will take? Do you take a brand-by-brand approach? Or do you take a big [ bang ] approach to rolling out AI in an organization given how complex, the beauty industry is.

Yes. What I would say is start with the beginning and not with the end. And what I mean with that is we started with the ends initially. So we wanted to go to sell-through forecasting from day 1, right? Because we knew that was our end game. For the organization that was way too difficult to make such a big step in 1 go. We're talking about hundreds of planners, right, around the world. So we had to really scale it back and start with a forecasting solution that was as close as possible to what we were doing manual at that time. So we really started to forecast shipments, right? That we were making to our vendors. And only from there, we really had a crawl-walk-run approach that finally brings us to a sell-through-based forecasting for the most mature markets, I would say, start with that. Then the second piece is, I would really encourage region by region, I would bring in region. All regions bring them in, look at a -- we see great trends at a channel level and at a major category level, right? And governing this at a -- through a global organization, right? So we've built all our processes globally, which we then implemented locally. And the strength of a global forecasting process is that you really drive results much faster than when you would implement this at a local level, region by region by region.

I think the important point there for me is, Frank, particularly when our technology is as complex and transformative as this do not bring about too many changes at the same time. Do not look at this as 1 big project, let's get to the end state, and we cancellate a whole lot of problems. So we -- we had the technology work for where we are and then went about the process transformation, which is a much bigger leap. Otherwise, people are going to mix the technology issues or the process issues and we're going to get whole a lot of pushbacks. Any other questions? We have one more question here.

So my question for you is, I know that it has typically been a challenge to work with retailers on getting their point -- it's been a challenge to work with retailers on getting their point-of-sale data for does it sell-through forecasting? How have you gotten their engagement? And what are some of the challenges that you faced?

Yes. So good question. So if I look at our global markets, right? I would say that -- in North America, we have a couple of really big retailers that we work with, and they were ready to offer the POS point-of-sale data and we actually had this already ongoing in our organization. In China, the business is quickly transitioning to a more online model. And there also, they're very willing to share their point-of-sale data. In Europe, where the retailer landscape is much more disintegrated and spread, I would say, is much more challenging. What I do often find is that they're willing to provide this information as part of a negotiation, right? Either for money or for something else? And what you can also think about is service levels, right? That are improving priorities and allocations, those type of things.

Excellent. Thank you very much, Frank. Really appreciate your attendance today. Thanks for being a great audience to say your time. Appreciate your time. And we are going to be here for a few minutes. If you have any questions, if you want to grab either of us, we'll be happy to talk to you. Thank you.

Well, happy Sunday afternoon. Welcome to the big idea session, how Office Depot is creating a modern store experience. Just first, a couple of comments before we get into introductions and the rest. This is my 15th NRF, and I love this show. It is like CES for retail -- and I actually have a few questions. Does anybody travel back from CES to New York? Yes, lots of hands, especially over here, your dedicated technology, maybe technology nerds, geeks like me. So that's awesome. So 2 things -- anybody have me beat 15, any more than 15 years, more than 15 NRF, no way and so old. Okay. I love this show because it's refreshing every January. It kicks off our year from a sales standpoint. You get to see new technology that you've never seen before, things like the modern store and others. And it's just exciting. It's invigorating and I love the energy here. So welcome. Number two, football, any Packers fans in the audience. Yes, a few, quiet ones? Any Cowboy fans a few quiet ones. So the good news is this session will not come close to eating into your football watching time, your game is coming up. I feel like I've seen the Packers and the Cowboys play each other about half of those 15 NRF. So anyway -- my name is Kevin Tapscott, I'm the leader of the Global Solutions Center for Zebra software and I get the distinct pleasure and honor of introducing a marquee customer in Office Depot. And in just a moment, you'll hear Kevin, Alex and Jonas tell you about their modern store story and the value that they've realized along the way. But first, perhaps some context. The modern store is Zebra's framework for retail now and in the future. You may know Zebra as the global leader in mobile computing or printing or RFID. What you may not know is that we made over $1 billion investment in software and solutions over the past few years. And with that investment and a lot of hard work, we've seen a multiplier effect here at Zebra and that multiplier effect is the modern store. So -- and I'm falling behind in my slides here. So I'll get with the program. I got so excited about football, I forgot about the clicker. The modern store delivers 3 key outcomes for our retail customers. Engaged associates. You'll hear listen closely, you'll hear Alex talk about engaged associates, optimized inventory, you'll likely hear Jonas and the entire team talk about optimized inventory an elevated customer experience. Certainly, you'll hear Kevin, Alex and Jonas talk about the effects of Modern store on elevating their customer experience. So with no further ado, it's my honor to introduce Kevin Moffitt, President of Office Depot; Jonas Stillman, Senior Director of e-com for Office Depot and Alex Powers, Senior Manager, Communications culture and engagement for Office Depot. So Kevin, why don't I turn the stage over to you and let's get going here. All right.

Hi, everybody. I'm really excited. So Office Depot is headquartered in Boca Raton, Florida. Anyone ever been to South Florida? Raise your hand if you've been to South Florida? Have you ever seen it snow in South Florida? Anyone? But that's why I have 7 layers on right now -- really excited. I'm not sure why NRF takes place in New York in January. I'd like to start a survey with all of you. If you could just leave -- and your feedback and your comments post event, just recommend that we move this whole event down to Boca Raton next year. Are you guys okay with that? Anybody a big fan? Does that sound like a good idea? I'd love to have you all down to my neck of the woods. Then we'll come up here in the summertime. I think that would be a great exchange. Don't you I have not been to NRF since before the pandemic actually. So it's been a few years. And after 25 years in e-commerce and 18 years in omnichannel retailing. It's always exciting to see the innovation. What I've taken away already from my experience so far, just wandering around is that it seems like retail is still a thing, apparently. It's a pretty important thing. And it's an exciting thing. There's tons of innovation going on. And what I find in these conferences, particularly here at NRF is that most of you will fall into 1 of 2 categories. They're the business, sales, marketing people and then there are those of you who will be able to identify the symbol on my socks. That's for you, Jonas. What do you see? You say -- got it. Jonas is the world's biggest Star Trek fan -- and no coincidence that he's also one of the world's leaders in omnichannel technology. I think this is the first time that we're presenting on stage together. So really excited to do that with you all. It's a big year for innovation in retail, but it's a big year for innovation at Office Depot as well. About 18 months ago, we announced a restructuring of our organization into 4 business units. One of those business units, Office Depot is the area of the company that I'm responsible for and that Alex and Jonas works in -- for the first time in the 30-plus year history of Office Depot and the ODP Corporation, we've combined our public e-commerce business with our store-based retail business to create a truly omnichannel specialty retailer. And it's a long time in the making. And just as Zebra has talked about some of their areas of innovation we've rolled out strategies for success at Office Depot as well. And 3 of those are focused on revenue growth. And those 3, you can see on this very nifty Atom chart that Alex created for me, thank you. Really starts and ends with the customer. Now raise your hand if you think your organization is a customer-centric organization? I hope to see a lot of hands at least that you aspire to be. How about that, a customer-centric organization. There's a lot of challenges to that. And today, there's more data available than ever before and yet the industry is changing so quickly that some of the data that we've come to rely on is becoming limited or not available at all. And so we have to really change our perspectives on what it means to be engaged with our customers how do we connect with them? How do we continue to drive the experience when they're not physically present in our stores or interacting with our digital ecosystem. And it's really required us to think differently about the overall omnichannel experience. And a lot of the tools and technologies that you'll see displayed here on the floor today relate to that exact challenge. How do you remain relevant? How do you increase customer loyalty? And how do you attract new customers in an incredibly dynamic retail industry that we've seen just explode in change in innovation over the last 3 years? The second area is assortment innovation. And I think it's really important that every retailer continues to challenge themselves to develop and grow their assortment over time. But certainly, in the space that we serve, which is core office supplies and related services and products, the whole world of work has changed. Raise your hand if you work remote or if you're a hybrid worker, if you work from home, at any point? Now keep your hand up if you used to work from home at least 4 years ago? So that's a big, big change in just the number of people who are working in new and innovative ways. And frankly, their challenges today are very different than what they were looking for from an Office Depot 4 years ago. And so our omnichannel platform, we believe, is critical to how we can connect to those customers and ensure that we remain relevant even as their needs change. I think many of you have experience working from home. You're now your own IT support, right? Who's had WiFi challenges in the last 3 or 4 years? Right? Who's -- how to figure out how to get their printer working or how to send a file to that printer. Okay, here's a good one for us. Who's been uncomfortable sitting in their dining room chair that you've used as an office chair for a year at a time. Those are the challenges that many people are facing, and they're looking for help in solving those problems in new and different ways. And so our omnichannel platform, the connection between all of the assets that we have available to us to provide a convenient, seamless robust positive and friendly experience for our customers truly becomes the differentiator as we look into the future on how we, as an organization, will continue to be relevant in our customers' lives and help them solve problems. What's really important to me, though, is that all of those strategies rely on the foundation of operational excellence that the team has really focused on over the last several years, and we are now reaping the rewards of the investments and energy we've put into those operational components, capabilities, processes and resources to really ensure that everything I just talked about actually happens in our stores every single day. And I'm really, really excited to turn it over to Alex and to Jonas to share more of the details of what we're working on to bring those strategies to life. Alex Jonas, over to you.

Thank you so much. All right. So Kevin talked about operational excellence and a big part of what we do is tied in. And then obviously, for our clients, we have this really unique opportunity to be dream makers. We're here to support our clients and make sure that we can help their personal, educational and professional dreams come true. It is my pleasure that my mission is to support our associates in supporting that mission and enable our associates to grow professionally, grow in their careers and become true advocates for our company and our culture. So go ahead. Just a quick number on the screen. Does anyone want to guess what this number represents? Yes. So this is the number of associates currently in our retail stores across the country. And this number is very important to me because this is over 12,000 unique ideas, unique perspectives and unique opportunities that we have the pleasure of leveraging to continue towards operational excellence. It is my job to ensure that those 12,000 associates can keep on target. I did not have the approval for a budget for an X wing. So we went with the next best option, which was our partnership with Reflexis, now Zebra. So journey back with me, if you don't mind, about a decade ago. This is a very young Alex, who's obviously very excited about her first day at Office Depot, excited to hit the ground to running. And this is an artistic rendering of my reaction when I found out that a big part of my job and now consisted of pulling activity data off of a homegrown tool individually, exporting it into Excel, breaking it down by district, by region and then e-mailing it out to each field leader opportunity. Obviously, a little stressful as the process was posting a task, reviewing the results, exporting the results, sending the results and then waiting for an impact. So we really wanted -- Kevin talked about operational excellence. We had an opportunity to find efficiencies that made our team more productive and helped facilitate that productivity in our stores. So in 2015, we joined the Reflexis now Zebra family with the rollout of a combination of the task manager, RWS and the task scheduler, what we call internally our activity calendar. So in 13 months, we went from start to finish. A little bit of bragging rights for us, actually the fastest rollout in their history. So very proud of that, a very successful rollout. So we went live in 2016 with this tool for all of our associates in the field.

Alex, a quick question -- sorry to interrupt but when you completed your implementation, what was the impact to your team and then the program managers team maybe it was a big impact there? Just elaborating on.

Well, Internally, obviously, my team was very happy, as you saw from that artistic rendering we were looking for ways to make our lives.

Alex is smiling more. I can...

I was smiling. In fact, if you want a true definition of how happy it made me, I actually married the associate who helped to roll this out.

That's a true story.

To be clear, that is not recommended from an HR perspective. I want to make sure we're disclaiming that.

That's just how much I appreciate process improvement.

Zebra bringing people together, one project at a time.

I may have a task manager for my home as well. But when we talk about then we implemented version 17 in 2022, which is the platform that's out today, -- we did sell through a lot of different tools because change management is always a large hurdle for any business. We are very proud of how this change process went in our stores, and that's because we have the right tools to make sure it flowed properly. So the new user interface is easy to interact with, which makes training much easier -- and in addition, we published a step-by-step training guide, we hosted a live training session that was then available. We reported it broken into chapters. That is now also available as a resource on the Zebra mobile device. So if associates have questions day to day, not only is the tool that they're using in the palm of their hands, but the questions -- the answers to the questions that they're facing is in the palm of their hand as well. And we were very proud of that because especially as the person who answered the tickets, we rolled out and I only received 4 support tickets after a launch, which made my inbox very happy and made me very happy. Wanted to talk a little bit about some of the major benefits that we've seen in version 17. So one of the big ones has been for field leadership. So obviously, monitoring the success of several stores that sometimes can be 10 miles apart, 100 miles apart. It can be tedious, it can be daunting. So with the upgrades of V-17, our field leaders now have access to clear, accurate, timely reporting and could now set up a watch feature, which means that every morning, they're going to receive an e-mail for some of the most important tasks that may be on their schedule with a synopsis of your 40% compliant, here are the stores you should follow up with. So by having that, it really helped increase that adaptation, increased efficiencies in our stores, made sure that things were being done right and on time. In addition, a new perspective. So everyone learns differently. Some of us are more tactile, some of us perform hearing things out. Now the upgraded system, it sounds so simple, but it went from having a really long list of tasks to a view that provided a GAN overview and also a calendar view. And what's nice about that is for my team, we are able to assign tasks to our stores based on operational departments. So it can be logistics, it can be planogramming, print departments. And for our general managers to be able to view everything that's coming up at a time frame that they have selected -- that now ties into the integration that we have with workforce management to ensure that our managers are scheduling the right people at the right times with the right resources. So not only did that help increase our operational efficiency when it came to task compliance, but it also helped bring up our scheduling efficiency.

Yes, Alex, I'll interrupt you again. You went through a full UX change and new UX is awesome, but it's changed after all. What was the response and the feedback from the field after the new UX change?

So the field was delighted. Like I said, a long list of activities where you have to click into each one to see the details, the timing, that can be very overwhelming and we found out -- we traveled to a lot of stores and there were times where I sat in with managers and watch them right the timeline from tasks onto a calendar. And -- so when we talk about operational excellence, that's not it. So the field feedback of not only some of our managers, but also from our hourly associates, to be able to look at your mobile device and see which tasks your manager has assigned directly to your role. It helped take away a lot of role ambiguity and also help with professional development as well. So if you know that one of your associates completed certification in the department. They may not be in. The scheduler shows you that they're now certified in print. So now you can assign something to them, but maybe they didn't have access to before.

Perfect. Thank you.

So we wanted to talk about some examples of ways that this tool has helped our team and saves my personal sanity during COVID. Obviously, we all experienced the pandemic and the massive changes that this had to retail. One of the craziest parts of being an essential business was that every state, sometimes every city, every county had very specific rules -- and in order for us to keep our doors open and keep providing solutions to our clients, we needed to meet those rules individually by market. So for example, COVID signage and mask signage that went on the doors kind of became a creative game of guess who, if you're wearing your hat and you have glasses, you have to wear a mask, if you're 5 and over, you have to wear a mask. So it was hard to keep track of. But thanks to the task manager, we were able to upload location-specific signage for those states, for those counties and ensure that just one quick click every store manager was able to print the correct signage for their market. So that really helps keep us up to date. Also, we made a lot of changes to how we operate at our stores to make sure that our associates were safe and our customers were safe and mostly that everyone felt safe and had what they needed, especially when it came to cleaning supplies to keep their own small businesses running. So by doing all of these tasks directly through the activity calendar, we were able to track that compliance, and it provided a lot of hard ROI that we were able to then reinvest into creating more of the modern storefront. In addition, credit cards are pretty important in this industry. If you can't accept credit cards, probably not a great sign for retail. So our PCI compliance, it's very important that we keep up with that. We used to have a process that was very paper-driven where managers were printing out a survey going around inspecting all of their PCI tools in the store, all their payment card, readers, submitting a paper survey, scanning it, emailing it, very tedious, not efficient. So with the help of the task manager, we were able to create a simple tool that they could do directly on the handheld and the Zebra device, go from workstation to workstation. The market is complete. And if there was an issue, connects it right to IT. So that we were able to not only track compliance, but if we had an issue, we were able to resolve it quickly and ensure that each customer using a credit card could do so safely. So you talked a little bit about feedback, and I wanted to make sure that everyone had the opportunity to see multiple perspectives. So I have the pleasure of working with a variety of associates across the country. And I wanted to make sure that everyone from field leadership down to an hourly retail associate felt like they had the right tools. And I think the old adage of the customer is always right. I don't think fits the retail environment that we're in anymore. You don't read a great customer survey that says, "Well, I went to the store today, and I was vindicated and I feel like I was smarter than everyone in the room -- agree customer experience comes from coming into a store and knowing that you met with the right person, who knew the right information and had the right tools to provide you with the right solution. So I think with that being the new future of retail, when you look at customer and associate comments saying that my to-do list was overwhelming, and now I'm able to manage it and prioritize the tasks I need to get done while balancing the priority of a customer experience really helps create that modern storefront that we prioritize and prioritize operational excellence. In terms of tools, so the resources that we had available really helps make that training more robust, but also easier to digest. So the Zebra Knowledge Center has been critical for us in developing a lot of our training. It's also taught my team, a lot of tips and tricks. There's a lot of information in there. So it kind of creates a curated menu of materials that we need in order to create training for our associates. In addition, I mentioned several times our handheld device. The integration of the Zebra mobile device not only the employee self-service app, which now lets associates check their schedules, submit times off, pick up shifts, helps our associates to be far more efficient as well as balance that work-life balance. Geofencing makes HR very happy because now you're making sure that people are doing the right things while they're in the right location. And then, of course, like I said, the task execution increased significantly. But very importantly, we have a best-in-class 20-minute BOPUS, so buy online, pick up in-store promise. And that would be much harder for us to achieve if it wasn't for the fact that our associates were able to immediately see, review, pick and complete an order right from the palm of their hands.

Alex, I'll enter up one more time. At Home, is there Alexa and Alex, does that ever?

It does happen.

With the Knowledge Center, was there -- maybe you can comment on any effect on training or adoption or expanded capabilities that the employees had tips and tricks, things along that line?

I know the tips and tricks that my team took away, I think, have been the most influential and keeping us productive simple things that you wouldn't think of day-to-day -- I mean, we all use copy paste in our business. The fact that I can copy paste an activity because retail is cyclical. We know we're going to have this coming up. The holidays are coming up. The fact that we can refer to tasks that were successful in the past and not start from scratch, to use what will work, throw away what didn't and keep that process going. Those are small tips and tricks that we've found in the knowledge guide and things that possibly you wouldn't know of today. So simple things like that, building different distribution lists, assigning tasks by state. All of those kind of little tips and tricks really help keep my team moving quickly. And what's important there is it gives us more time to focus on process excellence, which in the end, benefits our associates. Our team motto, which we live by every day is that our customer experience will never exceed our associate experience. So everything that my team can do to make our associates happy, not only does it contribute to that retention, but it builds our NPS. It helps us grow sales and it leads us to where we want to be as a retailer.

That's awesome. Thank you.

So I won't go through all of these numbers, but at a glance, they're very impressive and we're very, very proud. So not only have we increased our execution compliance, but our on time task compliance. And a lot of that has to do with the different views that I was showing you on the calendar -- simple things like what I know overdue task needs to be followed up on, it turns red, follows up. So just little changes like that and a much better UI, have really helped drive these improvements and numbers. when you look at going from a 52% project execution completed on time to the 80s now where we are now in the '90s, that means that our associates are completing the task that they need to and now focusing on that selling experience. Like I said, we are now at 97% tax completion as of last -- not last year, but the prior year. And in addition to that, we increased our on-time compliance by 42%. All right. And with that, I am going to hand it over to Jonas Stillman.

All right. Well, I see a lot of old friends. I see a lot of new friends in the audience, but we're all friends, right? We'll see how this goes. Kevin. Kevin's like I'm not sure where this is going. I'm afraid now. So Kevin, we've already had a couple of Star Trek and Star Wars references in this presentation, but I'm going to give you a couple of more. So I need everyone to do me a favor and close your eyes because I'm going to take you to a far away Galaxy long ago. Close your eyes, and I want you to think about retail. Has it changed over the last several years? So think back 5 years, maybe 10 years, where you have stores that have very limited technology or the technology that you have is continuously not working. It's downtime is high. You have store associates that are printing reports in working tasks off of those reports. You're working negative on hand. You're working missystem-outs, you're doing logistics, but you have all these other busy tasks that you have to do that your front line is telling you over and over and over again, this does not make sense. This is not value added to our business. Why oh God, why corporate are you making me do it? These were the questions. Our associates were asking us, and we weren't doing a really good job of listening. We needed to understand what was happening. We had an imbalance. We invested into what Alex just described. We spent a lot of money on switching over from our previous Excel-based system to tasks cloud, to work cloud, what used to be called Reflexis. But we still weren't taking full advantage of it because we were not giving the associates, the tools they needed and the technology they needed to execute. One of the first things Kevin did when he took over retail is he said, "Jonas, you got to fix this problem. We're spending way too much time on nonvalue-added tasks that aren't achieving our core objectives -- which is helping our customers, helping them find solutions, helping small businesses get started, helping customers in our copy and print centers. Why weren't we doing all those things? Because we were doing busy work. We were doing non-value-added tasks. We were doing a whole host of things we designed in 1999 and didn't change for 15 years. Sound familiar? This is happening. This is out there in the industry. I talk to retailers all the time. Even today, we're at the booth over at Zebra Technologies, and we're still talking to retailers asking us, how do we get off paper-based processes? So what I want to -- you can open your eyes if you haven't already. People then fell asleep -- you told me to close my eyes, I fell asleep,

Just flew in this morning. Dangerous thing...

I know I heard it was bumpy on the way in today. So I want to talk to you about what was the tail end of what Alex talked about, okay? Step 1 was we had to modernize our task management. We had to modernize our workforce management. And I wanted Alex to not go home crying every day because she was managing tasks for the chain in Excel. So we did this. We rolled it out and we realized the next step is the technology in the stores. Way back then, our stores were using legacy Windows CE and/or iOS. We had a mixture of devices. The diaspora of different application we had -- different applications we had never spoke to each other. They were not integrated, and they weren't very usable. The whole point of building mobile applications for your team is that it's usable. Who was a smartphone? Every single person in this room has a smartphone, every single one of you. Do you read a manual when you buy your smartphone? Does Apple give you a 400-page booklet on how to use this? Does Android give you a 400-page booklet on how to use your phone? No, it has to be intuitive. Why couldn't we do the same for retail? Why couldn't we do the same for our frontline associates or as Zebra effectually calls, the Edge. Our Edge associates who are out there every day executing the task. So what we did is we did a full review of every process we do in the stores. And at the end of that work out of it, it was actual a [ gene ] style workout event where we wanted to take a look at everything we did. The common theme that came up at every single breakout group was we need the technology to enable us to make this happen. You go into other retailers and they have technology to enable logistics. To enable processing of picking orders for Buy Online Pickup in Store, to enable pricing and presentation. We wanted to be that retailer. We wanted to be the retailer that was best-in-class. Our Buy Online Pickup in Store promise is the best in the industry. We can pick any BOPUS order in 20 minutes or less. And I know Kevin challenges me because we need to get that even smaller. There is no other retailer in the United States that can do that nationally. There's a few that are trying it regionally. But there is no other retailer in the United States where you can go to officedepot.com or go to their website, do a BOPUS order, and that order is ready in 20 minutes or less. And we're so confident we can do that. We'll give you a $20 coupon if we don't make our promise, $20 here, go spend it in our stores or online. That's how confident we are. And you know why we're that confident? Because we built out processes on the 7,000 devices that we deployed into the stores, through the investment that Kevin allowed us to make when we proved, we needed to get to the next level for omnichannel retail. So back in 2019, after we had rolled out Alex's project, with our -- with the early version of Reflexis, which is now work Cloud, we rolled out 7,000 Zebra TC51 devices to our entire chain. We wanted a one-for-one relationship of device to store associate. We wanted to put the power in their hands to make it right for our customers. We wanted to put the power in their hands to ensure that they were able to execute efficiently and on time and value-added. Because when you only are doing value-added tasks, the end result is always the same thing. You are able to spend more time with your customers. Makes sense, right? Completely did away with our Windows CE and iOS platform. The TC5x device has become the cornerstone of everything we do inside operations at the front line. It starts with work Cloud, and it starts with all of our cross-functional partners that funnel down to Alex's team. Those tasks make it in the way to work cloud, but the stores needed a tool to execute. They needed a tool of all the information at their hands. We didn't want them running back and forth to printers, printing out reports and working those reports and filing those reports. We had 17 binders of reports the stores are keeping. For what? For what reason? There was no reason. We know what the original reason was it was the only way we could track accountability. Technology has changed, and we changed with it. So that's why we did this TC5x rollout, and it's absolutely revolutionized the way we run our stores. And I did put Alex's quote on this slide, customer experience will never exceed the associate experience. If we cannot give the associates an easy and intuitive way to run our buildings and for them to also have fun. Retail is tough, but it should be fun. If we don't give them those tools, we will not succeed. We drove a continuous proof to culture going forward then. Right? So once we understood coming out of the event, that workout event that we need to invest in technology and we needed to eliminate all these tasks, then how do you sustain that going forward. It is not one and done. It is continuous improvement every day with every conversation you have with the field. Our teams worked very hard to ensure that we're gauging everybody at all levels of the organization. from our Vice President of Stores who's right here in front of me. All the way down to the frontline associate who's working on the floor, selling to our associates. Everybody has skin in the game when it comes to continuous improvement for our customers. That's why we have feedback loop processes set up. We gather feedback continuously from the field. Alex is a program called Retail 360, which ensures that we are engaging and influencing teams, and everyone is in the loop and in the know and understands what our priorities are and what we're trying to achieve and it ensures our cross-functional partners across the board, all understand that we have one single goal under the strategy of the organization. Scheduling efficiency, task management, process automation, pricing accuracy, presentation standards. It all goes hand in hand. Again, I go back to the -- if you do not enable your teams with the task -- with the tool to complete the task, you might as well not submit the task to the store. Okay, how many of you, especially folks that are retailers that may work in a central support center, push down a list of tasks to a store and go, why the heck can stores get this stuff done? Why can't they get it done? You know why they can't get it done. They're overloaded. They don't have the right prioritization. They don't have the right tools. They prioritize on their own based off of what's happening within their business. What we have discovered through this process over the last 7, 8 years is that prioritization from corporates has to be done in tandem with the field leadership -- and at the same time, we have to ensure that they're giving the tools to succeed. This is not a top-down organization. Kevin enables us to make sure that we are making the right decision as leaders, and he empowers the organization to make the right decision for the customer. That's what we've instilled in our teams and in our organization all the way down to the front line level. I do want to end here because this is really our differentiator. This is where Kevin challenges me continuously and my boss, Chris, who's in the -- Chris is right in front of me. I literally missed him. So a quick start. Kevin and I have actually worked together for almost 13 years. Kevin has been over the retail organization for the last 8 years. Chris is a little new to the organization, but I report directly to Chris. Him and I worked together now for about 10 months. And one of the things that Chris continues to challenge me on is ensuring that we shout from the highest hilltops what our successes are. Don't keep successes to yourself. We need to shout what we do well, and we need to reinforce it, and we need to tell customers internally and externally. How we got there and why those successes matter. I talked about our 20-minute pickup promise, a 20-minute pickup promise, that -- the genesis of that was our customers were telling us that they need speed from Office Depot. They need their products faster. They would do a buy online, pick up in store to a retailer, if the retailer could guarantee it in 2 hours maybe. And then even the 2 hours was a stretch. And why was that? The retailers that cannot do buy online, pick up in store in less than 30 minutes or less than an hour, the challenge and some of you may be out there. The challenge you have is confidence in your process and inventory accuracy. What we've been able to bring to life by streamlining process and streamlining our activity calendars and tasks and leveraging Zebra Work cloud to ensure the right person is at the right place at the right time. All of those components work together to bring us to where we're at today, which is north of 95% unit accuracy when it comes to our inventory. We could not attain a 20-minute BOPUS promise if we didn't know where our inventory was. By ensuring inventory accuracy, we reinforced 20-minute promise. But what did that do also? That opened up a world that we didn't even know existed 7 years ago. Same-day delivery. Same-day delivery is quickly chasing BOPUS as our flagship omnichannel program. Now the way we define same-day delivery is a little bit different, but same-day delivery for us is when you go online officedepot.com, and you check out, you have a fulfillment choice, you have 3 fulfillment choices. You can pick it up in a store for BOPUS. You can do traditional delivery, your 2-day delivery service. We deliver 2 day or next day across 90% of ZIP codes across the United States or 90% of addresses or if you live near a store, usually within 35 minutes, you can get that product delivered same day and it's scheduled delivery. You check out and you get asked at checkout. Do you want it at 2:00, 3:00, 4:00, you pick your window. We could not bring that to life. If we had not made the investments to be weighed in buy online, pick up in store, the order picking process, developing the mobile app, eliminating those non-value-added tasks, giving stores an intuitive process. You see how it all worked together within the ecosystem. And it doesn't stop there. We're continuing to look at what the next step is. Where do we want to go next with omnichannel. I continuously get challenged from my leadership, but also we get tons of feedback from our field on what they think our customers want next. And I can't share just yet, but a lot of cool stuff is in the works, and I can't wait to bring it to you, and I really appreciate the time.

First of all, I want to thank Kevin and Alex and Jonas for incredible stories about how you've leveraged what I heard was comment -- well, first, you did the work to understand where you needed to focus, and then you were empowered to make the investment into hardware and software to make it easy for your frontline workers to get it right. improved by on-time task execution, 20-minute pickup execution. The good news is we have a little extra time for questions from the audience. So we can do some Q&A for Kevin, Alex and Jonas, if there's any questions, we're happy to take them. Hands, anyone interested in asking something?

If it's okay, I did want to take the opportunity, Kevin, just to thank Jonas and Alex for everything that they've done to bring all of these amazing capabilities to life and to support our associates and our customers. It's really amazing to work with such passion of people. I hope that you guys saw or at least got a hint of the passion that Alex and Jonas bring to their job every day. So I want to thank both of you guys publicly. Thank you very much.

Thank you.

Appreciate it.

And Kevin, thank you for the partnership as well.

You bet.

It's really been one of the strongest partnerships that we've had as an organization and leveraging your tools has really helped make a big difference in our associate and customer experience over the past couple of years.

We feel lucky to have you as a customer.

We'd love to have you guys over to the Zebra booth. And just to give a teaser, one thing we have not talked about is how we're leveraging artificial intelligence, big buzzword topic. I feel like every single booth out here is talking about artificial intelligence this week how we're actually using not just talking about AI, but using it to improve our associate experience and give them better access to data through mobile devices in aisle in store every single day, so come by the Zebra booth, and I'm sure we'll be happy to give you a demonstration. Also, one of our partner business units at ODP Corporation, Varis has a booth here at NRF. So I'd encourage all of you guys to come over and join these guys. What's the number of the booth guys? What did you say? 1066? So Join -- come over and give these guys a hello, ask them what they're doing, very, very innovative work in the B2B marketplace world, and I think you'll be impressed by the stories of 1066. Come on over and say hi. Thanks again, Kevin, for the opportunity.

Thank you, Kevin. Please come and thanks for the plug. Please come by the Zebra booth to see modern store in action. There's a modern store demo end-to-end hardware, software -- and don't forget to fill out your raffle cards that everybody handed you when you came in today, submit those back at the booth. Thank you very...

Importantly, I'll See you all at NRF Boca Raton in [ 2025 ] Thanks, everybody.