Many of our clients are sharing the frustration and anxiety that looms over all points of their delivery infrastructure. Getting factories to commit to production dates, booking vessels to sail goods from overseas, shipping landed goods quickly once stateside- are just a few of the supply chain issues wreaking havoc. Retailers are having a harder time determining whether to write orders on an FOB basis or letting their suppliers replenish indirectly. The path (or commiserate cost) is not as clear as it was a year ago.
Across many categories, products are in high demand and retailers are hopeful that a robust economic recovery will ensue as COVID (hopefully) starts to wind down. Many have no choice but to pad lead times to account for so many unknowns. I can already foresee many retailers’ Fall and Holiday assortments being full of production holes and question marks. Any retailer that hesitated to commit on key categories over the last 60 days knows it could be game over. For the lucky ones that did, kudos. Costs are rising as well and retailers have no appetite for passing them on to the consumer, but I believe it is inevitable.
With limited product availability and shipping vessels quickly reaching capacity, retailers will have to focus on allocation efficiency. They can enlist their supplier base to help them analyze sales and inventory at store level and provide forecast and inventory recommendations. Suppliers can more closely monitor their piece of the assortment, rather than the retail buying or planning teams who just do not have the resources (including time) to do it right. Providing suppliers with the data they need is the best investment retailers can make. With a solid allocation plan in place, the next step is finding the quickest and most efficient way to get a product from Point A to Point B.
Walmart has been making a virtual boatload of under-the-hood changes to their systems which surround the PO Creation and Routing process. Over the past couple of years, the pace of their updates continues to accelerate- much to the vendor’s benefit! It started with the OTIF Scorecard, which clarified vendor performance and responsibility for PO On Time and In Full compliance. Originally this included Carrier info, shipping point pickup and transit dates but that was removed and now we know why!
In addition to the ability to see PO information in their NOVA system, the Transportation Supply Chain Portal (2.0) now allows a supplier to gain access once again to critical routing and pickup information. With the latest set of systems, once they know where to look, they can follow up on the weekly process of tracking and verify PO pickup and carrier information. This enables a supplier to assist warehousing teams in flagging POs for additional action before they become an issue in OTIF chargebacks or unforeseen issues like a late carrier pickup, which can cause out of stock issues for programs.
Traditionally, suppliers core competency has been product development and supply chain, and not taking on the retailer’s planning and allocation skillset. Yet there are many advantages of them doing so: including becoming a category manager or the buyer’s trusted advisor. At ERS we provide the tools, training and expertise to help suppliers and retailers collaborate more effectively. Learn more here.