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Compliance Networks Corner: Top Retail Supply Chain News in 2016


It was a Busy and Consequential Year in Retail Supply Chain as You Will See Here

Jan. 30, 2017

Kevin Harris
Compliance Networks


It was an interesting year in supply chain generally and in the retail supply chain especially in 2016.

 

Let’s look at some of the top retail supply chain stories in the past year, with a special focus on those that impact vendor performance management:

 

In January, Sports apparel retailer Finish Line makes news when it says troubles with new Distributed Order Management and Warehouse Management Systems causes it to lose $32 million in sales over Holiday period. The CEO resigns and the chief supply chain officer let go shortly thereafter.

Compliance Networks Says...

In April, Walmart causes quite a stir in its vendor community, after recently releasing new standards for carton marking that have the potential to add huge costs to its suppliers.

In February, there is a report from Bloomberg that Amazon seems to be taking steps to build out an end-to-end global logistics service capability that would compete with major 3PLs and carriers, perhaps not only to move its own freight but those of others. Moves include getting licenses in both US and China to act as a wholesaler for ocean container shipping.

Also in March, reports that Target is doing a deep dive on its SKU counts, in-store logistics processes and more in an attempt to reduce out-of-stocks and inventory levels. Retailer is testing putting more product on the sales floor rather than the stockroom by redesigning shelves, looking at case pack quantities from vendors, and reducing total SKU counts in many categories.

Meanwhile, Target also says it is largely dumping packaged software for forecasting and replenishment to write its own, more suited to needs of omnichannel commerce. Is the traditional DRP-based model dead, SCDigest asks?



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In April, Walmart causes quite a stir in its vendor community, after recently releasing new standards for carton marking that have the potential to add huge costs to its suppliers. Requirements ban use of inkjet printing for case code bar coding, meaning suppliers would have to maintain inventories of cartons specific to each SKU, among other changes.

That same month, news that Target is telling vendors that it will issue a chargeback of as much as 5% of the invoice for shipments that arrive as little as one day late, plus chargebacks of $5,000-$10,000 for suppliers who fail to provide complete and accurate master data for their products.

In June, Walmart brings reporters into Bentonville DC for demonstration of a drone taking physical inventories on continuous basis, flying the aisles and using an imaging system.

In July, news that struggling retailer Kmart is adopting strategy of moving all inventory out to store floor and getting rid of "back room" storage to reduce labor costs from double handling and decrease inventory levels.

In August, Walmart announces it will spend $3.3 billion to acquire ecommerce site Jet.com, as it hopes to supercharge its on-line success. Jet was just founded in 2015 by Marc Lore, who had also started Diapers.com and then worked for a while at Amazon after it acquired Diapers.com. Lore will lead all of Walmart's ecommerce efforts, as former head Neil Ashe resigns.

That sane month, sports apparel giant Nike signs a contract with giant private equity firm Apollo Global Management to create a new generation supply chain, including production facilities, in the Americas. Nike says it hopes change from former Asian-based production strategy will get products to customers more quickly, including more rapid support for a planned increase in customized merchandise.

Also in August, news that Walmart is reducing the "window" for on-time deliveries from vendors from four days to two. The change will go into effect in February, 2017. In addition, the fill rate requirement is being raised from 90% to 95%.

In September, the Wall Street Journal breaks story that despite numerous denials, Amazon really is working on plan to develop its own parcel delivery network for itself and others, competing with UPS and FedEx. The plan is code named "Consume the City," and the story notes that Amazon has also recruited dozens of UPS and FedEx executives and hundreds of other UPS workers over the past few years.

In October, a Macy's executive says the company plans to have 100% of all items in every store RFID tagged by the end of 2017, and that nearly all of those tags will be applied by vendors.

In December, Amazon announces opening of its "Go" store in Seattle, which has no cashiers or traditional point of sale terminals. Store instead uses RFID, sensors and artificial intelligence to track what shoppers buy, in approach that is literally "grab and go," with customers taking products off the shelf and right into shopping bags or backpacks and then out the door, the purchase quickly confirmed via smart phone app.


Any comments on this article? Please send below.


Your Comments/Feedback

Srihari

Senior Consultant, Infosys
Posted on: May, 22 2016
Great article. I am a little suprised not to see BNSF in the mix while I understand their financial mode/operation is a little different. 

That would only give a complete perspective with all the players in the pool.

Mike O'Brien

Senior editor, Access Intelligence
Posted on: May, 26 2016
Surprised to see Home Depot fall off the list; thought they were winning with Sync?

Julie Leonard

Marketing Director, Inovity
Posted on: Jun, 27 2016
Using the right tool for the right job has always been a best practice and one of the reasons, we feel, that RFID has never taken off in the DC as exponentially as pundits have been forecasting since 2006. While these results may seem surprising to those solely focused on barcode scanning, the adoption of multi-modal technologies in the DC makes perfect sense for greater worker efficiency and productivity.

Carsten Baumann

Strategic Alliance Manager, Schneider Electric
Posted on: Aug, 19 2016

The IoT Platform in this year's (2016) Hype Cycle is on the ascending side, entering the "Peak of Inflated Expectation" area. How does this compare to the IoT positions of the previous years, which have already peaked in 2015? Isn't this contradicting in itself?

Editor's Note: 

You are right, Internet of Things (IoT) was at the top of the Garter new technology hype curve not long ago. As you noted, however, this time the placement was for “IoT Platforms,” a category of software tools from a good number of vendors to manage connectivity, data communications and more with IoT-enabled devices in the field.

So, this is different fro IoT generally, though a company deploying connected things obviously needs some kind of platform – hoe grown or acquired – to manage those functions.

Why IoT generically is not on the curve this year I wondered myself.

 

 

Jo Ann Tudtud-Navalta

Materials Management Manager, Chong Hua Hospital, Cebu City, Philippines
Posted on: Aug, 21 2016

I agree totally with Mr. Schneider.

I have always lived by "put it in writing" all my work life.  I am a firm believer of the many benefits of putting everything in writing and I try to teach it to as many people as I can.

This "putting in writing" can also be used for almost anything else.  Here are some general benefits (only some) of "putting in writing":

1. Everything is better understood between parties involved.  There are lots of people types who need something visual to improve their understanding.
2. Everyone can read to review and correct anything misunderstood.  This will ensure that all parties concerned confirm the details of the agreements as correct.  This is further enhanced by having all parties involved sign off on a hard copy or confirm via reply email.
3. Everything has a proof.  Not to belittle the element of trust among parties involved, it is always safest to have tangible proof of what was agreed on.
4. There will be a document to refer to at any time by any one who needs clarification.
5. The documentation can be useful historical data for any future endeavor.  It provides inputs for better decisions on related situations in the future.
6. This can also be compiled and used to teach future new team members.  "Learn from the past" it is said.

There are many more benefits.  Mr. Schneider is very correct about his call to "put it in writing".





Sandy Montalbano

Consultant, Reshoring Initiative
Posted on: Aug, 24 2016
U.S. companies are reshoring and foreign companies are investing in U.S. locations to be in close proximity to the U.S. market for customer responsiveness, flexibility, quality control, and for the positive branding of "Made in USA".

Reshoring including FDI balanced offshoring in 2015 as it did in 2014. In comparison, in 2000-2007 the U.S. lost net about 200,000 manufacturing jobs per year to offshoring. That is huge progress to celebrate!

The Reshoring Initiative Can Help. In order to help companies decide objectively to reshore manufacturing back to the U.S. or offshore, the nonprofit Reshoring Initiative's free Total Cost of Ownership Estimator can help corporations calculate the real P&L impact of reshoring or offshoring. http://www.reshorenow.org/TCO_Estimator.cfm

Robert

Transportation Manager, N/A
Posted on: Aug, 30 2016
 Good article!  I am sending this to my colleagues who work with me.  We have to keep this in mind.  Thanks!

Ian Jansen

Mr, NHLS
Posted on: Sep, 14 2016
SCM is all about getting the order delivered to the Customer on date/ time requested because happy Customers = Revenue. Using the right tools to do the right job is important and SCM is heavily dependent on sophisticated ERP systems to get right real data info ASP.

I've worked in a DC with more than 400,000 line items and measured the Productivity of Pickers by how many "picks" per day.

I've learned that one doesn't have to remind Germany about your EDI orders.

Don Benson

Partner, Warehouse Coach
Posted on: Sep, 15 2016
Challenge - to build and sustain effective relationships at the level of the organizations that are responsible for effectively coordinating and colaborating in an otherwise highly competitive environment 

Jade

Admin, Fulfillment Logistics UK Ltd
Posted on: Oct, 02 2016
Of course we all need to up our game. We need to move with the times, and always be one step ahead of what the future will bring.

Mike Dargis

President of asset-based carrier based in the Midwest, Zip Xpress Inc. (at ZipXpress.net)
Posted on: Oct, 03 2016
Thanks for the article, but I know there's a lot more to this issue than just the pay rates. Please check out my blogs on the subject at www.zipxpress.net.

Blaine

Inventory Specialist, Syncron
Posted on: Nov, 16 2016
Lora, great article! I agree that companies choose the 'safe' solution more often than not. My solution is a bolt-on for legacy ERP's and we even face challeneges of customer adoption. Most like to play it safe and choose an ERP upgrade, which is more costly, time consuming, and has lower ROI across the board. Would love to learn more about your company, we are always looking for partnerships.

Blaine
blaine.schultz@syncron.com

Bob McIntyre

National Account Executive, DBK Concepts LLC
Posted on: Nov, 21 2016
This is a game changer in GE's production and prototyping.  It also has huge implications across the GE global supply chain with regard to the management of their support and spare parts network. 
 
 
 
 
 

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