Walmart Getting Tough on Vendors to Reduce Variability
Walmart is again tightening up on rules and fines for vendor shipments in terms of hitting delivery windows and fill rates.
That news from an article on Bloomberg.com, based on its review of a powerpoint presentation recently presented to Walmart vendors.
Soon, vendors will be receive a 3% chargeback on the value of goods shipped by vendors to Walmart which arrive late or are incomplete.
Supply Chain Digest Says... |
 |
| As with the old adage, retailers can only have two of speed, cost and quality, RSR Research Says. |
 |
|
|
That with tighten requirements for deliveries, which now must hit a 95% threshold for being on-time and in-full, often referred to as OTIF, under a Walmart program of that name.
The Bloomberg report is actually a little confusing and in some places contradictory, but the SCDigest believes it is directionally accurate, as Walmart continues to try to drive vendor performance to improve financial results and compete with Amazon.
Walmart says in the presentation that the new rules should drive $1 billion in additional sales for the company by improving in-stock positions. The new rules begin in August, and the company said they will require full-truckload suppliers of fast-turning items -- groceries, paper towels - to "deliver what we ordered 100% in full, on the must-arrive-by date 75% of the time."
Items that are late or missing during a one-month period will incur a fine of 3% of their value. Early shipments get dinged, too, because they create overstocks. "Variability is the No. 1 killer of the supply chain," Kendall Trainor, a Walmart manager, said in a presentation to vendors earlier this year.
Target stores similarly took moves with vendors to reduce variability in on-time and fill rates in mid-2016.
Meawhile, just before all that, Satish Jindel, president of SJ Consulting Group and ShipMatrix, caused quite a stir in late June when he told attendees at the SMC3 conference in Palm Beach that Walmart is sending veiled messages to trucking companies that carry its freight that if they do business Amazon too, it may not want to work with them anymore.
Visit the Retail Vendor Performance Management home page to learn more
and subscribe to the monthly newsletter.
The comments were picked upped by a variety of media, from logistics sites to investor-oriented ones.
Walmart has strongly denied it is using such tactics.
Describing the battle royal between Walmart and Amazon as a retail "cold war" at the conference, Jindel later told the New York Post that "I know that Walmart has expressed its views to truckload carriers."
"Walmart would prefer to do business with carriers that are not doing business with Amazon," in part due to concerns about their ability to handle high volumes of deliveries during peak times, Jindel said.
Jindel added that Walmart began having these conversations with carriers over the past 30 days or so, and that he has talked directly with some of those carriers.
"These developments, if true, are likely to have significant implications for US transportation companies as Amazon and Walmart remain two of the largest users of truckload capacity," wrote Deutsche Bank industry analyst Amit Mehrotra in a research note based on the news.
However, a Walmart spokesman denied that the company has had discussions with trucking companies about high-peak delivery times or about Amazon, adding that "it would be illegal for us to tell them who they can do business with."
Walmart also sent an email to Heavy Duty Trucking magazine that "This report is false."
Another Factor in Retail Sales Woes
Most observers tend to blame the growth of ecommerce generally and Amazon specifically as the source of top and bottom line challenges at traditional retailers – but that is hardly the only factor.
Put simply, US consumer spending habits are changing dramatically.
The chart below from a recent report by Deloitte, based on US Bureau of Labor Statistics data, tells the tale: the percent of income spent by US consumers on "goods" is falling sharply, while spending on services continues to rise.
"More and more, the data suggest that consumers are choosing experiences over physical product, shifting spending away from more traditional retail categories," Deloitte notes, adding that "This furthers the view that the complexity of the disruption needs to be understood beyond a simplistic brick-and-mortar vs. online view."
Amazon Is Buying Products from Some US Brands at Full Price To Build Global Inventory
Amazon is trying to boost its catalog by telling tens of thousands of marketplace sellers in the U.S. that it will buy their inventory at full retail price.
In an email sent to sellers and obtained by CNBC, the Fulfillment by Amazon (FBA) team said that a new program is being rolled out where Amazon will buy products at full price from third-party merchants, then sell them to consumers across the globe.
"For a limited time, there will be no additional fees, and we will purchase inventory from you at your local marketplace offer price," the email said.
The new program, which follows a similar rollout in Europe, is the latest move by Jeff Bezos to build up a complete catalog, even if Amazon can't make any money on the products in question. In some cases, Amazon is approaching these third-party merchants after the manufacturer has declined to distribute the products through Amazon.
Your Comments/Feedback
|
