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Retail Vendor Performance Management News Round Up for April, 2017


Walmart to Up Pressure on Vendors Relative to CO2 Emissions; Stores are Closing at Rapid Pace, but eCommerce not Only Cause; Vendors Wary of Financial Health of Retailers

April, 2017

by SCDigest Editorial Staff


Walmart Pressuring Vendors to Reduce CO2 Emissions

Retail giant Walmart has made significant progress in reducing its own CO2 emissions, but says to really have an impact it must drive more change in its extended supply chain.

That means putting pressure on thousands of suppliers to reduce their CO2 emissions too.

Supply Chain Digest Says...

Some of the current closing are the result of retailers adding outlets and selling space in the late 1980s and 1990s far beyond the growth in consumers.

"We've made progress in our own operations, but this is taking us deeper into our supply chain," said Laura Phillips, Walmart's senior VP for sustainability. "We need our top suppliers to take more action."

Walmart is calling the initiative Project Gigaton because that's how many metric tons of CO2 it wants eliminate from its total supply chain by 2030.

A gigaton is equal to one billion metric tons. If achieved, that would be equivalent to taking more than 211 million passenger vehicles off the road for a year, Walmart said.

Walmart has identified six areas where suppliers can focus their clean energy efforts: agriculture, waste, packaging, deforestation, and product use and design.

Walmart is telling suppliers they will save money as they reduce their CO2 emissions.
In 2009 Walmart released what is called its Sustainability Index, in which suppliers and products - mostly through self-grading - are scored on their sustainability, based on a framework tailored for different product categories. The approach was developed in conjunction with an organization called The Sustainability Consortium, which led the development of the category-specific assessment systems.

Some 1300 Walmart suppliers are said to be subject to the index, and over the years Walmart has put systems in place to better ensure its buyers are considering index scores when making procurement decisions.



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In 2015, Walmart began highlighting companies that scored on the index as "sustainability leaders," dedicating a new section of its website to explaining the designation. More than 3,000 products are marked with the "Sustainability Leaders" badge on the Walmart site, though the company has not shared much information on how if at all that impacts consumer buying behavior.
So how does this new program change things?

"What's new is that we are convening our partners in a way that's going to create a great moment of accountability and action. We've been working on pieces of this, but we haven't packaged it all together into one program that made it easy for others to interact with us, and we haven't shared it all," Phillips said.

"We are initially working with 250 of our top global suppliers, working across multiple product categories like food, personal care products, toys, electronics and apparel," Phillips also said.
Walmart expects its vendors to voluntarily join its Project Gigaton efforts. How will vendor that don't jump in the boat be handled? That isn't yet clear, but we can assume there will be consequences.

Store Closings Continue – but Not all Due to eCommerce

With previous announcements earlier in the year by Macy's, JCPenney, Sears, American Apparel and more, recently women's apparel chain Bebe Stores said it would close its remaining 170 shops and sell only on-line, while teen retailer Rue21 announced plans to close about 400 of its 1,100 locations.

Through April 6, closings have been announced for 2,880 retail locations this year, including hundreds of locations being shut by national chains such as Payless ShoeSource and Radio Shack. That is more than twice as many closings as announced during the same period last year, according to analysis by investment firm Credit Suisse.

Based on historical patterns, Credit Suisse further estimates retailers will close more than 8,600 locations this year in total, which would exceed the number of closings during the deep 2008 recession.

 

 

Source: Wall Street Journal


The impact of ecommerce is certainly a factor here, but perhaps surprisingly not the only one. Some of the current closing are the result of retailers adding outlets and selling space in the late 1980s and 1990s far beyond the growth in consumers.

"Thousands of new doors opened and rents soared," Richard Hayne, CEO of Urban Outfitters, told analysts last month. "This created a bubble, and like housing, that bubble has now burst."
Indeed, retail sector analysts have been warning for many years that the US was "over-stored."

"A pair of men's dress pants costs less today than they did a decade ago," Manny Chirico, CEO of Calvin Klein and Tommy Hilfiger parent PVH Inc., observed in a recent interview. Adding to the impact of too many stores of course has also come ecommerce in terms of adding another powerful factor in keeping prices - and margins - low.

Dangerous Games with Vendors for Financially Struggling Retailers

With the wave of retail store closings and bankruptcies, vendors are getting increasingly nervous about shipping goods to many – which can accelerate a troubled retailer’s downward spiral.
"Vendors are getting extraordinarily nervous," recently said Hilldun Corp. CEO Gary Wassner, whose firm finances fashion suppliers.

For example, Bloomberg reports that many vendors are demanding payment terms from wobbling Sears Holdings at as little as one week.

A group of suppliers to Payless Shoes, which recently filed for Chapter 11 bankruptcy protection, sought help from the Chinese government when they said they weren’t getting paid by the retail shoe giant even before its bankruptcy filing.

Struggling retailers can slow payments to vendors to conserve cash, but it’s a dangerous game.
"Lack of faith - and canceled shipments -from vendors and [receivables] factors has precipitated numerous retail bankruptcies," said Christa Hart, a consultant at FTI Consulting.


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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