Walmart Pressures Suppliers with New Delivery Mandate

By Mark Burstein, VP of PLM and Global Sourcing Solutions, NGC (New Generation Computing)

Last month, Walmart tightened its delivery requirements for suppliers. U.S. companies shipping goods to Walmart distribution centers must now deliver within a 4-day MABD (must arrive by date). Suppliers that consistently deliver goods too early or too late must pay a "reimbursement charge" of three percent of the cost of goods sold. The stakes are high: suppliers that are consistently late "risk losing Walmart as a customer," according to a Feb. 9 article in the Journal of Commerce.

Walmart isn't the only retailer with an MABD program, but it is by far the largest. With Walmart taking the lead, more retailers are likely to adopt similarly tough requirements for their suppliers - with repercussions throughout the global supply chain.

MABD mandates put a renewed emphasis on supply chain collaboration solutions such as PLM and global sourcing. However, according to the 2010 "Top Technology Trends in Apparel" study by AMR Research, 31 percent of its survey respondents were not using any system at all for supply chain collaboration while 21 percent use custom-built applications that are frequently based on spreadsheets.

This means that more than half of the retailers and brands surveyed still manage product development and global sourcing using a complex maze of spreadsheets, faxes, emails and phone calls -- with little or no supply chain visibility, lengthy delays in communications, and inordinate amounts of staff time dedicated to inefficient manual processes. Employees can spend half their time searching for relevant information; by the time they find it buried in yet another spreadsheet, it's out of date.

This lack of timely data creates huge inefficiencies and information gaps in an organization, resulting in missed opportunities. By the time retailers find out about a problem, it all too often has escalated into a crisis: for example, P.O.'s haven't been issued, samples haven't been approved for production, the fabric hasn't arrived at the factory, shipments don't have the right customs paperwork, to name a few of the many challenges that erupt daily.

It's impossible to efficiently manage supply chain operations without the right PLM and global sourcing tools. Fortunately, the latest generation of these software systems can serve as a web-based information and communications portal for all trading partners, from retailers and brands to agents, factories and logistics providers. Such systems help enhance supply chain collaboration and also ensure supply chain accountability -- ultimately helping to ensure timely deliveries.

Improved supply chain collaboration. Best-in-class PLM and global sourcing systems can tie every communication to the appropriate style or P.O., keeping all communications within a web-based, easy-to-use system that is instantly accessible throughout the supply chain. Companies no longer have to spend hours each day poring over emails, spreadsheets and faxes to receive status updates and resolve critical problems.

Better supply chain accountability. PLM and global sourcing systems make extensive use of time and action calendars that help streamline workflows and processes; through exception management, alerts can be triggered when events and activities don't happen on time. Calendar management ensures that problems can be immediately pinpointed and resolved -- gaining precious time and ensuring that production stays on schedule.

The increasing use of MABD deadlines puts new pressure on supply chains. However, today's PLM and global sourcing systems can be an invaluable ally for retailers and brands that are seeking to make sure that the right merchandise arrives at the right stores, on time and on budget.

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