The Haves and the Have-Nots

February 3, 2014

If you mentioned the phrase "supply chain management" to most people a decade or two ago, they would have told you it had to do with S&M or something along those lines.
But these days, everyone knows the term...even if not everybody gets how important it has become to running a successful business.
Let's face it, most suppliers can come up with a pretty nicely designed product and even more will match just about any price a retailer throws at them just to get the business.
But it's the execution of getting those products from the CAD screen to store shelves where the stuff hits the fan, and that's really the true measure of success of any given program.
The ability to be in stock is also a huge leveraging point for stores trying to be competitive with online retailers who are always in stock.
This was more apparent than ever over the past holiday shopping season. Just a walk through stores instantly told you who had their supply chain well managed...and whose was well mangled.
In the latter category, you have to lead the list off with Target. On top of all the credit card breaches the store was dealing with, if they actually convinced a customer to buy something it was a big problem for that shopper to find it in stock.
You can understand big retailers not wanting to tie up cash in inventory, but Target has taken this too far in the wrong direction. And whether this is a deliberate corporate strategy or the result of leaning too heavily on Li & Fung for fulfillment is unclear, but something has to change.
On the opposite end of the spectrum is, of course, the reigning champ of supply chain management, Walmart. They practically invented the modern business model that is the gold standard for retailers everywhere in the world. The boys from Bentonville can get a product from factory to floor faster, cheaper and more efficiently than anybody else in the game.
But coming up fast with an entirely different model is Amazon, which has developed so many different ways suppliers can sell online that it is e-years ahead of anybody else in e-commerce.
Suppliers can sell product directly to Amazon, they can co-locate their goods in an Amazon distribution center fulfilled through their apparatus, sell from their own DC on the Amazon platform or any of several other permeations on the theme. It's a complex system that works and works well.
In between Target on one end and Walmart and Amazon on the other is everybody else. With stores like TJX and Costco counting on eight, ten, even 12 to 14 turns a year, they have to be able to get goods quickly and consistently.
That's the challenge for suppliers doing business with these big boxers. It's why bigger suppliers who can manage supply chains efficiently will continue to gain market share.
It's why the Haves will win and the Have-nots will become...well, just the Nots.


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