Supply Chain Optimization

Friends With Benefits

by Tom Moore on Jun 17, 2019 3:51:00 PM

FMI and GMA used to put on a joint Supply Chain Conference to discuss important “Trading Partner” issues, but it dwindled to mostly second-tier retailers and a few manufacturers (it will be smaller and transportation-focused this year).  There are important questions to be answered and solutions implemented:  

  1. How can trucks be filled up?
  2. Can multiple vendors ship together and achieve OTIF (On Time, In Full)?  
  3. How can order quantities be set economically?
  4. What items can be rationalized?
  5. How can both sides gain more visibility?  
At one time, VMI was thought to be part of the answer – but that has faded and then clawed back a bit.  
 
Collaboration and transparency are the keys to shared benefits, and here are a few of my thoughts about what is really needed:
  • Retailers place orders with “Must have” products and “Nice to have” items that can be used to fill out the load
  • Manufacturers use load optimization with the flexibility above to fill loads and share the savings
  • Inbound delivery windows be at least 2 days
I’d like to build a more complete list of how retailers and manufacturers should get along.  Please add your contributions.

Follow up on insourcing:  XPO projected lower earnings because its biggest customer (widely rumored to be Amazon) was insourcing.  The $600 million loss of revenue represents only 3% but will cut EBITA growth in half.  
 
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