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:
- How can trucks be filled up?
- Can multiple vendors ship together and achieve OTIF (On Time, In Full)?
- How can order quantities be set economically?
- What items can be rationalized?
- 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.