One of the major impacts of squeezing your suppliers for every last penny is depriving them of the very revenue they could plow back into getting faster.
Here’s another observation from this quote, “They’re trying to get as much inventory as possible off the books……They want to order more frequently and in smaller quantities, and kind of accelerate that whole process.”
So, in apparel, smaller boxes faster huh, store direct, floor ready? What about the fabric, the lead time for textiles? Are you OK with funding on-hand fabric so its there to be cut and sewn based on sales? That would eliminate months of lead time. You see the factory is trapped between long lead time supplies and short lead time product. You know that right, how stuff is manufactured? You’ll help with that, won’t you?
Wal-Mart Tightens Delivery Windows for Suppliers
The Wall Street Journal, Jan 29, 2018
Large suppliers will soon need to meet one- or two-day windows 85% of the time, or be fined, executive says
Wal-Mart Stores Inc. plans to ask suppliers to deliver more goods to warehouses exactly on time or face fines, another step in the retailer’s efforts to keep inventory low and shelves stocked as it battles withAmazon.com Inc.
At an annual conference for suppliers this week, Wal-Mart executives plan to announce that large suppliers need to deliver full orders within a specified one- or two-day window 85% of the time or face a fine of 3% of the cost of delayed goods, said Steve Bratspies chief merchandising officer for Wal-Mart U.S., in an interview Monday. Previously, suppliers had to hit a 75% threshold to avoid fines. For smaller suppliers, the on-time threshold will move to 50%, up from 33%. The change will take effect in April.
“This is not a ‘Hey, let’s see how unreasonable we can be,’” said Mr. Bratspies. “We need the product that the customer wants when they want it.” Wal-Mart would rather have the products on-time than fine suppliers, said a spokesman.
Last February, Wal-Mart executives told suppliers more accurate delivery times would be a focus going forward and first introduced fines for inaccurate deliveries last year. Read More