12 Ways Retailers Improved Business Performance in 2009
March 10, 2010 - Last year was a tough year for retailers. Many had to close stores and almost all made an effort to carry less inventory and maintain margins. But after many conversations with retail supply chain professionals, it's clear that retailers were far from idle, accomplishing quite a lot with very little. And the bonus -- shared goals among functional silos made a new level of collaboration possible. Below are some of the projects retailers embarked on in 2009 -- consider these a good starting point when looking for high value/low-medium cost opportunities for 2010:
1. Enhance Collaboration Opportunities with Business Process Changes: Retailers focused on store friendly shipments; cross docked more; renegotiated service levels; and improved timeliness of advance ship notice of store-bound shipments.
2. Reduce Empty Miles: Many retailers are working with suppliers, 3PL partners and internal logistics to leverage SmartWay transportation standards and to develop retail/supplier/third-party partnerships to reduce empty miles.
3. Get More Work Done in Less Time: Many retailers implemented new pay/bonus for performance on standards or simply applied new labor standards to distribution and warehouse work. Some also implemented workforce management to better schedule and assign work in their facilities.
4. Reengineer Processes and/or Distribution Center Flow: FreshDirect, a $250 million/year online "fresh" grocer, reduced the number of boxes in customer orders by installing additional conveyor belts, enabling a more efficient selection process to be implemented. Fewer trucks, faster delivery and a 26 percent reduction in boxes resulted.
5. Radically Improve Inventory Accuracy and Productivity with a New WMS: Bon-Ton stores implemented a new WMS from HighJump Software that enabled an increase in productivity of 13.6 percent. The new fully automated system coordinates movement of 85 percent of store merchandise from inbound dock to outbound truck within four minutes of arrival at the warehouse.
6. Consolidate Cross-Channel Order Management: Cabela's implemented Sterling Commerce Order Management to improve its ability to orchestrate fulfillment for all channels across its entire supply chain - stores, warehouses, suppliers and partners.
7. Reduce Carbon Footprint and Transportation Costs: Retailers cited the use of transportation applications to redefine optimal routes, loads, shipment frequency and to identify backhaul opportunities. They also accomplished consolidating and cubing loads better to make the best use of trucks.
8. Make Money from Refuse: Recycling more and managing the waste stream better has been cited by many retailers as an easy to implement practical process that can result in a new or more significant revenue stream.
9. Reduce Maintenance Costs: Take unused equipment, idle because of reduced work loads, out of circulation. Trucks and forklifts that are completely out of circulation do not need routine inspections, reducing costs.
10. Reduce Freight Costs: By implementing a "carrier bid optimization" tool that automates the development of "bid packages" for automated negotiation with carriers and evaluating carrier bids by lane to minimize total transportation expense, a warehouse club retailer was able to reduce overall contracted freight rates by approximately 10 percent.
11. Source More Efficiently: Wal-Mart announced a reorganization of private label sourcing, eliminating 5 percent to 15 percent of sourcing related costs by sourcing 80 percent of product directly, rather than through a third-party procurement organization.
12. Reduce Cycle Time with PLM: Retailers are implementing retail PLM to reduce the time it takes to bring quality product to market as expediently as possible. In 2009, Belk and Le Chateau chose Tradestone's MLM and Global Sourcing application and Cache and Billabong chose NGC's PLM and Global Sourcing application.
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