Strength Gain
Responding to retailers' demands is on the minds of small consumer goods manufacturers when it comes to updating their supply chain solutions. From the command for capabilities such as EDI to the impact of market leaders such as Wal-mart on fortunes of the entire supply chain, small manufacturers are striving to gain the efficiencies and visibility of their larger brethren with solutions that are scaled for their smaller operations.
The Big Picture
Larger manufacturers "have systems in place, and are now trying to use them as much as they possibly can," according to Mike Dominy, senior analyst for Yankee Group. They're throwing particular attention toward supply chain execution solutions and trade/promotion planning as well as collaboration -- as long as it has a short ROI.
Smaller manufacturers are looking to get the same sort of infrastructure in place at their own pace, driven primarily by high customer expectations.
Putting the House in Order
Liberty Richter, for example, is a specialty foods marketer in Saddle Brook, New Jersey, and a division of Tree of Life Foods. To coordinate data about its many brands, half of which come from overseas, the firm was relying on an outdated application not designed for distribution businesses. Liberty Richter brands include Ka-Me Asian foods, Wasa crispbread and Belsoy soy milk.
"We lost confidence in the data," says John McLennan III, VP, finance and controller. "You could have three different sales reports, each with slightly different numbers." Flat files made it difficult to glean data about products, customers and markets that are essential to effectively compete.
By implementing Blinco System's 3rdwave Food, the company gained a centralized database from which it could generate the sales and market reports needed to help it compete. McLennan credits the application in part to helping it double its sales while minimizing additional headcount, which would have increased by 25 percent without the application, he estimates.
Today, Liberty Richter relies on 3rdwave Food to manage purchasing and trafficking and analyze and fuel decisions in freight, warehousing, sales, promotion, advertising and sales, with integration into accounting applications. Those capabilities were essential in helping Liberty Richter rapidly alter distribution planning during the West Coast port strike in addition to a strike by Evergreen Marine workers.
"We make smarter decisions and we're drawing costs out of the system," McLennan says, crediting the application with lowering inbound shipping and staffing costs. Currently, the company is focusing on tapping the data for improving its sales promotions and deals.
Meeting Demands
On the opposite coast, San Francisco's Wild Planet Toys also faced challenges from retailers as well as various challenges in obtaining accurate data from its previous application.
Demand for the company's spy toys, including its Spy Gear and Undercover Girl brands, spikes from August to January, and larger customers such as Wal-mart and Target demand to exchange data via EDI. Wild Planet needed to meet these external needs while making the internal processes that surround customer orders more efficient, producing better quality data throughout the system.
Wild Planet replaced a heavily manual system of matching inventory to its 300 daily orders, allocating stock picks for its 3PL, and then matching shipments to orders to generate paper invoices. The new ERP solution, from Epicor Software, automates those, eliminating manual errors, cutting cycle times and enabling Wild Planet to rely on clerks only for special situations. Fill rates jumped from 40 percent to 85 percent and cash flow increased. The company experienced a very large volume increase with only a small increase in staff.
Addressing the central problem of inefficient order management processes, Wild Planet can now focus on analyzing data to enhance service to customers, such as sell-through and vendor-managed inventory, since data is now unified. Data is exported to Crystal Decisions - Seagate Info Desktop 7.5 for online analytical processing. Next, Wild Toys is tapping the solution to improve its sales forecasting and budgeting, and farther down the road, supplier relationship management.
Like larger manufacturers, Wild Planet is focusing first on the biggest payback. "We do 80 percent of our business with the top 10 retailers," he says, though the company also sells worldwide. "Logically, the biggest bang for the buck is on the customer side."
Liberty Richter's McLennan notes that while events such as new customs rules and port strikes hurt in the short term, the top three challenges his company faces can all be traced back to Wal-mart. While Liberty does a small volume of business with the retail powerhouse, the company's impact on its other partners, such as Fleming, affects Liberty Richter as well. In addition, "their competitors are wrestling with how to compete with Wal-mart," forcing changes in how they do business. "They have a huge impact on us."