Archive for the ‘Supply Chains’ Category

“We ain’t got no chicken”

March 12, 2018

Finally, I can tell one of my favorite stories.
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A couple of weeks ago, due to a “supply chain issue”, KFC ran short of chicken at many of it’s UK stores.

That’s a problem since:

1) The UK is KFC’s 5th biggest market – accounting for about 6% of company sales.

2) KFC is shorthand for Kentucky Fried CHICKEN !!!

That’s a big problem.

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OK, here’s my story ….

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Better vision: Warby Parker eyeglasses.

September 20, 2012

Punch line: Warby Parker, a luxury eyeglass company with a social component, has grown 500 percent by following a few easy guidelines.

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Excerpted from Inc., “How Warby Parker Grew So Fast: 3 Reasons”

Addressing a crowd of more than 550 entrepreneurs and business owners at the Growco conference, … the company’s co-founder, Neil Blumenthal, offered a bit of insight into how and why the company has grown so rapidly …

  1. Cut out the middle men: By working with a manufacturer in China, and designing the glasses themselves, Warby cut out the middle men and make the glasses far more affordable.
  2. Don’t overspend on unnecessary marketing: Instead of a five or six figure launch spend … Warby launched with two well-placed editorials in Vogue and GQ. The tactic was so effective that … within two weeks, they had sold out … and had a waitlist of 20,000 customers.
  3. It all comes down to company mission: When the company moved into its new offices a couple of months ago, it decided to knock down the walls of the office … “to institute mechanisms for people to learn on a regular basis.”

Edited by JDC
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Wal-Mart goes right to the source …

November 1, 2010

TakeAway: Wal-Mart has built its reputation on its ability to cut its costs, and then pass the savings on to its customers.

To lower its costs even further, Wal-Mart is now exploring the idea of buying raw materials in conjunction with the manufacturers who sell products in Wal-Mart.

Wal-Mart would presumably know exactly how much the manufacturers are saving, so it’s no surprise they’re staying away.

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Excerpted from Bloomberg Businessweek, “Wal-Mart Wants More Buying Clout,” by Matthew Boyle and Carol Wolf, October 7, 2010

Wal-Mart Stores purchasing chief Hernan Muntaner has a dream: teaming the giant retailer with soda and snack maker PepsiCo to buy potatoes jointly for a lower price than either company can get on its own. That would allow both to earn more money on the chips and spuds they sell in Wal-Mart’s supermarkets. So far, Pepsi isn’t playing along. But with sales slowing in the U.S. and the price of sugar, meat, and wheat on the rise, the world’s largest retailer is jointly purchasing a growing share of raw ingredients with manufacturers of food and household products sold in its stores. …

It’s all about the retailing giant doing what it’s become famous for: squeezing costs out of its supply chain. And although Wal-Mart is already feared by many suppliers for its enormous buying clout, it’s convinced it can cut even better deals by consolidating its purchasing with partners. Currently, only makers of private label goods sold under Wal-Mart’s house brands have joined in its so-called collaborative sourcing program. Manufacturers of branded products have taken a pass because they’re loath to share pricing data and product formulas …

Muntaner says that “in most cases” the branded companies “are more sophisticated than we are” in buying raw materials. ” …

Muntaner’s primary job is to circle the globe helping Wal-Mart’s international divisions … find ways to use the company’s massive buying muscle to lower what it spends on everything from copier paper to store-branded bottled water. Increasingly, that means selling the benefits of sourcing collaboratively. Muntaner says a soda maker … has teamed up with Wal-Mart in Britain to buy sugar. The soda company paid 14 percent less, he says. Wal-Mart’s sugar costs also fell, savings it used to lower the price of bags of its own house brand of sugar. …

This is just the company’s latest attempt at slowing expense growth. Wal-Mart … wants savings of over a billion dollars eventually.

Edit by DMG

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Full Article
http://www.businessweek.com/magazine/content/10_42/b4199023758279.htm

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Right product, right place, right time … or else

November 20, 2009

TakeAway:  Distribution is half the battle for marketers.  If you can’t get enough of the right product, in the right place, at the right time, you will lose sales regardless of the quality of your product. 

Whirlpool took advantage of the recent slowdown to reexamine its distribution system and, as a result, is now enjoying an array of benefits, including $350M+ in savings a year.

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Excerpted from WSJ, “Whirlpool Cleans Up Its Delivery Act,” By Joe Barrett, September 24, 2009 

After raw materials, distribution is one of the biggest single costs at Whirlpool, which needs to get bulky products like dishwashers and clothes dryers from factories to customers quickly …

In 2005, the company’s supply chain system was a hodgepodge of warehouses, transport depots and factory-distribution centers. Retailers often had to wait five to 10 days to get new washing machines or other appliances.

Whirlpool undertook a four-year program to build a state-of-the-art distribution system from scratch … The effort is already producing results, allowing Whirlpool to reduce its annual inventory by about $250 million a year and to deliver products in 48 to 72 hours. Whirlpool is also saving costs — about $100 million a year because of improved efficiency …

Whirlpool’s logistics makeover shows how a recession can leave the biggest, best capitalized companies better positioned than ever to scoop up both market share and profits as the economy rebounds …

The company’s ordering and delivery functions used to be located in separate divisions, complicating coordination and resulting in costly mistakes when Whirlpool made too much of a certain product.  The distribution system often had to soak up excess inventory …

The core of Whirlpool’s program was replacing 41 outdated sites with 10 huge regional distribution centers that used high-tech warehouse management systems and upgraded vehicles that could handle a variety of products.  Now, when trucks deliver appliances from the company’s factories to a distribution center, the merchandise is sorted according to how quickly it is likely to leave. Slower-moving goods, such as certain high-end refrigerators or stoves, are deposited in the center of the building, while fast-moving dryers and washing machines are closer to the loading docks.

The facilities are laid out in quadrants, with most of the products arranged in identical order four times in the same building. That way drivers can access everything they need without going from one end of the building to another …

There are still reduced sales because of the recession, but there are lower than expected inventories thanks to the logistics overhaul …

Edit by TJS

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Full Article
http://online.wsj.com/article/SB125366529324132457.html

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Get out your wallet … states move to tax internet sales

July 8, 2009

Ken’s Take: I hate taxes.  Not because I’m not willing to pay my fair share, but because so much of tax revenue is wasted or applied to  questionable political missions. 

That said, if there have to be taxes, I’m a fan of user taxes (think toll bridges) and consumption taxes (think sales taxes).

So, it never made sense to me that internet sales should be sales tax free, except for sites that have a local physical presence (think Best Buy or Barnes & Noble). Of course, I take advantage of the rules and buy stuff over the internet.   But, why should states forego this revenue and why should retailers with a local physical presence be put at a disadvantage.  It just doesn’t make sense.

I expect many states to pit internet sales in the sales tax bullseye.

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WSJ, Amazon Cuts North Carolina Affiliates to Avoid Tax,
June 27, 2009

North Carolina is in the process of passing a law that would force companies to collect the tax if they have in-state online-marketing affiliates — people who get a sales commission from links on their Web sites. To avoid getting caught by the law,

Amazon is dropping the affiliates. Amazon.com Inc. said it has ended business relationships with marketing affiliates in North Carolina to avoid collecting sales tax in the state. 

But the decision highlights mounting tensions between online retailers and cash-strapped states across the country. Other states are considering similar laws that would use affiliates as a way to force companies to collect a sales tax for online purchases. 

Consumers are technically supposed to pay a so-called use tax for online purchases on their own, but most don’t. Many e-commerce sites rely on the price advantage they have over traditional retailers because they don’t have to collect taxes. , and forcing them to collect the tax upfront could take away some of that advantage.

Full article:
http://online.wsj.com/article/SB124603593605261787.html#mod=testMod

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Go green or go broke… your choice !

January 14, 2009

Excerpted from Brandweek, “Go Green Or Else!” By Elaine Wong, Dec 2, 2008

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Environmental legislation and climate changes could eat up as much as 47% of packaged goods companies’ profits by 2018 if they don’t adopt long-term sustainability measures  …

A report, Rattling Supply Chains … addresses long-term profitability of the packaged goods industry. The findings are based on “future analysis” of how much certain commodities will go up, including oil, cereal, soy and palm oil, and how they will fare under certain environmental, governmental policy and climate situations. The term used to describe these hypothetical scenarios is “ecoflation.”

Companies that can reduce their reliance on materials like plastic or paper, through sustainability initiatives, can cut costs when economic pressures cause price increases…Companies can expect a reduction of anywhere from 13 to 31 percent in earnings by 2013… if adequate sustainability measures are not taken….

Companies like P&G and Nestle have already implemented sustainability strategies. Nestle is placing more emphasis on sourcing materials locally to cut down on transportation. Meanwhile, P&G is cross-leveraging research and design teams across different brand categories…

These are just a few examples of the extent to which many companies have considered going green. Oftentimes, retooling a supply chain to be more sustainable involves “rethinking the product itself … It has as much to do with improving business practices as it does with improving environmental practices. In fact, the two go hand-in-hand.”

Edit by SAC

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Investing in sustainability reduces costs, but it can also have the added benefit of encouraging consumers to buy your product.  According to a recent IRI report, 50% of consumers consider sustainability efforts when purchasing consumer product goods.  Indicating that neither the product, nor the people (consumer) can be separated from the sustainability process.

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Full Article:
http://www.brandweek.com/bw/content_display/news-and-features/packaged-goods/e3i726f0f4961487c61bd28d01ac0630121?imw=Y

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