In this installment of my case management series, I consider what might be possible not just for the largest retailer in the world, but also for the fashion forward.
The annual Top 25 Supply Chain came out last month. There were a few surprises but mostly “old favorites” on the list. Apple is again at the top of the list, as are Dell and P&G, and Wal-Mart is there at #7. Wal-Mart has been on the list somewhere in the top 10 since it debuted in 2004. Love them or hate them, Wal-Mart has always competed brilliantly on the basis of their supply chain, focusing on their distribution efficiencies and using IT to help them drive economies of scale. Now in a recent initiative, they are taking over transportation from their suppliers to reduce the cost of hauling goods. The strategy is part of what Wal-Mart calls its “productivity loop” -- efficiency ultimately reflected in lower bills for shoppers at the cash register and an increase in sales for Wal-Mart stores.
To me, one of the most interesting elements of this Wal-Mart strategy is the nature of the competitive advantage it gives them. Apparently a side effect is that manufacturers may face increased transportation costs on deliveries to other retailers as they lose scale. Those increased shipping costs more than likely will be passed on to other retailers. In a Bloomberg BusinessWeek article I read last year, a former Wal-Mart executive Randy Huffman commented that “this aligns with Wal-Mart‘s taking cost out of the supply chain for their benefit and not their competitors.”
So, What is Your Competitive Advantage -- Have You Found Your Productivity Loop?
If you‘re not the world‘s largest retailer like Wal-Mart, or even if you are, you need to constantly consider what your company can do to stay ahead of the competition.
While the physical flow of product over the supply chain is one place to find productivity gains, the financial and information flows hold great potential as well. In my experience, the intersection of IT and the supply chain is a great place to lower your costs and increase your yield. And you can look to technology to give you a competitive edge in the processes that define your business.