Walmart has made headlines recently by asking suppliers to help pay for warehousing and the use of their distribution network. It’s not long since they made headlines for asking suppliers to cut marketing and divert the funds to further cost reductions.
But Walmart also makes some real savings possible — not just by motivating suppliers but by offering their distribution network and data free or at a low cost. Most suppliers don’t really take advantage of it.
Harvard Business Review used case studies to make the point that logistics is an area in which suppliers can save. They reported that Avery Dennison invested millions of dollars in new logistics technology that streamlined their distribution systems so they would mesh with the needs of retailers like Walmart. “Avery Dennison’s efficient supply-chain management translates into real savings for the superstores and is a barrier to low-price offshore competitors,” they explained. “The company’s sales, profits, and market share have been growing steadily.”
Smaller suppliers usually don’t have millions to invest in logistics, but there are two big takeaways for smaller suppliers:
- Work with Walmart’s system instead of choosing traditional logistics and distribution and hoping to get to the loading dock on time.
- Take advantage of new technology.
A small but growing cosmetics company chose third-party logistics company CaseStack to get them the same kinds of benefits larger suppliers can create for themselves. They recognized that their strengths were in sales and marketing, not in logistics.
CaseStack facilitated the transfer of all the company’s warehoused goods from multiple locations where their contract manufacturers had sent them, to a single warehouse. This allowed the cosmetics company to check on quality at any time, and to spend less time figuring out where products were and how to get the right amounts of each product to the right place. It also cut down on warehousing costs.
The cosmetics company now enters retailers’ orders directly into their CaseStack account at the CaseStack website. CaseStack gets the products to the distribution centers, using consolidation of orders to keep costs in check.
Their logistics costs were trimmed by 5% and their freight claims fell by 80%, adding up to significant savings. The reduction in time spent putting out fires and dealing with errors and damages — and the improvement in stress levels around the office — those are bonuses.
CaseStack’s technology allows suppliers to manage inventory levels, track shipments, forecast future needs, and to handle billing and claims at any time, from any internet connection. That means that smaller suppliers have the same advantages larger suppliers do.