Page 9 - Logistics News Sept/Oct 2017

Bookmark

Bookmark: inventory & supply chain

management lessons from retail giants -

IKEA, Walmart, Apple, Redmart.

www.tradegecko.com
This downloadable ebook brings together inventory management lessons from the
world’s leading retailers in various strategic areas - retail giants such as Redmart, IKEA,
Walmart, and Apple. The case-study type lessons are grouped in the following areas:

1. Supplier Relationship Management In addition, because they are picking and
Supplier relationship management is a pivotal packing so many diff erent products for each order,
programme that should be communicated to warehouse optimisation is much more important
everyone in the team to maximize a company’s for them than for the usual e-Commerce company.
benefi ts from the process. Also, it is best for the The operations team has to keep some food cool
plan to be integrated into the whole organisation all the way from warehouse to delivery, so there is a
and its day to day operations so everyone (even lot of coordination that goes
those outside of the procurement team) can into picking to delivery processes. Redmart
contribute and get involved in improving the makes it super simple for their pickers to pick and
company’s customer-supplier relationship. For pack. They have an algorithm that optimises the
example, A huge part of IKEA’s success is credited pick tasks and minimizes walking distances and
to its relationship management with materials an algorithm that does wave picking (compiling
suppliers and manufacturers to get good prices on customer orders on pick carts so they pick six at a
what it procures. This is crucial as IKEA is a very time – much more effi cient than just doing one at
high volume retailer; it buys products from more a time). These methods increased their effi ciency
than 1,800 suppliers in 50 countries, and uses 42 by 50%.
trading service offi ces around the world to manage
supplier relationships. 4. Distribution Methods
Delivery, the fi nal stage of your supply chain before
2. Optimised Inventory Tracking & Management your goods reach your customer, is crucial in
The best example of this process is of course forming your customers’ overall perception of your
the Apple supply chain. Apple keeps as little brand. Cross docking is a logistical practice that is
inventory on hand as possible. Why? Because the centrepiece of Walmart’s strategy to replenish
inventory holding costs add up and the market inventory effi ciently. It is the direct transfer of
is too competitive to hold on to a single product products from inbound or outbound truck trailers
for long. Technology manufacturers cannot aff ord without extra storage, by unloading items from
to keep too many products in stock because a an incoming semi-trailer truck or railroad car and
sudden announcement from a competitor or a new loading these materials directly into outbound
innovation could suddenly bring down the value of trucks, trailers, or rail cars (and vice versa), with no
products in inventory. storage in between.
Also, foreseeing sales levels accurately and not Suppliers deliver products to Walmart’s
having excess inventory is absolutely crucial in the distribution centres where the product is cross
electronics industry, especially when new products docked and then delivered to Walmart stores.
quickly render the old ones obsolete. You get Cross docking keeps inventory and transportation
clearer and more accurate forecasting when you costs down, reduces transportation time, and
don’t have too many SKUs in your inventory. eliminates ineffi ciencies. Walmart’s truck fl eet
of non-unionized drivers continuously deliver
3. Warehouse Processes Optimization goods to distribution centres (located an average
A great example of this in action is in the 130 miles from the store), where they are stored,
warehouses of Asian grocery giant Redmart. It is repackaged and distributed without sitting in
very diff erent from other e-Commerce businesses inventory. Goods will cross from one loading dock
because their orders contain a lot more products. to another, usually in 24 hours or less, and company
For example, their average order consists of about trucks that would otherwise return empty “back
14 lines and 22 product types. haul” unsold merchandise. •

38 September/October 2017 | Logistics News