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1、1|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights ReservedWALMARTthe retail-supplier relationshipbluegrace|white paper2019 BlueGrace Logistics All Rights ReservedIntroduction2019 BlueGrace Logistics All Rights ReservedintroductionWalmart&The Retail-Supplier Relationshipbl
2、uegrace logistics|white paperYou landed the Walmart account!Now what?Retailers and Consumer Packaged Goods(CPG)suppliers have a co-dependent relationship.The retailer needs products to sell to customers;the suppliers need to be able to reach those customers.Each has its own specialisms,abilities,and
3、 infrastructure;each is good at what it does.Retailers want great products that happy customers will keep coming back for.Suppliers want the reach that the likes of Walmart and Amazon provide.It is a mark of success,of scale,to be stocked by some of the most recognizable names in the world.Thats the
4、 theory.In reality,the relationship is in a state of fmux as the retail sector is bufgeted as never before.High-profjle brands are announcing store closures;store traffjc continues to fall;up to a quarter of malls are predicted to close by 2022,and the shift to online shopping continues to accelerat
5、e.Bufgeted,yes.Disrupted?Defjnitely.Beaten?Hardly.Retailers that are thriving are overhauling their operations,streamlining their processes and seeking effjciencies in every part of their business.What does that mean for CPG suppliers?It means that they need to make sure their own processes and syst
6、ems are in line with their retailers.Complying with retailers requirements,whether On Time In Full(OTIF)or Must Arrive By Date(MABD),is critical to ensure retailers keeping stocking supplier products.Its important that suppliers put themselves not in the shoes of the retailer but in the shoes of the
7、 customer.If they were to walk into a Walmart or log on to Amazon with the aim of purchasing a specifjc item,and its out of stock,theyll go somewhere else.Introduction2|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights ReservedIntroduction2019 BlueGrace Logistics All Rights
8、 ReservedAs a retailer,thats not just the lost sale of that item,but the missed opportunity of selling them other related products.It might be chewing gum at the checkout or the Bought-Together suggestions from Amazon whatever it is,it is money the retailer is not getting this time.When that happens
9、,questions start being asked.If insuffjcient stock was ordered,thats a retailer issue.If the delivery did not turn up on time,the supplier is responsible.Given the situation the sector is in,lost sales equal lost revenue,and retailers intent on surviving will move quickly to rectify issues.For suppl
10、iers,that could well mean saying goodbye wholesale customers.In such a situation,whod be a CPG supplier?Yet for those that have their house in order,that are compliant,the opportunities are immense as major retailers look to increase their footprint and secure their leadership positions.It might fee
11、l like getting into a Walmart or an Amazon means the hard work is done,but that would be a mistake.The purpose of this paper is to give CPG suppliers a guide to meeting retailer demands.It doesnt matter whether youve just landed your fjrst Walmart account,or youve been supplying it for years weve pu
12、t this resource together to help you navigate the ever-changing requirements of being a Walmart supplier.Introduction3|Walmart:The Retail-Supplier RelationshipAN INTERNAL SUPPLY CHAIN AUDIT IS ONE OF THE MOST POWERFUL METHODS OF EVALUATING&IMPROVINGWe know what a great opportunity supporting Walmart
13、 is for you we want to help you make the most of it.4|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights ReservedIntroductionAn Enviable Position015|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights Reserved01|An Enviable PositionCongratulations!You
14、 made it this far youre a Walmart supplier.To achieve this,youve provided all your information,proven that your products are a good fjt for Walmarts customers and demonstrated that you are the sort of business Walmart wants to work with.Youve fjlled out the forms,shared your certifjcates and complet
15、ed the 11 step onboarding process.Its a fantastic achievement.According to Walmart,youre now one of 100,000 businesses worldwide supplying products to its customers.That number demonstrates just how much Walmart is the“800 lb gorilla”in the supply chain.Its also a mark of how highly regarded you are
16、,as a CPG company,to have Walmart agree to distribute your products.We know that all of your distributors and the retailers you sell wholesale to are important to you,but Walmart might be a little more special.Whether youve just started or have been a supplier for a few years,its a difgerent busines
17、s than the one most grew up with.The pressure Walmart faces is the same as the rest of the retail sector.Its size is a double-edged sword its footprint of stores and operations means there are more places to be afgected by market disruptions,yet it has the resources to not only weather the storm,but
18、 profjt from it too.Just being big isnt enough,however.What marks Walmart out is its commitment to innovation.In July 2019 it opened its fjrst high-tech consolidation center a 340,000 square foot dock in Colton,California that will use automated technology to receive,sort and ship freight.According
19、to the announcement,this will enable three times more volume to fmow throughout the center.Walmart innovates to maintain its position.Why does it need to do that?An Enviable Position6|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights ReservedIntroductionThe Situation Today0
20、27|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights Reserved02|The Situation TodayWalmart needs to continually innovate because it faces a very real threat:Amazon.Amazon has been at the forefront of the consumer shopping experience revolution.One-click payments,same-day de
21、livery in certain geographies,multiple delivery and collection options,dash buttons all features that are shaping customer expectations.Its dominance of the retail landscape is such that it has gone from driving 15%of core U.S.personal consumption expenditure(PCE)growth in 2013 to 69%in 2017,accordi
22、ng to Morgan Stanley Research.This has forced many retailers,including Walmart,to revise how they serve customers.For Walmart,that means a switch from building stores to focusing more on e-commerce to drive growth.In September 2016,it acquired e-tailer J,accelerating its online sales and helping it
23、to outperform the retail sector within one year.It consolidated its e-commerce position with the purchase of Indian online retailer Flipkart in 2018.In much the same way that Amazon purchased Whole Foods to acquire physical presence,Walmart acquired J to give it a credible e-commerce function.That d
24、oes not mean that Walmart is abandoning its bricks and mortar business.Those stores mean that it is closer to more people in the U.S.than any other retailer,with 90%market penetration,versus Amazon and Whole Foods combined 74%.So,Walmart is closer to you,but Amazon can ofger a great experience.This
25、is where Walmarts innovation switches from automation technology in vast consolidation centers to delivering effjciencies in its extended supply chain.A customer can fjnd anything on Amazon and get it the next day.With a Walmart down the street,if a product is in stock,that same customer can walk aw
26、ay with it on that day.It is here that suppliers come in;products have to be in stock.The Situation Today8|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights Reserved02|The Situation Today2019 BlueGrace Logistics All Rights ReservedAs Steve Bratspies,the Chief Merchandising
27、Offjcer for Walmart U.S.,told the Wall Street Journal:“When we receive the product that we ordered,we see better sales.”In other words,if a customer cannot fjnd what they want,they will go somewhere else.Not only does the retailer lose that sale,it also loses the opportunity to sell complementary pr
28、oducts,or perhaps something that simply catches the shoppers eye on the way to checkout.According to Greg Foran,Walmart U.S.CEO,5%out of stock at Walmarts scale translates to 5,000 orders.Walmart is closer to more people in the U.S.than any other retailer,with 90%market penetration,versus Amazon and
29、 Whole Foods combined 74%.9|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights Reserved02|The Situation Today2019 BlueGrace Logistics All Rights Reserved“So,Walmart will do everything to make sure that its shelves stay full and that customers can fjnd what they want,when the
30、y want it.If enough stock is not ordered,thats a retailer issue.If not enough stock is delivered at the right time,thats a supplier issue.At the same time,as Walmart and other bricks and mortar retailers look to economize,theyre looking at where they hold stock.They want stores to sell,not to act as
31、 warehouses the price of retail square footage simply does not allow that in the current market.Thats why Walmart is introducing these consolidation centers to collate from hundreds if not thousands of suppliers,before using their own distribution networks to get the stock to stores.Thats the retail
32、 landscape suppliers are entering into when they become part of the Walmart supply chain.Alongside this are rising fuel and transport costs the U.S.Energy Information Administrations(EIA)May 2019 update forecasts that regular gasoline retail prices will average$2.92 per gallon,up from an average of$
33、2.85 per gallon last summer.Its an additional cost that both suppliers delivering to Walmart and the retailer itself,are going to have to take on board.This ultimately impacts margin across the supply chain.10|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights ReservedIntrod
34、uctionRamifjcations:They Say Jump,You Say How High0311|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights Reserved03|Ramifjcations:They Say Jump,You Say How High2019 BlueGrace Logistics All Rights Reserved“Ramifications:They Say Jump,You Say How HighAn environment of ruthles
35、sly seeking effjciency,with fmuctuating transportation costs,dominated by 800 lb gorillas.What that means for suppliers is that they have to deliver when Walmart wants,not when the suppliers feel like it.Its where OTIF comes in on the actual due date,exactly the right amount.There is no grace period
36、 or limited leeway because fmexibility eats into the margin.Struggle to comply and chargebacks will kick in currently 3%on all shipments below the threshold.Amazon,with MABD,may appear slightly more lenient,but it has a similar level of chargeback on both late and early deliveries.On top of that,pur
37、chase order(PO)and advanced ship notice(ASN)violations(such as failing to confjrm a PO or not sending an ASN in good time)levy a 2%charge.It just got stricter,as well.Starting in May 2019,suppliers that ship full trucks(Full TL)must hit a specified window 87%of the time,up from the previous 85%previ
38、ous target.For less than truckload(LTL)shippers,the jump is that much higher up to 70%in that window,from 50%before.It gets trickier.Historically,suppliers were judged on how consistent deliveries were on time and how complete they were.Now,those two parts will be evaluated separately.Its all about
39、having data that can be fed back into a stringent evaluation process to identify further effjciency opportunities.Then theres the challenge of Walmart as an international operation.As you grow within Walmart,there may become opportunities to supply its Canadian subsidiaries,or even further overseas.
40、That brings its own challenges,as you will need to comply with local regulations and legislation both in terms of your products and your business practices.12|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights ReservedIntroductionWhat You Need to Think About If You Are.0413|
41、Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights Reserved04|What You Need to Think About if You Are.2019 BlueGrace Logistics All Rights Reserved2019 BlueGrace Logistics All Rights ReservedWhat You Need to Think About if You Are.So far,what weve discussed applies to all shi
42、ppers.Yet every business is difgerent,and there will always be specifjcs that only certain types of suppliers need to focus on.In this section,well take a brief look at three types in particular:newer CPG companies,LTL shippers and those dealing in perishables(such as fresh food).A Newer CPG Shipper
43、With the introduction of consolidation centers and the end of stores holding inventory,the onus of predicting consumer demand is passed on to CPG companies.That means knowing who your end customers are,how they shop and when there might be spikes in demand,even if you do not sell direct.This is a ch
44、allenge for all CPG shippers,but whereas more established brands may have the resources to store spare stock,that capacity may not be available for newer businesses.This is where really clear insights into customers,coupled with effjcient internal processes and a lean supply chain of your own come i
45、nto play.Falling foul of chargebacks will quickly eat into profjts,making it vital that shippers can accurately predict consumer demand.Less Than Truckload(LTL)If youre LTL,the positives are the savings in not paying for half-empty trucks,but the drawback is less control over how the carrier gets to
46、 your distributor compared to a Full TL shipper.The carrier may pick up your pallets then go to another shipper for their products.It might head to a regional dock to unload your pallets to go on another truck heading somewhere else,before being cross-shipped onto a third truck with everyone else he
47、ading to Walmart.That means you have to build in additional time to your shipment planning to ensure that you comply with OTIF,which will have ramifjcations for your own production processes and supply chain.14|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights Reserved04|Wh
48、at You Need to Think About if You Are.2019 BlueGrace Logistics All Rights Reserved.Dealing in Perishables While targets may be tight for long-life or non-perishable goods,for suppliers that deal in products that have a limited shelf life the OTIF goals are even stricter.That two-day window becomes o
49、ne,which puts the emphasis on the shipper to be absolutely accurate with their deliveries.All retailers that stock food and drink,particularly that which needs to be kept in controlled,refrigerated environments,need it to be able to stay on the shelf for as long as possible in order to be as attract
50、ive as possible to customers.Get closer to Use By or Best Before dates,and consumers are less likely to buy leading to last-day discounting and wastage.THERE WILL ALWAYS BE SPECIFICS THAT ONLY CERTAIN TYPES OF SUPPLIERS NEED TO FOCUS ON15|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logist
51、ics All Rights ReservedIntroductionThe Upside0516|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights Reserved05|The UpsideIt might seem like becoming a Walmart supplier is nothing but hardship and the constant threat of chargebacks.Yet it is challenging because Walmart is su
52、ch a golden opportunity to get your products into the hands of millions of consumers,both in the U.S.and further afjeld.It isnt all about the sales opportunity,however.With retailers like Walmart looking for effjciencies,it forces their suppliers to either follow suit or fall ofg.By aligning your ow
53、n systems and processes with the demands of OTIF,you will end up a leaner,meaner machine.This means less wastage in your operations,resulting in less outgoings and more profjt.At a time when all sectors are undergoing huge disruption,this streamlining sets you up to thrive rather than simply survive
54、.While it is demanding,the practices and processes you on-board will unlock long term gains for your business.The question is what do you need to consider when aligning your business with the demands of Walmart?The Upside17|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights
55、ReservedIntroductionTop Tips on Being a Star Supplier for Walmart0618|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights Reserved06|Top Tips on Being a Star Supplier for WalmartHere is what weve learned turns a good shipper into a great Walmart supplier from working with bus
56、inesses just like yours:1.Its all about data:Walmart wants its supply chain to be as effjcient as possible,so its willing to share the data it has to help you shape your operations.If you dont sell direct,getting tangible customer intelligence can be a challenge,but Walmart will share information,su
57、ch as on-shelf availability and point of sale insights,more often.2.Work from the customer backward:On time doesnt mean in-time to Walmart.If you dont want to sufger chargebacks,you need to think about your timings from the customer backward.The customer buys your product after its been on the shelf
58、 X days,so how long prior to that do you need to be delivering it to the distribution or consolidation center?How long does it take to get from your warehouse to that point?3.Chargebacks hurt,so make sure its justified:Walmart may be huge,but it isnt infallible.Theres a lot of automation,which means
59、 sometimes chargebacks can be applied due to mistakes in their processes rather than your failed compliance.For instance,a carrier may have delivered your shipment OTIF,but the DC did not unload that day.The only way to contest is to have complete records of delivered OTIF against the buyers require
60、ments.Having a trusted logistics partner that can audit your scorecard and compare it to carrier manifests is critical,and could be the difgerence between receiving a chargeback and being able to challenge it successfully.4.Load planning:If you supply multiple products to Walmart,think about how the
61、y are loaded on the pallet or in the truck.Its no good having the back half of the truck full of products for distribution centers further down the line,or shorter life products near the bottom of the pallet.Top Tips on Being A Star Supplier for Walmart19|Walmart:The Retail-Supplier Relationship2019
62、 BlueGrace Logistics All Rights Reserved06|Top Tips on Being a Star Supplier for Walmart5.Think like a Roman:The Romans crisscrossed their empire with straight lines,because thats the most effjcient way from point A to B.You want to do the same,but build in factors such as weather forecasts,traffjc
63、patterns,fuel levels,and load points.Youre looking for the most optimized route because it will save you time,which in turn saves money.6.Packaging tips:People need to know whats in the box.That means distribution center employees,yes,but it also means customers.How will it look on the shelves?At Wa
64、lmarts Supplier Summit 2019,Foran said“packaging should be designed for impact and effjciency with large fonts that are easy to read,easy to fjnd and bar codes which also are prominent on the packaging.”7.Cut down on travel time:Fuel and transport costs are the great unknown,tied to everything from
65、crude production levels to the political situation in the Middle East and South America.You want to control as much as possible,so limit how far you need to move your inventory by positioning it closer to warehouse locations.If Walmart is selling your product predominantly in California,why not get
66、as close as possible to the new consolidation center?Limit the variables and you have a more effjcient machine.8.Appointment scheduling:Be aware that your mode of transport will dictate when your products can be delivered.Most LTL carriers will not allow you to pre-schedule appointments,preferring t
67、o wait until your freight has arrived at the consolidation terminal.It will then be co-loaded with other Walmart-bound deliveries,with appointments based on the trailer the carrier has allocated for that day.Its therefore vital that you,or more likely your logistics partner,can work closely with bot
68、h the carrier and scheduling system to make sure this is being done.By doing so,you will be better placed to identify exceptions,such as where the carrier cannot accommodate the delivery,and adjusting OTIF without penalty.Most suppliers dont realize this and miss the opportunity.It is important to n
69、ote,however,that this must not be abused and is for exceptions only.Your lead logistics service provider is expected to have the right connections and expertise to manage it professionally.20|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights Reserved06|Top Tips on Being a S
70、tar Supplier for Walmart9.Reliable carriers are worth their weight in gold:We hear of horror stories where carriers and shippers fall out because neither can clearly understand what the other is actually trying to achieve.The number one mistake people make is to think that being effjcient equals goi
71、ng for the cheapest option,when its actually about having every part of your chain operating reliably.You want a good price,certainly,but you need a partner thats aligned with your objectives more.10.The right foundations:You cant operate a 21st-century business using 20th-century tools.To compete i
72、n todays market you need to have the right technology underpinning your operations.Foundations that give you visibility and control optimize every aspect of your business.11.Embrace digital:Walmart is investing billions in its technology that means manual processes and paper documents are disappeari
73、ng.Digital tools like electronic bills of lading are becoming the norm.Shippers that fail to embrace the new paperless systems will stand out and slow down the process.12.Ensure everyone lives by OTIF:Its all well and good your logistics team is being held to OTIF,but when the penalties impact the r
74、est of your business,isnt it really a matter for everyone?It comes back to working back from the customer the process doesnt stop when the product leaves your dock,it should carry on through to your production team.If youve got a lead time of two weeks to produce new stock,thats not a just manufactu
75、ring factor,its a supply chain one too.21|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights Reserved06|Top Tips on Being a Star Supplier for Walmart13.Walmart wants you to win;let them help you:Walmart runs a sophisticated education network designed to support suppliers.Its
76、 in their best interest that you are operating to the best of your abilities,so make full use of their classes,academy and tools ofgered to help you do just that.14.OTIF is vital,but so is everything else:Walmart is taking huge strides in making its entire operation as sustainable as possible,which
77、includes targets for suppliers.These targets are only going to get stricter,so its a good idea to know what they are and keep yourself aligned.There will come a point where being 100 percent OTIF compliant,with customers buying your products in droves,wont save you if you have a huge carbon footprin
78、t and are unsustainable.Thats a lot to take in,so heres a one-ofg tip:15.How to write a great OTIF action plan:Walmart lives on data,which means evidence.Write a great OTIF action plan and you will have evidence to show how you will improve standards.But how do you do that if youve not done one befo
79、re?Googling isnt an option here-you need qualifjed,experienced support.Hiring the right people is one route-but they wont come cheap,and you may not be able to justify having them as a permanent employee.Another option would be to outsource to a competent third party.One which has experience in supp
80、orting suppliers to build effjcient supply chains,whether theyre supplying to Walmart,Amazon or any other big box retailer.Having a supportive partner that has done this time and time again,for all difgerent types of businesse sectors,means you get access to the right experience and support,tailored
81、 to your unique requirements.22|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights ReservedIntroductionBeing a Walmart Supplier0723|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights Reserved07|Being A Walmart Supplier2019 BlueGrace Logistics All Rig
82、hts Reserved“Being A Walmart Supplier-A Story from the FrontlineFor one Houston-based health and beauty supplier,working with Walmart was a dream come true until the tremendous growth it propelled led to distribution challenges.With vendor scorecards dwindling and chargebacks against purchase orders
83、 mounting,the need for a better solution was apparent.From numerous carrier meetings to drive on-time compliance to costly upgrades in service levels,the trend continued to show little improvement.Lead times were not an issue and inventory levels were manageable,yet carriers could not seem to comply
84、 with the OTIF date clearly displayed on the BOL.Purchase orders were being shipped with ample lead time and in most cases,early with guaranteed service at a premium.However,even with upgraded service,the carriers would typically refuse to refund the charges since they were delivered“on time”per the
85、 standard transit.To tackle this,the supplier analyzed the data and scorecards to determine the root cause and set a baseline for current state performance.Next,an assessment of ERP integration capabilities was performed.By linking this with a transport management system,this supplier was able to ap
86、ply custom business rules to achieve the missing link of the overall issue.What this meant was that no matter when the order was received in advance of the OTIF,the supplier could efgectively route the“Best Value Carrier”and provide the most optimal ship date,relative to the selected carriers standa
87、rd transit time.Each order,once approved within the ERP,would be rated and routed with a Walmart approved carrier delivering the lowest cost,standard service and shipped on the day that would best fjt that carriers network.This ensures the delivery was within the specifjed OTIF window.The supplier s
88、howed a 90%reduction in chargebacks within the fjrst 60 days of implementing this program and realized the best scorecard performance in recent history.24|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights ReservedIntroductionConclusionYouve done great work getting this far.
89、Now its time to do even better.Contact BlueGrace today and see how we can help you achieve exactly that.Now Its Time To Start WorkingAs we said before,the hard work starts now.Remember,you arent alone many CPG companies experience diffjculties keeping up.Back in August 2017,OTIF compliance stood at
90、70%,and its taken a while to get higher.Walmart wants you to do well so listen,learn and take the opportunity that awaits.Look at your own network,your own suppliers and operations,and see how they can work together to support your business with Walmart or any other big-box retailer.Technology and n
91、uances of logistics and supply chain operations are vital here.Working with partners who have the connections,fjrst-hand experience,and understand both the business and technology can make the difgerence between success and failure.BlueGrace Logistics is a freight and logistics services provider,and
92、 one of the top third-party logistics providers(3PL)with invaluable experience in managing complex logistics programs of leading CPG companies.The dedicated team has the fjrst-hand experience in planning,building and delivering supply chain solutions for CPG businesses that not only help them meet t
93、he requirements of their retail partners,but turn their logistics costs into a value add.25|Walmart:The Retail-Supplier Relationship2019 BlueGrace Logistics All Rights ReservedIntroductionABOUT BLUEGRACE Founded in 2009,BlueGrace Logistics is one of the largest third-party logistics(3PL)providers in
94、 the United States.With over 500 employees and working with over 10,000 customers to provide successful shipping solutions,the company has achieved explosive growth in its 10-year operating history.Backed by a$255 million investment by private equity fjrm Warburg Pincus,the company operates 12 locations nationwide,and its headquarters are in the sunny Tampa Bay area of Florida.For more information,visit 2846 S.Falkenburg Road Riverview,Florida 33578 Phone:800.MY.SHIPPING Fax:813.626.7447 Email: Web: