Benchmarking Your Competitor: Get Your Hands on their Vendor Guide!

Do you want to understand the supply chain capabilities of your key competitors? Or gain insights into how their supply chains are structured? If your competitor is a large company, they almost certainly have a vendor guide. And if you type their name and “vendor guide” into a search engine, there’s a good chance you’ll find their vendor extranet where you can access and read their vendor guide.

I did that for a large, “big box” retailer and here is a summary of what I read and the conclusions I drew.

The introduction to this guide showed me the retailer’s aspirations: “Our supply chain is designed to be flexible and responsive to consumer demand.” After a historical focus on reliability and efficiency, the supply chain management field is now focused on flexibility and responsiveness.

To drive trading partner accountability, there is a section in the guide that describes the penalties associated with lack of compliance around not sending advance ship notices (ASNs) or poor delivery performance. This retailer applies chargebacks not just for shipments that are late, but also for shipments that arrive early; for sending less or more than was ordered; for not having accurate UPCs on all delivered products; and for lack of item dimensional accuracy. This retailer has described its perspective on the composition of a perfect order.

The type of EDI messages a company uses tells you something about its capabilities. As mentioned earlier, this retailer requires its trading partners to send it advance ship notices. ASNs are a best practice; they improve labor planning at the DC, receiving, and put-away.

Interestingly, this retailer provides 852s (“Product Activity Data”) to its suppliers. This data set allows the retailer to tell its manufacturing suppliers its sell through at the store and DC levels, as well as quantities on hand. This important information allows the retailer’s manufacturing partners to improve their forecasting and replenishment processes. Some retailers charge manufacturers for providing this data. This retailer does not, which suggests that when they say they want to be “responsive to consumer demand” they truly mean it. Still, 852s are not as advanced as the kind of on-demand supply chain extranet that Walmart provides with RetailLink.

There was a relatively small section in the guide describing the EDI associated with Direct-to-Store shipments. Reading between the lines, it seems like most shipments flow through the retailer’s DCs.

When I read the dotcom requirements, I came away with the distinct impression that the retailer has a specific DC focused on this area, which is smart, because direct-to-consumer fulfillment requires different capabilities.

The vendor guide also had a section called “Vendor Item Management.” Here is the introduction to this section:

“Every process in our supply chain relies on accurate data to effectively and efficiently fulfill customer demand. Item attributes, such as item and carton dimensions, carton weight, item perishability, and pack configuration must be accurate for our success. The accuracy of this information is critical within the supply chain as it affects freight costs, space planning, DC processing efficiency, and store checkout time.”

The information in that short paragraph suggests that the retailer has advanced logistics planning capabilities. This assumption is further strengthened by the section in the guide that explains how the retailer’s vendors should make appointments at the DC a few days prior to the truck arriving. However, the appointment form was paper based. Thus, their dock scheduling is manual and error prone.

The retailer makes use of both prepaid and collect shipments. The guide does not seem to emphasize prepaid, which likely means the retailer has not taken control of its inbound processes. Thus, it is not leveraging its size to drive lower freight costs.

So, when I read this guide, what conclusions did I draw? I saw advanced, but not best-in-class capabilities. This is a retailer with billions in annual revenue. For a company that size, I’d grade them a B or a B+.

Comments

  1. Great point on controlling inbound transportation. By not controlling their inbound transportation they are not able to optimize all orders across their facilities. As individual orders are grouped, it could be possible to create multi-pick, single drop shipments. Also, LTL pickups could be crossdocked and interlined as truckload shipments to inbound destination points. I wonder if they will look at this in time.

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