Walmart Supply Chain performance looked like artwork from The Little Prince, thus their Supplier Reliability program initiative...
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As we have been discussing for several weeks (see Compliance - Burden or Benefit), Walmart has embarked upon a series of interlocking changes (read Walmart sea change) in their supplier program. Last week I met Rowland Whitsell of Walmart. He presented the Walmart Supply Chain Reliability program, motivation, program content and progress to date.
Rowland showed the starting performance metrics for Walmart on time. I scribbled down notes from this talk and captured a representation of the program’s beginning benchmarked performance. (This is not accurate; just what I was able to scribble down).
I suddenly felt like I had seen a similar picture before. Was it a hat? Those who read The Little Prince, by Antoine de Saint-Exupéry will remember.
But just like in the Little Prince—it was not a hat, but a snake that had swallowed an elephant—so in our case, my notebook graphic represents something different for the supply chain.
Though I can think of a really good reason to be early, like my Mother told me so, the reality is that in supply chains it costs a lot of money to be early. In this case, many millions in carrying costs. Carrying costs means less margin for all. And early is a lack of precision which also reflects the lack of responsiveness inherent in long cycle times. Once you have shipped, suppliers might be surmising, Walmart can’t cancel. Also, they can’t ding me on my scorecard for being late. All true, before.
But we all must grow up some time. The Little Prince has to go back to his planet and supply chain practices have to get better. After seeing many compliance presentations from retailers over the years, I felt like this was a pretty reasonable program, to be honest.
Interesting, and hats-off on this to Walmart, who doesn’t want to spend time in the minutiae of additional transactions, chasing disagreements with suppliers for a mere pittance, and increased phone calls, emails and finger pointings, which add to the cost of the business (remember) vs. many compliance programs that we see around. So, variances and penalties that equal $1000 or less will not be pursued.
This is quite like a really lean program to improve performance yet reduce disputes, transactions and paper work, and to not create a revenue source as some retailers have.
So many of the principles in supply chain focus on customer metrics, shorter cycle times, responsiveness, accuracy, and pursuit of continuous improvement. So far, the Walmart program sounds like a motivator to do just that, rather than an odious “do it our way or else” program.
If, over time, it turns out I am wrong, I’ll eat my hat!