ROCHESTER, N.Y. — One of the primary lessons Wegmans Food Markets learned from its “New Ways of Working Together” trading partner collaboration pilot is that “we need to measure joint performance, how we are performing together,” rather than focus solely on suppliers, said Marianne Timmons, Wegmans' vice president, supply chain and global business-to-business.
In its pilot, which took place between February 2007 and October 2008, Wegmans collaborated with J.M. Smucker, Procter & Gamble, Coca-Cola, Frito-Lay and Kraft Foods on common goals and measures to accelerate growth, eliminate disruptions and improve the consumer experience. Wegmans used scorecards to measure the suppliers in a wide range of activities, including days of supply, on-time delivery, timely payment and deductions.
But Wegmans realized that to complete the circle it had to acknowledge its own performance as well. “With the Smuckers people, we said, ‘What can you measure us on? What are the things we can do better?’” Timmons recalled in a presentation last month at the Grocery Manufacturers Association's Information Systems/Logistics Distribution (IS/LD) Conference. “It took awhile for us to understand how we disrupt them.”
Timmons said Wegmans had “some of our best New Ways moments” during honest exchanges with suppliers. A Frito-Lay executive, for example, noticed that Wegmans receivers took 32 minutes to check in a Frito-Lay delivery to a Wegmans store, and pointed out that a nearby competitor did it in 2½ minutes. “They helped us get better, and that became a seven-digit savings for us and our DSD suppliers,” said Timmons.
Wegmans had been faxing 70 pages of promotional forecasts to Kraft Foods every week last year, until Kraft asked if the documents could be sent via electronic document interchange (EDI). “We didn't know we hadn't added them to our EDI transactions to make them more efficient,” Timmons said. Wegmans also improved the communication of perishable orders to its private-label broker, Daymon Worldwide.
“So the importance of trust and two-way communications was one of the key learnings that came out of the pilot,” she said.
Timmons encouraged other retailers to collaborate with their suppliers on a New Ways initiative. “Think about suppliers you work really well with,” she said. “Give them a call and get started. It pays great dividends.”
NEW PERFORMANCE MEASURES
Timmons acknowledged that one of the lingering issues complicating New Ways collaborations is agreeing on definitions of terms like on-time delivery and fill rate with suppliers. Even inside Wegmans there can be inconsistencies. “You'd think inside it would be easy, yet we had three different measures for on-time delivery.”
But the industry has addressed this issue in the form of the recently developed GS1 Trading Partner Performance Management (TPPM) standard. This standard defines a common set of measures companies can use to evaluate sales, supply chain and operational effectiveness, including sales growth, out-of-stock, order change and item data accuracy. For example, out-of-stock percentage is defined as “the percentage of items that are not available at their expected stocking locations out of the set of item stocking locations that were evaluated.”
“The idea is that two trading partners with the same underlying data will be able to use this standard to come to the same results,” said Matt Johnson, senior director, consumer goods industry strategy, Oracle, at the IS/LD Conference. The chances of trading partners concurring in that way in the past have been small, added Johnson, who has participated in developing the TPPM standard.
Johnson encouraged retailers and manufacturers to begin using the standard definitions in business systems. “These definitions are available today,” he said, adding that the current TPPM specifications can be accessed at www.gmaonline.org/industryaffairs/newways.htm.
The next step, Johnson noted, is the development of a process to allow retailers and manufacturers to transmit the measures to each other via standard messaging. Under the auspices of GS1, a pilot testing this process is planned for the summer, he said.