ORLANDO, Fla. — Wal-Mart Stores is renowned as a fierce competitor whose low prices typically send shock waves across the retail landscape, but when it comes to technology-based supply chain standards, the Bentonville, Ark.-based retail giant takes a much more collaborative approach with other retailers and suppliers.
While implementing a wide range of these standards in support of its well-respected logistics efficiencies, Wal-Mart fully realizes that the more these standards are adopted by other retailers and suppliers, the more everyone benefits, including Wal-Mart.
That was the message imparted by Gary Maxwell, Wal-Mart's senior vice president of international supply chain, in a presentation at the 2007 U Connect conference here at the Gaylord Palms Resort this month. He urged suppliers and retailers to work together on standards that benefit the industry.
“Where there is a standard, follow the industry standard and the entire industry benefits,” said Maxwell. “Use of standards reduces friction with trading partners.”
As one example, he cited the Voluntary Interindustry Commerce Solutions Association (VICS) bill of lading standard, which has helped Wal-Mart improve efficiencies and identify problem areas in appointment scheduling. “We have much more efficient appointment scheduling with our suppliers [and] the information in our system is a mirror image of the information in our suppliers' systems,” Maxwell said.
Wal-Mart's accomplishments with the bill of lading standard were recognized at U Connect with a VICS Collaborative Commerce Achievement Award for Supply Chain Excellence. In presenting Wal-Mart with the award, VICS said that 70% of the retailer's top 100 vendors now comply with the bill of lading standard, and those in the top 30% are 100% compliant. In particular, transportation provider JB Hunt's compliance has improved to 91% from 30%.
In addition, Wal-Mart is making a big push toward leveraging the Global Data Synchronization Network (GSDN), a division of GS1, Brussels, which synchronizes retailer and supplier data in a secure, global registry. “If you happen to be one of our suppliers and are not exchanging information, please start,” Maxwell said.
While it is synchronizing data with more than 1,000 suppliers, that still only represents just over 7% of its total supplier base, said Ken Wells, Wal-Mart's senior manager, information systems, who took part in another U Connect session. (See “Global Goals,” SN, June 18, 2007.)
Wal-Mart is also pursuing its well-publicized RFID initiative with several hundred suppliers who are equipping pallets and cases with Electronic Product Code (EPC) tags.
The chain is also standardizing processes through the Global Commerce Initiative's GlobalScorecard.net, which helps companies assess their Efficient Consumer Response (ECR) capabilities. “Our common goal is to meet demand with minimum inventory,” Maxwell said. “Carrying costs is not the biggest factor; it's the triple and quadruple handling [of products].”
One collaboration tool that has already worked well for its suppliers is Wal-Mart's Collaborative Forecasting, Planning and Replenishment (CFPR) website, which helps suppliers identify out-of-stocks. It is used by the industry because data given to suppliers is at a level that they can “roll up and use in any way they want to distribute it,” said Maxwell. “If we tried to drive every supplier to use data in the same format that we like, it wouldn't be used.”
Many of these collaboration and standardization projects have been successful because of Wal-Mart's internal system for reviewing projects it should invest in — its Supply Chain Collaborative Board. The board, which includes some of Wal-Mart's suppliers, has directed the chain on a number of projects. “If we're not looking ahead on how this [project] is going to affect the broader supplier community, they let us know,” Maxwell said.
Wal-Mart has gained some positive press of late for its sustainability initiatives, one of which is asking suppliers to reduce the amount of packaging they use. Maxwell said the company wants to standardize some of its sustainability initiatives. “There are no standards or data exchange in sustainability.”
Wal-Mart executives are focusing on “sustainable shipping” using pack size analysis and transportation optimization. “There are plastic items, corrugated boxes and inner sleeves around products that [we can look at] to change the way we do business, but also improve sustainability,” Maxwell said.
For example, executives are in the midst of a pilot project to determine efficiencies from eliminating plastic lids used on Wal-Mart's Great Value yogurt. Instead of placing both foil lids and plastic lids on each container of yogurt, the retailer has switched most of its yogurt containers over to foil-only lids.
From this change, the retailer and its suppliers have already saved $1 million in production and transportation costs and improved sustainability. Nearly 500 tons of polypropylene and 197,846 gallons of gasoline used to transport the lids have been eliminated.
Maxwell aims to standardize more of those types of packaging and shipping processes, which will improve Wal-Mart's sustainability at the same time.