Retailers Master the Art of Speed
Kador, John, Chief Executive (U.S.)
Wal-Mart, with $100 billion a yea in sales, has mastered the art of speed with an elaborate system that ties the retailing powerhouse and its thousands of suppliers together in an network of information, just-in-time inventory, and up-to-the-second sales feedback. Here's a look at how Wal-Mart's system works-and why other other retailers have followed the retailer's model.
If you want to be a supplier to WalMart, you must comply with a variety of technical specifications for sharing information about inventories, shipments, schedules, logistics, forecasts, and accounting. The stakes are high: You are penalized if you make a mistake. You also need to install Wal-Mart's Retail Link system, which communicates exclusively with the Bentonville, AR retailer. What's more, you probably have accounts with Kmart, Sears, Home Depot, and other retailers, and each will insist you deploy their own standalone systems, as well. Complying with these specifications can be burdensome, but currently there is no easy alternative.
"I'm trying to fight a situation where I need a Wal-Mart machine, a Kmart machine, an Ace machine, and a Home Office machine, " says Michael Freeman, director of operations at WD-40 Co., a San Diego, CA-based maker of aerosol lubricant. "Far from gaining efficiency, such requirements actually add to our cost structure because now we have to staff, monitor, and administer these redundant systems."
But the quality of information provided by these systems can make a supplier's life much easier. WD-40 implemented electronic data interchange with Wal-Mart in 1993 to streamline order processing. All purchase orders and purchase-order changes and acknowledgments between Wal-mart and WD-40 are now completely electronic, according to Freeman. WalMart's orders for WD-40 flow directly to WD-40, which edits and verifies them, then on to the packager, sends it on its way. There is therefore no need for inventory.
Wal-Mart shares information generated by its retail scanning systems with its major suppliers because sharing benefits both parties. When suppliers know what products are moving, they can do better forecasting and promotion. …