Flow lowers the cost of goods sold
June 11, 2010 By Andrew Joseph
When shipping perishable foods, the shorter the storage time, the better.
Jeff Kelly, general manager food and consumables, west at Supply Chain Management Inc—Walmart Canada’s third-party logistics provider (3PL), puts a lot of stock into this belief.
Kelly walked delegates at the 85th Annual Purchasing Management Association of Canada (PMAC) National Conference in Regina, Saskatchewan on June 10 through Walmart Canada’s decision to move to a no-stock distribution model for its perishable food items.
Walmart doesn’t accept any perishables into its distribution network unless they’ve already been allocated to a store. Once the shipment arrives, instead of going into storage it is disassembled and re-sorted for store delivery within minutes of being received.
The initiative involved a lot of back-end planning with vendors—lead times are now extremely short, for example—but it’s paying off. It’s allowed the company to rely less on forecasting and more on actual real-time needs. It’s reduced shrinkage at stores and the distribution centre. It’s resulting in fewer touches in the supply chain. And it’s helping the bottom line.
“Flow really does reduce the cost of goods sold,” Kelly says.
Look for more in-depth coverage of this presentation and more in the July-August issue of Purchasingb2b.