Walmart Raises the Stakes for Supply Chain Reliability

Walmart Raises the Stakes for Supply Chain Reliability

February 19, 2018

Walmart has raised the stakes for supply chain reliability. Its new on-time, in-full delivery guidelines (OTIF) were rolled out in 2017, with escalating requirements for 2018.

Both early and late deliveries get the thumbs down; failure to meet the metrics results in the supplier being fined 3% of the value of their order.

Requirements vary, depending on whether the shipment is a full-truckload or less-than-truckload (LTL) shipment. But either way, suppliers and 3PL’s cannot use weather or other uncontrollable events as acceptable reasons for failure to deliver in full and on time.

This post is based on the Supply Chain 24/7 article, Keeping Pace with Walmart’s On-Time Delivery Requirements, by Scott Bolduc, February 5, 2018. 

Discussion Questions
1. Assume that you are responsible for designing a lean supply chain for a supplier to Walmart. Find a company that supplies packaged water to Walmart from an internet search.  (Or find another company that supplies Walmart if you choose.)  How would you improve the supply chain to become lean to meet the demands Walmart has now imposed for suppliers such as your chosen company?

Guidance: Students should review lean supply chains, facility location considerations, and the Continue reading

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After 100 Years, a Year is the Limit

After 100 Years, a Year is the Limit

February 18, 2018

L.L. Bean has changed its 106-year old return policy. Returns will now be limited to a one-year time period.

If that sounds generous, keep in mind that for over a hundred years, the company has offered an ‘unlimited’ customer return policy.

Over the last five years, the viral nature of social media has accelerated losses on returns to $250 million. These products are what the company calls “destroy quality”, items so used or damaged they’re sent to landfills.

This post is based on the CBS News article, L.L. Bean changes its unusually generous product return policy, by The Associated Press, February 9, 2018. 

Discussion Questions
1. How might the merchandise return policy change impact L.L Bean’s order winner(s)?

Guidance: Students should review the concept of order qualifiers/order winners.  Ask students to identify the order winner(s) that L.L. Bean had under the old customer return policy.  Students should then compare the new customer return policy to competing firms in the retail industry.  Does the new return policy change L.L. Bean’s order winner(s)?

2. With over $250 million of returns at L.L. Bean over the last five years, identify the supply chain issues created by Continue reading

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Whole Foods and Prime Time Delivery

Whole Foods and Prime Time Delivery

February 17, 2018

Amazon is piloting free delivery within two hours from a Whole Foods location for Prime members. One hour delivery will also be offered for $7.99.

This post is based on the CBS News article, Amazon to deliver Whole Foods groceries for Prime members, by Aimee Picchi, February 8, 2018. 

Discussion Questions
1. What additional capacity will be required for Amazon to offer fast delivery? How can this additional capacity be generated without requiring significant resources?

Guidance: This is a thought question for students to discuss.  Students should note the use of technology to quickly schedule and route truck deliveries, possible changes to service design within Whole Foods to free personnel to drive the trucks, and potentially outsourcing to a 3PL to implement the shipping service.

2. How does Amazon’s acquisition of Whole Foods change the supply chain system for Amazon?

Guidance: Students should be asked to explore the differences in inventory perishability between Amazon’s traditional products and grocery products.  How does perishable inventory impact the design of a lean supply chain?

 

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