To Avoid Large Chargebacks and Penalties, Improve Supply Chain ExecutionJune 14, 2016
The famous red Target “bulls-eye” is now trained squarely on suppliers that miss delivery windows, causing merchandise out-of-stocks and lost sales.
Sourcing Journal recently reported, “as of May 30, Target’s domestic suppliers will face tightened delivery deadlines.” In addition, “they’ll no longer have the two-to-12-day grace period to ship goods late without penalties, and fines for inaccurate product information could reach as high as $10,000.” This follows a recent move by Walmart that changed the “on-time delivery standard from 90 to 95 percent and cut the delivery window to within one to two days of the target date.”
With these moves, both Target and Walmart have reduced the margin of error to near zero for suppliers. And with Target and Walmart leading the way, other retailers will soon follow suit.
The message to brands is clear: Supply chain execution is your #1 priority. Without it, you stand to incur huge penalties – and a possible loss of business from your most important customers. There’s plenty to be concerned about, too; according to Just-Style, “a large number of global apparel companies are still operating with little knowledge or control of their supply chains.”
Without better supply chain execution, production issues – quality problems, delayed shipments on raw materials, overbooked capacity, test and inspection failures and much more – can’t be shared before problems escalate into full-blown crises. By the time companies sort through mountains of spreadsheets, emails and faxes, they can be facing delayed shipments, rush charges for overnight shipments, and a failure to meet required delivery windows resulting in severe financial losses.
In this kind of environment, supply chain excellence is the #1 mandate. And the good news is a new generation of supply chain management systems is helping enterprises break through their organizational barriers and improve supply chain visibility and transparency. These new SCM systems connect the data and systems in an organization to drive better decision-making and faster turnaround time – turning SCM into an enterprise platform that helps brands optimize lead times, improve profitability and meet the new mandates from their most important customers.
To learn more about how supply chain systems can help improve overall performance, download NGC’s latest whitepaper, Optimize Lead Time, Maximize Profit.