For years producers have sent their products to individual retails stores and endured the seemingly endless waits for an unloading slot plus the inevitable claim “for missing goods”. Why do International Key Account (IKA) retailers have so much power to frankly mess around with very often very experienced and professional producer logistics? Slick supply chains frequently grind to a halt once the retailer back of store unloading bay is reached. Unloading delays and stock loss simply postpones the arrival of producer goods on the shelf.
This probably does not bother the retailer too much as shoppers may well decide to buy another product which has managed to make it to the shelf. For the brand owner of the products sitting in the rain it is never- to-be-recovered lost sales.
So, after years of criticising producer supply chains as inefficient and weak, retailers are increasingly building logistical platforms to service their own store networks. Producers are now being asked to send goods to a central platform where goods from multiple suppliers are consolidated before shipment to individual stores. Sounds sensible; instead of 20-30 trucks arriving at the retail outlet you get a smaller number of in-house or 3PLP trucks loaded with consolidated goods for each store.
These “platform” trucks take priority over those clinging onto direct delivery and sweep past the queues and up to the unloading bay. Use of platforms involves some sharing of cost to serve benefits and this usually involves considerable negotiation to ensure both side perceive a win-win. However, is it really a worthwhile win for anyone?
- Simplicity. Well it would be if producers could send bulk pallets to the platform for subsequent picking per store. Instead, they usually still have to pick to order at their own warehouses before dispatch to the platform.
- Cost. There will be some cash saved by not delivering to a country-wide store network but that is likely to be eaten away by the adjusted credit terms demanded for the pleasure of using the platform.
- Reliability. There is a belief that retailer platforms will ensure goods are replenished on the shelf faster and more often. You are still dealing with the archaic store unloading bay organisation in addition to the involvement of an extra party at the platform. Why should this be any better than the previous direct delivery operation?
- Simplicity. Well, yes if you consider they only have to deal with a few trucks per day.
- Cost. If they have had a good negotiator they have probably gained more than they have lost in the deal.
- Reliability. No, I do not think so. An extra step has been added to the supply chain which really does not add any value and is simply another logistical hurdle to overcome. Success really depends on how well the platform is operated by in-house or 3PLP management.
In summary, the retailers probably see and obtain a benefit from use of a platform. For producers cajoled into sending picked pallets to sub-optimal logistics platforms; I just cannot see it…..yet!