Subscribe to our free, weekly email newsletter!


Supply chain efficiency can lead to bottom line success, says retail shipper

By Jeff Berman, Group News Editor
October 08, 2012

The concept of “following the money” may apply to the supply chain and freight transportation sectors more than most. It comes from a school of thought, which states where the freight is, the money is.

What’s more a case can certainly be made in that having a strong supply chain can, in fact, equate, into a successful bottom line for a shipper. That mindset was front and center at a session at last week’s Council of Supply Chain Management Professionals (CSCMP) Annual Conference last week, entitled “How Supply Chain Drives Shareholder Value.”

In his comments at the session, Greg Rake, senior vice president-supply chain, at Pier 1 Imports, explained that supply chain’s influence on company value can be measured through speed to market.

“The faster you get products to market, the more full-price sales you get,” said Rake. “When you look at what we do, we understand there is some period of time where we bring in a brand or a new product line, color, or style, we have some sort of a proprietary system—or timeframe—where we actually are allowed to be the only company in the market that has that style, color or whatever that is. When [larger companies] get your business, it is going to be a bad day. If we can figure out a way to get a new product into the market prior to Target or Wal-mart, Kohl’s or J.C. Penney…we get to enjoy full-price sales for some period of time. This shows why speed to market is important.”

The engine that drives speed to market is effective supply chain management. Rake quipped that as a college student at Ohio State University 30 years ago, supply chain was someplace where old manufacturing and sales majors were out to pasture.

But now, especially in manufacturing and retail environments, supply chain ranks in the top 3 for a company’s cost of product, along with real estate, which is more of a fixed cost, and labor.

“People are now looking at the supply chain and saying ‘that is really a place where we can drive gross margins,’” he said. “It has become increasingly important that we as supply chain executives recognize the impact we have on the bottom line.”

Another area in which supply chain can boost the bottom line is brand protection, said Rake, while stressing that nothing good happens when you touch products.

When products are touched, costs are added, the product is slowed down, and the chances of it being broken increase, according to Rake.

“At Pier 1, each product is touched 11 times before it gets to the consumer,” said Rake. “Every single day, our team works as hard as it can to figure out how to reduce the number of touches we have before the product reaches the consumer.”

And when dealing with tough situations, Rake said there is always a “best” answer for every supply chain, which identifies what is best for the shipper as it relates to the best use of money and time. This also applies to mode selection.

If Pier 1 moved its goods by only air freight, Rake said the company’s transportation costs would easily triple.

“They talk about the fast plane and the slow boat; you need to figure out where your supply chain fits,” he said. “And the best answer changes very frequently. You need to always look at things like macroeconomic issues in Europe, currency fluctuations in China, geopolitical things, and the costs of real estate and fuel.”

About the Author

Jeff Berman headshot
Jeff Berman
Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Transportation stakeholders reliant on North Carolina’s major seaports are welcoming news this week, which outlines plans to enhance the intermodal and cold chain network in the region.

The index ISM uses to measure non-manufacturing growth—known as the NMI—was 56.9 in February, which was 0.2 percent ahead of January and also 0.1 percent ahead of the 12-month average of 56.8. Economic activity in the non-manufacturing sector has grown for the last 61 months, according to ISM.

Non asset-based third-party logistics (3PL) services and logistics technology services provider Transplace said today that Brooks Bentz has joined the company in a newly-created role as president of Transplace Consulting in conjunction with the launch of the company’s new North American consulting services practice.

The advent of e-commerce continues to grow and gain increased traction over time. The many ways for consumers to order and purchase goods online continues to expand and leads to various subsequent byproducts of online purchases, including shopping through multiple channels, and delivery and payment options, among other things. These types of topics serve as the thesis in the second annual UPS Pulse of the Online Shopper Global Study issued this week by UPS and comScore Inc.

A major highlight of CEVA’s fourth quarter performance was its new business wins, which were up 14 percent for all of 2014, with Freight Management wins up 14 percent, and Ocean Freight and Air Freight wins up 30 percent and 14 percent, respectively, while Contract Logistics wins were up 2 percent.

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2015 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA