Walmart….I know it is almost universally recognized as a dirty word for the many challenges they create for their DSD suppliers. However, today I would like to talk about the beneficial changes to operations that have resulted from their ASN initiative.
Let’s first look at how many “traditional” DSD vendors handled their order flow before ASN’s (I am going to state the implied assumption of pre-sold orders rather than peddle sales here, but really ASN is conceptually impossible without pre-sales).
- Order is received by vendor “X” hours or days in advance of required delivery (the method of entry is for another discussion at a later date) into route accounting software.
- Order goes through some level of processing to determine how it will be built. Eg. Products are aggregated with common packages, or order is built specifically for customer (read my previous blog on whether to build by order or not).
- Pallet(s) are built by the distribution warehouse staff with paper pick tickets / load sheets. Possibly with, but more likely without checking of pallet content.
- Driver shows up the following morning and verifies his load content and has to either manually pick additional product to replace short picks / miss-picks, or if they are lucky gets some help from the receiving staff.
- Driver delivers goods to store where additional invoice/delivery adjustments may be required due to earlier verification issues.
This process obviously has some fairly inefficient steps here, but I think it is safe to say this was generally accepted, and even still is today with many small to medium sized distributors.
The Walmart ASN initiative continues to roll out across North America. To be compliant DSD suppliers not only have to pick at a rate of near constant perfection, but they also have to submit this information well in advance of the driver showing up at the back door with product. Meeting these requirements means manual picking processes have to go away and any pick discrepancies must be accounted for AND communicated in advance of delivery. This means adding a step to update pick quantities and another step to update delivery handhelds have to above process. It doesn’t take a rocket scientist (no offence to the rocket scientists), to figure out the changes required to complete these tasks cost $$. But let’s look at how these operational changes provide benefit beyond being able to continue to supply Walmart with product.
- Productivity Metrics: by using either a handheld or mobile computer solution you should be able to track more data than just updated pick quantities. Why not select a solution to track picking time to generate productivity numbers? These metrics could be used for incentive picker compensation or alternative motivation plans.
- Driver Check Out: with loads already reflecting the changes to pick quantities driver checkout processes should take far less time, getting them out into the trade faster.
- Delivery Time Reduction: similar to point above, with accurate load/invoice information route drivers reduce time required to handle the administration side of mobile sales, and should be able to spend more time actually servicing stops.
- Risk of Fraud: unfortunately fraud happens…but with accurate order/invoice numbers the need for invoice adjustment will theoretically go to zero. While I doubt the zero adjustment goal will be present 100% of time, far fewer invoice adjustments means those that happen need better explanation and can be investigated to confirm legitimacy.
- Route Reconciliation: here is yet another spot where accurate orders result in time savings. The lack of invoice adjustments, and accurate inventory numbers save labor for route drivers and reconciliation clerks alike.
- Inventory Accuracy: actual pick quantities rather than relieving inventory based on expected numbers give your operation and sales teams real on hand data to know what needs to be ordered, and what is available to sell.
As you can see there are definite benefits to implementing a process solution where actual picked quantities are efficiently tracked. To truly reap the benefits of this process though, operations should be applying this supply chain improvement not only to their Walmart ASN accounts but to all (or at least the majority) of their accounts!
Traditional perceived challenges to dealing with Walmart aside, I think this is one area where the supplier integration changes they have created in the DSD supply chain best practices are actually forcing operations to become more efficient! I hope that you consider some of the points above and how they could help your direct store delivery operations as well.