Collaboration - to supply chain efficiency

Often, as a supplier to major customers, the structure of business is such that, these established customer or sourcing division dictate the condition of supply. Example will be large conglomerate like WALMART or KINGFISHER will have a ready tailored requirement of mode of supply.

The policy will indicate;

• packing method
• carton sizes to use
• label requirement
• expected cost of purchase
• quality control
• term of freight





Demand Planning Cycle





Demand Planning Cycle

• lead time requirement

Many times, the sales or marketing division of the supplier side will be overwhelmed by the requirement, as if this is a cast in stone.

Is that so?

Ironically, the expert of the product are with the manufacturer or supplier and not the buyer and as the originator of these product, these supplier should know best how to handle and ship the order.

Cost of moving product from seller to buyer can be collaborated and review jointly before any decision should be made, irrespective of any constraint set out by the buyer guidelines.

Typical example of cost of supply chain which can be optimize are as following:-

1. Packing quantity per box, there are cases where the box are not fully optimize  either by increase the quantity or changing the box size. Large retailers for example always wish to set a standard guide line for display box size on its shelf. However, very often, both parties are blinded by increase in cost due to unable to optimize the packing method. Setting box sizes without looking at other aspect can increase cost of shipping and handling tremendously.
2. Limit on weight, due to the need to optimize cost of delivery and ease of calculating value of purchase per shipping container, supplier are given a set of lower and upper limit to meet, on the weight, otherwise, the goods will not pass quality control. Due to this, supplier sometimes failed to question the reason behind this control, beside for those product which are sold by weight. Supplier role in this area is to educate buyers on this aspect. Lighter products which still able to meet the stringent standard required will meant lower shipping and handling cost, beside able to lower the cost of the product.
3. Innovative proposal, smart seller will always look for opportunity to to offer product or make offering "outside the box". It could be a one-off offering for certain product in which both side will be able to take advantage to increase turnover and profit. Inability to look into this aspect continuously and forming assumption that "it waste of time" or "we have tried before and failed" will result in stagnant relationship. Innovative proposal could also meant the offer to shortened lead time by building stock and communicate effectively to the buyer. Fear of unwanted product due to low sales can be avoided by regular information flow from both side.

The inability of seller to make the correct move and build up effective strategy to build a solid supply chain relationship with their customers, are sometimes always due to been overwhelmed by the buyer requirement. Lesser noted experience on this aspect is also part of the reason as well.