Guest Author: Deb Miller
Global 360 Inc.

Wal-Mart is once again on the annual Gartner AMR Research Top 25 Supply Chain list – at #4 this year. Love them or hate them, Wal-Mart has always competed brilliantly on the basis of their supply chain, focusing on their distribution efficiencies and using IT to help them drive economies of scale.  Now in their latest initiative, they are taking over transportation from their suppliers to reduce the cost of hauling goods.  The strategy is part of what Wal-Mart calls its “productivity loop” – efficiency ultimately reflected in lower bills for shoppers at the cash register and an increase in sales for Wal-Mart stores.

To me, one of the most interesting elements of this latest Wal-Mart move is the nature of the competitive advantage it gives them.  Apparently a side effect is that manufacturers may face increased transportation costs on deliveries to other retailers as they lose scale.  Those increased shipping costs more than likely will be passed on to other retailers. In the Bloomberg BusinessWeek article I read, former Wal-Mart executive Randy Huffman comments, “That aligns with Wal-Mart’s taking cost out of the supply chain for their benefit and not their competitors.”

So, what is your competitive advantage – have you found your productivity loop?

 If you’re not the world’s largest retailer like Wal-Mart, or even if you are, you need to constantly consider what your company can do to stay ahead of the competition. While the physical flow of product over the supply chain is one place to find productivity gains, the financial and information flows hold great potential as well. In my experience, the intersection of IT and the supply chain is a great place to lower your costs and increase your yield.

How to do this? 

Well, do you have SharePoint in your enterprise?  Wait for it…of course you do. Then consider what you might achieve for example by using BPM (business process management) to process-enable your supplier data in SharePoint and improve your supply chain cash flow.

Take Lowe’s for example. They process-enabled their supplier data and adopted better payment discipline to enable accurate payments against their supplier SLAs. Companies like Lowe’s also use process and document management solutions to improve accounts payable productivity across the board, eliminating errors that cause delays and unnecessary adjustments, such as goods being received for which no invoice has been generated, or vice versa.  This can work all along the supply chain!  CIBA Vision used BPM and increased their invoice processing productivity by 37% and improved document turnaround from 5 days to less than 24 hours.

One industry stat found that an average worker spends 20% of working hours searching for previously created docs or emails. You could beat that stat for your supplier payments, using SharePoint and BPM for a really reasonable TCO (Total Cost of Ownership) to avoid situations where the worker needs to track down information. As a result, you avoid delaying the process and missing your time-sensitive vendor discount terms – in effect, you pay your suppliers “just in time.” 

The idea of paying your suppliers “better” – okay, “just in time” – to maximize your cash flow on discount terms is just one example for a “productivity loop” advantage. I’d like to hear your ideas for using SharePoint and process improvement to contribute to supply chain efficiencies for your business.

Guest Author: Deb Miller
Global 360 Inc.

Deb Miller is Director of Market Development for Global 360. Her work focuses on industry strategies for business process improvement. You can read more of Deb’s writings at http://DebsG360.wordpress.com/ and at @DebsG360 on Twitter.