September 2006 - Backend Business

Retail Sales Merit Special Attention

By Hal Altman

When you want attention to a special project, you seek out a specialist. With retail sales and distribution this is no different.

You need a system that provides an end-to-end solution for multichannel initiatives designed to serve the retail industry’s specific needs. Look for web-based tools for visibility and control across all steps in the commerce supply chain. Find a single source integrated solution provider for warehousing, transportation, destination, cross docking, load consolidation and inventory management, as well as other value-added services.

The unlimited potential of sales is the carrot waved by the over 300 top retailers, and if your company wants a bite, you must be able to play by their rules and follow their guidelines without question.

Major chains like Wal-Mart, Target, Bed Bath & Beyond, JC Penney, Home Depot, Lowe’s, Walgreens, CVS and others all have their own particular wants and needs, and it is essential for you as the vendor to find a fulfillment or distribution company that can service these needs and is prepared to make any and all changes that inevitably come up during a major program. Flexibility is key to the success of any program and a strength you should not do without.

As in consumer fulfillment, there are basic services that are mandatory if you want to approach and be a player with the major retailers, such as:

  • EDI integration - This is the exchanging of information electronically rather than using faxed or hardcopy purchase orders. The basic premise is that high transaction costs can be minimized using electronic documents versus paper. Major chains demand EDI integration with their suppliers and in many cases will not even consider your product without EDI integration available.
  • Vendor compliance - This is the ability of your fulfillment or distribution company to pack, palletize, mark cartons, barcode, shrink wrap and ship in the manner dictated by the retailer. In most cases, the retailer will dictate how, when and where they want the product. This can range from individual store drop shipping to multiple containers to various distribution centers. The harsh reality is that it is “their way or the highway!”
  • Meeting shipping dates - Retailers are sticklers and are demanding about when you ship, how you ship and when they receive your merchandise. In many cases, these windows are small and you must be able to comply with these dates or you risk missing the sale, tab or ad the merchandise was purchased for. If you miss these dates, you stand a good chance of either having the goods refused, returned or accepted with a very expensive chargeback attached.
  • Volume - If you want to be a major supplier in the retail game, you have to be prepared to ship a great deal in a short period of time. Major chains can order 75,000 to 100,000 units (the equivalent of 2,000+ pallets) all to ship the same week-packed, labeled, marked and palletized according to their specifications. If your distribution center cannot handle this type of volume, you either have to find one that can, or you will have to avoid the major retailers.
  • Real-time reporting - Your fulfillment or distribution center must be able to furnish you with “real-time reporting.” This includes receiving reports and bills of lading, RF inventory control, shipping documentation and tracking, as you will need all of this information to satisfy the demands of the majors. Real-time access to shipments allows for daily invoicing to increase cash flow and provide the ability to electronically invoice. To avoid chargebacks, you should be able to immediately notify your customers electronically. Be prepared to confirm pallet counts, pallet configuration, individual pallet weights and placard identification, which includes SKU and UPC markings.
  • Bulk product storage - Being able to store large amounts of product is essential for long-term business. The fulfillment or distribution center you choose must have FIFO inventory control to ensure your goods are shipped according to date. It is also an asset if PO or LOT tracking is available to match goods to the factory for recall or defect identification.
  • Multiple docks - The fulfillment or distribution center you choose must have facilities to handle both incoming and outgoing containers and shipments for various accounts simultaneously.
  • Flexibility - The ability to serve each client’s needs individually. Retailer setups differ for each vendor and their terms and criteria are often unique. The fulfillment or distribution center should be able to fit your business needs through integration and not force you into a mold used.
  • Innovative services - This is the ability to develop new and cost-saving methods and systems. Experience allows for the sharing of solutions and providers saving time and money. Make sure your choice has the years of experience behind it to back up the solutions the company offers.
  • Cost-effectiveness - The cost of these services must be at a price point that affords you the opportunity to use all of your fulfillment or distribution center’s systems and not be limited by cost.
  • Central purchasing - Let the collective volume of the fulfillment or distribution center help you in purchasing corrugated, shrink wrap and other materials at a much lower price.
  • Freight discounts - Some retailers will demand that you prepay the freight. Once again, the volume and the ability of your fulfillment or distribution center should be able to negotiate with freight carriers to secure discounted rates. If you are being told that discounted rates are not available for your bulk shipments, take a second look at the company you’ve chosen to do your distribution with, as these rates are available to those who know how to get them.

The overall key to getting into retail sales is the ability to service and supply the major chains with the product and information in a timely fashion, in the manner they demand it…and, still be profitable.

Hal Altman is president of Motivational Fulfillment & Packaging Inc. in Chino, Calif. He can be reached at (909) 517-2200, or via e-mail at [email protected].


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