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With the five new DCs in Wisconsin, Florida, Indiana, Wyoming and Pennsylvania Wal-Mart will have 122 total DCs in the U.S. The company typically opens four to five DCs each year, note Ford, with a maximum of 12 opened in one year. "This is a huge undertaking," he notes, "considering the taxation on all your assets" when tackling a project this size.
The mega-retailer, with more than 6,600 stores worldwide, also is in the process of completing the rollout of a strategy termed Remix, in which the company is "moving from a category-based network to a velocity-based network," says Ford. This strategy pushes the fastest-moving, high-volume items out to the stores in one delivery. Remix is scheduled to be complete within the year, Ford says.
Wal-Mart's supply chain strategy focuses on the basic premise: "Right Product, Right Place, Right Time," Ford notes, which includes a long-term approach to logistics. "If a company's logistics network is not planned four to five years out, then they are behind and will find themselves chasing the business," he explains.
Ford also addressed Wal-Mart's RFID initiatives, noting that the company is maintaining its aggressive approach to implementation. He expects an additional 300 suppliers to be on board by January 2007, doubling the current supplier participation to more than 600. The company also phased out its Gen 1 RFID tags on June 30, 2006 and is re-focusing on Gen 2 tags which are able to be read in harsher environments.
Future goals for Wal-Mart are environment-oriented. The retailer plans to eventually achieve zero waste, be supplied by 100 percent sustainable energy and sell product that sustains the environment, according to Ford. Recently, for example, Wal-Mart has dramatically cut costs with new, more efficient store lighting. The retailer also is testing alternative fuels, such as hydrogen fuel cells, to run fork lifts.
These initiatives are common sense, Ford says, but "common sense in the retail industry is a phenomenon."
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Like every area of retail, Loss Prevention is being transformed by a proliferation of new technologies. There are a host of exception-reporting software programs, digital video cameras that can be integrated to the POS, RFID solutions, digital audit tools and interfaces to ERP systems available for loss prevention.
While technology has given LP professionals increasingly sophisticated tools for fighting shrink, however, it's only a means to an end. It's the information produced by these technologies -- and the vastly improved speed and quality of data now available to LP managers -- that matters most.
To make real progress in lowering shrink and improving safety, retailers must capture relevant information, quickly get it in the hands of the people who can use it to make a difference (whether it's a vice president of loss prevention or a store manager), then put into place the necessary corrective actions.
Ultimately, of course, that involves changing the behavior of store associates. After all, all three types of shrink -- internal, external and error -- are directly affected by hourly associates. They are on the front lines to intervene with a shoplifter, report associate theft, decide for themselves not to steal or commit fraud and comply with policies and procedures. If you want to make a change, you must understand your associates' attitudes and behaviors, get a clear picture of what's going on in the stores, then use that information to implement change.
In order to do this, one of the nation's best-known retailers uses monthly audits that interface with the company's ERP system. These store-level audits measure the degree of each store's compliance with Key Performance Indicators (KPIs) and issues of regulatory compliance that closely influence shrink and safety. Key indicators must be relevant to the specific organization or environment, objectively measurable or quantifiable, applicable to everyone, actionable, and available in a regular, timely fashion. Indicators can include such things as program compliance, inventory shrink, incident rates and associate comprehension.
The retail industry is uniquely fast paced, and for retailers, the speed of delivering information, and taking corrective action, is essential for improvement. The sooner problems are diagnosed and addressed, the sooner the associates can begin improving behaviors.
In the past, retailers sometimes wouldn't discover problems until annual inventory, or when situations escalated enough to become really noticeable. Real, substantial improvements only take place with continual monitoring, fast and accurate delivery of information and rapid response.
Another well-known retailer uses an online safety certification program to drive continual improvement in each store. Audit information is gathered monthly from different parts of each store's operations, then analyzed to produce actionable reports. What makes this reporting unique is that, in the case of deficiencies, each store automatically receives a detailed checklist of corrective actions that need to be taken in order to improve their results moving forward.
Are you looking to get the most improvement out of the LP technologies in place in your stores? Then keep in mind these principles: