Mercado | Insights - An ounce of prevention

Insight: An ounce of prevention

Article | What I learned in Supply Chain

An ounce of prevention

June 15th, 2021
8 minute read

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Every week, Mercado CEO Rob Garrison pens his latest learnings from the supply chain industry as part of an on-going series. Each article aims to share a little insight into what's going on that week, and to help foster discussion amongst industry professionals across levels, geographies, and companies.
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The biggest opportunity I see in the international supply chain right now is connecting procurement and logistics on a single platform.
When I was responsible for International Logistics and Sourcing at Michaels Stores, I got my first hint that I wasn’t in charge.

Three weeks into my new post, I got “taken to task” by our Halloween buyer for not getting her products to market quickly enough. The exact quotes were, “You are going to ruin Halloween!” and “I’m reporting this to the CEO,” and then she quickly walked back out.

I was beyond stunned and upset that I was responsible for such a large sales miss. I quickly called my small team together and asked if they knew of any Halloween issues. No one had any idea, so I asked all the usual questions about our shipping practices and didn’t find anything unusual.

However, as we dug deeper into the issue, we uncovered that the orders weren’t placed with the correct lead time. The suppliers required 90 days for production, however the orders placed only allowed for 60 days. The predictable result? Late orders.

This incident changed my entire trajectory in logistics. It turned on the lightbulb for me that the biggest supply chain improvement opportunities came from the order — not logistics. Once the product is on a boat, there is nothing a company can do to change the outcome.

Those kinds of “failed baton passes” happen every day. The reality is that whatever issues happen in purchasing are going to “sail right to the customer.” Any issues that occurred in the purchase process (such as delays, price changes, style changes, or damages) are going to “sail right into the network.”

Once the container is on the vessel and sealed, you can’t make the boat go any faster and you can’t stop the boat in the middle of its travels to fix a last-minute issue. So it can often be an expensive fire drill for receiving, accounting, transportation, replenishment, and management to “recover” from any production issues that aren’t caught and fixed before the logistics journey.
Mercado | Insights - An ounce of prevention
Conversely, if the purchasing and production processes were fully connected, everyone would have ample time to plan and solve for any issues.

For example, right now it’s nearly impossible to get containers at all. One solution that would drastically improve the process is a forecast which could easily come from the order data, allowing you to plan ahead of time for when you could expect to need a container.

A last-minute style change can impact duties (aka taxes) that can ultimately impact the cost of goods. A non-documented price change can result in overpayment. Quantity changes halfway through the production process that can impact receiving, accounting, and sales in the long run. These are just a few examples of things that can hurt sales or increase cost — and there are hundreds of other scenarios that we haven’t even touched on.

The expression “an ounce of prevention is worth a pound of cure” has never been truer than it is here. The best problems are the ones that are ultimately prevented.

Conversely, the most expensive place to fix a problem is at the end of the line, right before a sale.

To solve this issue, we recently created “The Mercado Method,” which is designed to provide a seamless connection at every critical inflection point from order placed to order delivered.

More on that in my next post...

About the author(s)
Mercado Labs | Rob Garrison, CEO & Founder
Rob Garrison
CEO, Mercado Labs
LinkedIn

About the Series

Each week, Mercado CEO Rob Garrison pens his latest learnings from the supply chain industry as part of a series run for his LinkedIn followers. Each article aims to share a little insight into what's going on that week and to help foster discussion amongst industry professionals across levels, geographies, and companies.

You can connect with Rob on LinkedIn by following this link.
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Thank you for using Mercado. Our goal is to empower businesses to better navigate the complex world of importing. We know data security is of paramount importance, so we place high standards on ensuring it is safely and respectfully secured. We are committed to following and continuously evolving best practices to support this principle. Your data is yours, and we guard it closely. We do not sell any of your information, and we will always be fully transparent on how we collect and use your data. That's a promise.
Mercado | Bring Order to your Imports
                                               
© Mercado Labs Inc.
Designed by Studio Nine
From us to you...

Thank you for using Mercado. Our goal is to empower businesses to better navigate the complex world of importing. We know data security is of paramount importance, so we place high standards on ensuring it is safely and respectfully secured. We are committed to following and continuously evolving best practices to support this principle. Your data is yours, and we guard it closely. We do not sell any of your information, and we will always be fully transparent on how we collect and use your data. That's a promise.