Mercado | Insights - Can BBB leverage their supply chain to build back better?

Insight: First Things First – Can BBB leverage their supply chain to build back better?

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First Things First

Can BBB leverage their supply chain to build back better?

September 8th, 2022   ·   By Rob Garrison

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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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Great article by Max Garland of Supply Chain Dive regarding Bed Bath & Beyond (BBB).

The BBB story reminds me a bit of former Apple executive Ron Johnson attempting to turn around JCPenney. His ideas were bold and ambitious, but in the end, it wasn't what their core customers wanted or expected.

When Mark Tritton came into BBB, he determined they should have less of a “scavenger hunt” approach and offer more private label merchandise in order to boost margins. Similar to the situation at JCPenney, the customers weren't onboard, and Mr. Tritton was forced out in June.

According to this article, Sue Gove, who has been appointed interim CEO, has determined Supply Chain is the number one priority. Specifically, optimizing infrastructure and increasing the speed of getting their product to market. Given that they are a top 100 importer per the JOC, I suggest that they start there on supply chain improvements.

On average imports take six months to go from order to receipt, by far the longest time to market in their network, and also likely is an area where they need modern technical infrastructure. Back of the napkin math—they are purchasing approximately $340,000,000 of imported products, expecting related sales for those products of between $700m to $1b.

I wish the very best to Sue and the BBB team. They have an iconic and popular brand that I sincerely hope can thrive in this environment.

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Mercado | Insights - The $2.8T international supply chain visualized
"In an 'ideal' world, an importer would have at least one backup country, and one back up supplier for every critical product... All of this sounds good on paper, however it's actually incredibly difficult in practice."
One key reason is the dominance of China. Many importers are concerned about China as a sourcing point due to increasing tensions between the countries. However, the reality is that China dominates mfg in Asia, and they are very good at it.

As a result, quitting China is hard, as you will see in the excellent analysis below by Rita Rudnik.

A second reason is much more mundane. Most importers lack a robust database of their suppliers, and their supplier's suppliers. On the surface this sounds ridiculous, however we have gone through decades of 'predictable' supply chains where this wasn't a priority. Using the example above, most of the bike importers I spoke to were simply not aware of how reliant their suppliers were on Shimano.

My guidance to all importers is to address this database issue quickly. Beyond resiliency, knowing a lot about who makes your products, and who makes their parts, is also critical for understanding things like cost, ESG, and sales.

About the author

Rob Garrison, Mercado CEO
A highly accomplished Global Supply Chain executive with 25 years of experience, Rob Garrison has provided strategic vision and leadership to Fortune 500 companies. Rob has an impressive history of building agile, technology-enabled supply chains, and he has an established track record of forging high-growth partnerships, positioning organizations for success and launching innovative technology solutions that significantly improve end-to-end supply chain efficiencies.

Rob is currently CEO and founder of Mercado Labs.
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