Mercado | What Costco can learn about connecting supply and demand

Insight – Lessons learned from Costoco’s supply and demand issue

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Insights: What I Learned In Supply Chain This Week Series
Lessons learned from Costoco’s supply and demand issue
Tags: Demand, First Mile, Global Supply Chain, Import, International Supply Chain, Magic Quadrant, Retail, Supply, Supply Chain, Technology
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I recently read an article in The Wall Street Journal featuring Costco Wholesale CFO Richard Galanti discussing the challenges of import merchandise, including seasonal. My recent post highlights the "Zara gap" - an integrated First Mile strategy designed to address this type of issue.



Galanti stated he is “working closely with the company’s merchandising team to right size upcoming purchase orders for certain products categories, such as seasonal items.”

The company also decided it might store some patio furniture and other seasonal items to sell next year instead of discounting them. Costco has to pay vendors for these products now, resulting in an increase in working capital as well as increased inventory, Mr. Galanti said.

Halloween costumes — one seasonal category referenced — on average take 4 months from order to delivery.

  • May 1: Halloween orders placed
  • Aug. 1: Products depart Asia
  • Sept. 1: Products arrive in DC
  • Sept. 24: Products in stores
  • Oct. 31: Halloween
  • Nov. 1: Unsold products discounted heavily or returned to the DC for 11 months of storage

The more closely you can connect your supply and products to demand, the better you can improve time to market, working capital, expenses, and sales.
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.
GT Nexus founder and supply chain industry veteran, John Urban, has joined the Mercado board of directors.

I recently read an article in The Wall Street Journal featuring Costco Wholesale CFO Richard Galanti discussing the challenges of import merchandise, including seasonal. My recent post highlights the "Zara gap" - an integrated First Mile strategy designed to address this type of issue.



Galanti stated he is “working closely with the company’s merchandising team to right size upcoming purchase orders for certain products categories, such as seasonal items.”

The company also decided it might store some patio furniture and other seasonal items to sell next year instead of discounting them. Costco has to pay vendors for these products now, resulting in an increase in working capital as well as increased inventory, Mr. Galanti said.

Halloween costumes — one seasonal category referenced — on average take 4 months from order to delivery.

  • May 1: Halloween orders placed
  • Aug. 1: Products depart Asia
  • Sept. 1: Products arrive in DC
  • Sept. 24: Products in stores
  • Oct. 31: Halloween
  • Nov. 1: Unsold products discounted heavily or returned to the DC for 11 months of storage

The more closely you can connect your supply and products to demand, the better you can improve time to market, working capital, expenses, and sales.
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.
Copyright © Mercado Labs
                       

Terms of Service   |   Privacy Policy
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.
Copyright © Mercado Labs
                       

Terms of Service   |   Privacy Policy
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.
Copyright © Mercado Labs
                       

Terms of Service   |   Privacy Policy
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.
Copyright © Mercado Labs