those with annual revenue of $1 billion or more—accounted
for 43 percent of the respondents. Gibson and Hanna chose
this approach to deepen their understanding of the total problem by drawing comparisons between large and small players.
Consistent with the report’s central theme, 60 percent of
large manufacturers said they enjoyed strong communications with their retailers, compared with about 47 percent
of their smaller brethren.
In a mid-October interview after the report’s release,
Gibson said smaller manufacturers are “not operating from
a position of power.” He said bigger players, besides possessing the kind of volumes that help them get their voices
heard, have the staff, resources, and technology to better
respond to quickly shifting retailer demands.
The larger companies also are more likely to have
employees embedded in the retailer’s operations, a strategy
that allows for more personal communication and, by
extension, better execution, he said.
Gibson said he understands the concerns raised by smaller manufacturers, and he noted that small and big companies face common challenges. For example, all CPG companies are affected by retailer demands to deliver smaller lots
on an as-needed basis, he said. The report notes that 28 percent of the larger players cited “inventory velocity” as their
number one issue with retailers, compared with 24 percent
of the smaller companies.
He added that all CPG companies also struggle to achieve
more collaboration with retailers and to get adequate face
time with them.
Gibson said, however, that retailers might quarrel with
many of the respondents’ transportation-related grievances, such as the assertion their loading dock operations
are ill-equipped to handle a large number of LTL deliveries.
In the interview, Gibson said he hadn’t shared the report’s
findings with any retailers because there wasn’t enough
time between its drafting in September and its release to
coincide with the Council of Supply Chain Management
Professionals’ Annual Global Conference in Atlanta. He said
he would lobby to get visibility for it at future RILA events.
FAMILIAR SOLUTIONS
This being a Kane-commissioned report, it is hardly a shock
that it hammers home the need for shippers to rely more on
3PLs to serve as their advocate in dealings with retailers.
The use of 3PLs can help shippers meet the dual objectives
of enhanced efficiencies and more productive interaction
with retailers, the report said. “3PLs are imperative in help-
ing to take costs out for the manufacturer,” said Gibson. “But
they also have more of an ability to speak to the retailer—to
get a meeting or get a callback.”
David Howland, vice president of land transportation
services for 3PL APL Logistics, said an intermediary can be
invaluable in bridging the communication divide between
shipper and retailer that is becoming more commonplace.
“When you have multiple players with a single coordinator,
you reduce the number of communication channels and
make the entire process more efficient,” Howland said.
Mid-sized shippers can also leverage a 3PL’s investment
in transportation management systems (TMS) that would
enable them to more effectively respond to retailers’ changing delivery requirements, the report said. Many smaller
shippers cite the costs of buying or developing an in-house
TMS as an impediment to implementation.
In the report, smaller manufacturers expressed eagerness
to work with retailers to set reasonable order minimums,
implement customized inventory requests, and identify
mutually acceptable replenishment practices. But dialogue
is by definition a two-way street, and as one respondent
remarked in a somewhat rueful summation: “Retailers can
be difficult to deal with because they hold all the cards.” ;
