Improving supply chain performance with vendor compliance solutions
The challenge:
Inaccurate shipments and a lack of vendor accountability increased costs and delayed inventory.
The solution:
SPS Supply Chain Performance Management
The result:
Sun & Ski gained greater visibility into vendor performance, strengthened compliance and reduced costs.
The challenge
Since 1980, Sun & Ski has specialized in making outdoor dreams come true by providing customers with quality merchandise, exceptional service and outstanding value. With 32 stores in 13 states, Sun & Ski serves a wide array of active lifestyle customers, including products for winter sports, cycling, swimming, running and hiking.
About 90% of the time, vendors ship their products to the Sun & Ski distribution center in Houston, Texas, where they are then dispersed nationwide to stores. The remaining 10% of the time, goods are drop-shipped to the stores. Sun & Ski also has a warehouse in Boston for its off-season patio furniture business.
With a seasonal business, Sun & Ski receives most winter goods at their Houston warehouse during June, July and August. During this flurry of shipments, it became nearly impossible to act on inaccurate carton contents or inaccurate shipments. The impact included increased overtime and transportation costs, ghost inventory, excessive inventory and disappointed customers.
“We want to be reimbursed for the time and effort we expend to correct vendor shipping errors, and we want vendors to correct their shipping process to avoid errors in the future,” says Frank Stanley, Co-CEO of Sun & Ski. “For many years, we had tried to capture compliance chargebacks internally, but on a scale of one to ten, I feel like we were a two or three. We just couldn’t seem to get the processes in place.”
The solution
In 2015, Sun & Ski implemented SPS Supply Chain Performance Management to improve vendor accountability and reduce costs caused by shipping errors.
Even though Sun & Ski was smaller than other customers, the SPS team was able to build customized solutions for the company’s software and distributions processes.
“Now years later, I would rate (SPS Commerce) a ten. They are clearly professionals,” says Frank. “The software that they have is incredible. I routinely receive management reports and the amount of information that I get from their system is fabulous.”
The SPS solution also gave Sun & Ski a practical way to enforce vendor guidelines. “As an example,” says Dan Simpson, Director of Logistics and Distribution, “one rule is: vendors are not to ship backorders unless they ship them prepaid. That’s been in our guide for years, but we didn’t have a way to enforce it. Now we do.”
The results
With SPS, Sun & Ski now has the information to determine which vendors have improved their shipping process and which vendors have not. “It wouldn’t surprise me if half of those vendors improved their shipping process because of the information we provide (from the SPS system),” says Frank.
Using an automated platform, Sun & Ski gained visibility and control within their operations. “From 1980 to 2015, the chargeback situations that we caught were few and far between and were usually only found as a byproduct of our internal manual processes. For 35 years, we didn’t use a formal system. After using SPS, we recouped about a quarter of a million dollars a year,” Frank continues.
The Performance Management solution also drives a unified understanding of the entire supply chain by identifying shipping errors that lead to bottlenecks at the distribution center. Vendors are notified of a compliance issue quickly with automatic emails that are sent as soon as a chargeback is determined, allowing vendors time to correct the issue.
With SPS, Sun & Ski was able to build a more consistent, predictable and profitable supply chain.
Going forward, there’s going to be a continuous relationship with SPS because of the nature of retail. We change vendors, we add some and drop others. For us to develop something that captures all of this information would be cost-prohibitive. We will always want to have a third party to provide the system and the tools to monitor compliance, and for us, that third party is SPS.
–Frank Stanley, Co-CEO, Sun & Ski