Supply chain concepts always find a way to creep into my personal life…
The other day, my wife and I went to Wal-Mart. We made a decision to remodel our bedroom, so we were going to paint our walls blue.
Now, we have two small children, ages 2 and 4, so shopping can be challenging. It’s like “get the stuff in the cart and get through the checkout line as soon as possible because a tantrum or argument is sure to happen any second!”
So, we weren’t as careful as we should have been when we picked out paint.
The friendly Wal-Mart associate took the paint that we picked out, added the necessary colors, and was just about to begin the mixing process when I noticed that the can said “EXTERIOR” on the label. I shouted “Wait! Is that exterior paint?”
So, I profusely apologized and was ready to offer to pay for the paint when the Wal-Mart associate said “Don’t worry. We just send it back to our supplier and they give us credit.”
A supply chain issue? You bet.
The classic supply chain is supplier-organization-customer and this situation illustrated which of the three supply chain members would bear the risk in this case.
The exterior vs. interior mistake was clearly my mistake. In all fairness, I should have had to eat the cost.
Now, if Wal-Mart wants to bear the cost and do something fantastic for its customers, that’s great. I love to see great customer service and giving the customer the benefit of the doubt. That’s great for business, great for branding, great for building customer loyalty, great for building positive word-of-mouth, etc.
But the question is: should the risk of a customer mistake be borne by the supplier instead of the organization who sells directly to the customer?
I have so many competing thoughts on this, but I’ll reserve any conclusion and invite you to submit your comments. Here are some thoughts from both sides of the coin:
- Wal-Mart is reputed for beating up their suppliers on price, do they really have to force them to accept the risk of customer mistakes, too?
- Shifting risk as far down the supply chain away from the customer is simply aligning every supply chain member with the ultimate goal of serving the end customer
- Is there an opportunity for a struggling Wal-Mart competitor like Kmart to become more successful by having a more supplier-friendly approach to supply chain matters?
- It is smart purchasing by Wal-Mart to anticipate these types of issues ahead of time and therefore negotiate them into the contract.
- Every buyer should make his own company’s profitability a higher priority than its suppliers’ profitability, though supplier profitability should be a concern, right?
- Should risk of customer mistake be borne only by those who are somewhat able to control it through processes that educate the customer and have direct contact with them?
- Should Wal-Mart’s be a standard supply chain model?