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Kmart-Vendor Alliances Aid Stock Position

CHICAGO -- If retailers did a better job of getting merchandise into their stores, they could boost sales by 20 to 25 percent, according to David M. Carlson, senior vice president of corporate information at Kmart.<BR><BR>Carlson outlined Kmart's...

CHICAGO — If retailers did a better job of getting merchandise into their stores, they could boost sales by 20 to 25 percent, according to David M. Carlson, senior vice president of corporate information at Kmart.

Carlson outlined Kmart’s version of quick response, called Just In Time, at a recent conference on the subject here.

Under Kmart’s system, which uses electronic data interface technology to transmit and process purchase orders and bar code technology to ship goods, 90 percent of Kmart merchandise reaches the selling floor without hitting the warehouse.

About 30 percent of the merchandise coming into Kmart uses markings on the shipping containers, and more than 99 percent uses bar codes, he said.

“Suppliers are asked to make reasonable efforts to comply with industry standards,” Carlson said.

He added that Kmart expects its vendors to reimburse any costs incurred if a supplier fails to meet the standard.

In a second presentation, Jim Glime, Kmart’s director of business development, described how the retailer has formed business alliances with its key suppliers to maximize customer service and make replenishment most efficient.

The alliances involve establishing goals for point-of-sale, in-stock and inventory flow and lead times, Glime said. Goals are reviewed weekly and “alliance meetings” held on a quarterly basis.

As a result of these alliances, it now takes only three to 10 days for merchandise to get from vendors to the stores. Previously, it took 14 to 21 days. The retailer has also reduced the amount of inventory it has to purchase in advance — by as much as 200 percent with one vendor.

Glime said Kmart currently conducts 35 to 40 percent of its business with vendors through alliances, a figure the retailer would like to see grow.