A new initiative from Asda to cut stock and increase the delivery frequency of its top 1,000 ambient lines could significantly cut suppliers' profits, according to a logistics expert.
The "flow logistics" project, unveiled to Asda's leading suppliers last month, will treat the retailer's top 1,000, low-volatility, ambient lines as if they were fresh produce.
That means that the suppliers would have to deliver products throughout the week with a maximum 24-hour lead time, which could mean more expensive transport, increased case picking and larger manufacturers' stocks, warned Tim Knowles, a partner at logistics consultancy TKA.
"Asda may not cope with the hub congestion implicit in many more part loads. It will then have to force suppliers to ship via consolidation centres funded by suppliers, thus adding to supplier costs and inventory," said Knowles. "The de-stocking implicit in Asda's plans will have a seriously detrimental impact on suppliers' sales in the year of change."
Suppliers would be expected to fund their side of the changes even though Asda would save a lot of money.
"It behoves suppliers to establish a crystal clear understanding of their current cost to serve Asda and prepare the negotiating ground for the imposition of the change," said Knowles.
Asda was unavailable for comment.