Costco purchases their merchandise from numerous domestic and foreign manufacturers and importers. They have thousands of vendor relationships.Costco's forte is its unparalleled purity of operation. It prunes everything but the most essential volume-driving items and receives them packed in one form: palettes.
"As our president Jim Sinegal likes to say, we are in the item business, not the category business," noted chief financial officer Richard Galanti. "We will do over $45 billion in fiscal 2004 with just 4,000 sku's."
He said the company's annual IT budget, which includes supply chain technology, is roughly $50 million.
A disciplined focus has allowed the wholesaler to standardize rapid-fire cross-docking in all its distribution centers. Seventy-five percent of Costco's goods are cross-docked, spending on average nine hours in a distribution center, Galanti said. Distributors deliver the remaining 25 percent of goods - fast-moving bulk goods like soda and potato chips - directly to individual stores.
He said the company's annual IT budget, which includes supply chain technology, is roughly $50 million.
A disciplined focus has allowed the wholesaler to standardize rapid-fire cross-docking in all its distribution centers. Seventy-five percent of Costco's goods are cross-docked, spending on average nine hours in a distribution center, Galanti said. Distributors deliver the remaining 25 percent of goods - fast-moving bulk goods like soda and potato chips - directly to individual stores.SPS Commerce, the leading Supply Chain Integration Service supplier provides SPS` suite of
integration services to Costco suppliers. Costco will utilize SPS` hosted Internet service to conduct electronic commerce with its nationwide network of suppliers. Utilizing SPS Commerce`s Vendor Enablement Services, Costco will take advantage of a proven formula for performing successful community enablement and management that emphasizes best practices rather than just technology. With SPS Commerce`s online service, SPSCommerce.net, orders are electronically processed and stored quickly and accurately. Costco and their suppliers gain maximum administrative efficiency, reduce shared expenses and improve system accountability. See SPS Service.
integration services to Costco suppliers. Costco will utilize SPS` hosted Internet service to conduct electronic commerce with its nationwide network of suppliers. Utilizing SPS Commerce`s Vendor Enablement Services, Costco will take advantage of a proven formula for performing successful community enablement and management that emphasizes best practices rather than just technology. With SPS Commerce`s online service, SPSCommerce.net, orders are electronically processed and stored quickly and accurately. Costco and their suppliers gain maximum administrative efficiency, reduce shared expenses and improve system accountability. See SPS Service.Costco will also implement solutions from i2 Technologies Inc. in order to achieve higher levels of performance while driving down transportation and distribution costs across their transportation network. The company aims to deliver its products more efficiently across its distribution network. Costco Wholesale will leverage i2’s FreightMatrix solutions to establish the strategic framework for optimizing its North American transportation network leveraging leading edge decision support capabilities from i2. Using the solutions, Costco Wholesale will collaborate with its carriers to enable an innovative transportation procurement process. Additionally, the company can enable strategic modeling and what-if analysis capabilities to allocate the optimal carrier base to specific lane volumes while balancing cost and service level requirements.
