UK durable high street retailer
Supplier and merchandising operations definition
Summary
This Client was experiencing relatively poor product availability in store yet was holding high stocks. As such multiple objectives were set:
• Define and deliver good practice lifecycle management to make category and supply manager’s jobs more efficient • To work with and develop a more responsive supplier base, in order to match the market and product strategy for a more volatile, faster moving product
• Reduce margin erosion on fashion products due to poor sell through and time to market
• Reduce supply chain costs on low value / non-fashion products
• Bring product to market faster
• As a result of the interventions above, to reduce volume of product in Distribution Centres and so avoid need for new build or additional external storage
Approach
The project undertaking was split into two:
1. Supplier management
• Undertake a sourcing and supplier base analysis – quantitative and qualitative
• Support identification of strategic and operational change requirements
• Provide analysis of the supplier base that justifies rationalisation and development opportunities
• Structure and coach in the planning, running and evaluating of a cross-section of supplier development trials
• Conduct factory/supplier reviews and introduce Lean Thinking and specific techniques as appropriate to enable Supplier improvements
• Provide training of the buying and logistics business teams to facilitate the adoption of the tools and techniques to help sustain benefits
• Establish a 'Collaborative Web Site' providing sales and stock data feeds for Suppliers, to enable demand profiling and stock reduction
2. Product merchandising and forecasting
• Investigation and definition of current margin erosion issues
• Establish new Product Lifecycle Management process and gain board level sponsorship to roll out across the business
• Workshop findings and add best practice to define shape of future processes
• Build and implement web-based management tool
• Full training and implementation
Client Testimonials
With strong Client leadership from the Supply Chain Director, LCP was able to interact with all functions and levels of the organisation, resulting in a truly cross-functional exercise with high levels of 'buy-in'
LCP introduced specialist skills - discrete statistical modelling to give the Client confidence the changes would yield the benefits identified and web based technical skills to fast track the implementation
Success Factors
The real success was in gaining buy in from the business at large and having a Supply Chain led project directly influence the Planning Functions.
The application of Lean Thinking (elements of Six Sigma) in a Retail environment was both challenging and rewarding.
A significant development was the implementation of a Product Lifecycle intranet enabled 'Alerts' system that automatically alerted Product Managers of changes in Product status either tie based (following the sales / store calendar) or against projected sales forecasts.
Results and Benefits
From the Supplier Management side of the project:
• Stock investment avoidance of £4.2m pa
• Supported avoidance of new build and reduced reliance on external storage
• Reduced UK supplier lead times from 2 weeks to 3 days for steady state product, based on Lean Supply and Time Compression
• Identified suppliers delivering negative contribution totalling £9.5m – targeted for rationalisation or development
From the Product Merchandising project:
• Net margin improved by more than £3M pa
• Fashion product to market an average of 2 weeks sooner
• Multi-£M stock reduction
• Improved provisions accounting
• Fewer category / supply managers per £ turnover