Case Study - Process Improvement
We drive process improvement by analyzing relevant core processes in your organization’s strategy implementation program. If applicable, we’ll plan, design and implement new processes and establish ongoing controls for continuous improvement.
Create and Implement a Process for Inventory Productivity Improvement
Client:
600 store, North American retail chain
Goal:
Quickly improve inventory turns by eliminating non-performing products. Simultaneously, create and implement ongoing processes to measure productivity per linear foot (Effective Gross Margin/ Linear Foot), identify and manage under-performing products, and standardize performance tracking for merchandising & buying.
Process Improvement:
The initial system evaluation showed that best-in-class processes for inventory management did not exist. Merchandisers and Buyers needed formal Open-to-Buys, standardized inventory performance measures, benchmarking and strategies and processes for managing slow moving or obsolete inventory.
Action:
Roeder Consulting addressed both structure and people.
Structure: A standard process was designed and implemented to improve retail inventory management and productivity. The process involved controlling inventory levels by closely managing purchases and monitoring sales. Additionally, the process included a systematic way for the Merchandisers and Buyers to manage the inventory performance details of the individual product categories while maintaining the overall system balance. The complete process also included creating new measures for under-performing and obsolete inventory, and included standard disposition plans.
People: Worked directly with VP Merchandising, VP Finance, Director of Merchandising, category managers, category planners and distributors, and Director of Marketing. Our recommendations for how the additional responsibilities for the new processes and procedures should be allocated among personnel resources was accepted and implemented.
Results:
- Fact-based Open-to-Buy system took guess-work out of inventory purchasing.
- Initiated bi-weekly inventory replenishment schedule that effectively flowed product to stores, reduced out of stocks and increased fixture fill.
- Introduced Vendor Scorecard for all merchandise suppliers for benchmarking, resulting in higher service levels and vendor compliance rates.
- Designed and implemented a standardized inventory Strategy Worksheet for Seasonal inventory planning and purchasing, resulting in a reduction of over-buys and better SKU management.
- In June, company was $6.5MM over inventory plan. Finished February $200K over plan.
- Achieved comp store inventory reduction (cost) of 14% without a drop in comp store sales
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