REDESIGNING SUPPLY CHAIN PROCESSES PRODUCES SIGNIFICANT BOTTOM LINE RESULTS

A premier deep discount retailer transforms its supply chain processes and dramatically reduces inventory and costs while building its capabilities in supply chain management and its responsiveness to store / customer demand.

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The new management team at a premier deep discount retailer knew they were carrying too much inventory and had other supply chain issues. MPG was engaged to do a comprehensive review of their entire system in order to identify the root causes and opportunities and solutions to improve efficiency and effectiveness.

An intensive assessment revealed a number of issues around product, replenishment, and financial planning. MPG’s recommendation was to transform how the company manages its merchandise throughout the system – from ordering to warehousing and inventory to shipments to stores – with a focus on four key areas:

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• Development of a Planning System that integrates multiple planning processes – merchandising, warehousing, replenishment, and financial – for the efficient and accurate planning and management of the flow of merchandise throughout the client’s system, enabling the client to:

  • Plan and optimize procurement and sourcing

  • Manage and optimize forecast accuracy, inventory levels, and scheduling / shipments and service to the stores

  • Improve the use of resources for warehouse, transport, and store receiving

  • Provide a single source of reliable data for increased responsiveness / issue resolution

• Design of a sustainable, easy-to-use process and tools for buyers to more effectively plan and manage their assortment of build out planograms

• Assessment of stores’ profitability to identify gaps and opportunities for improvement and Supplier assessment

• Design of an inventory management process that integrates into the Planning System process in order to achieve optimal stock levels, management, and availability, as well as lower write-downs caused by shrinkage, aging, or obsolescence

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The MPG team – which was comprised of seasoned retail professionals with expertise in merchandising, inventory and warehouse management, forecasting, and replenishment – started by conducting in-depth interviews of all key cross-functional team members involved in the overall process in order to critically assess and comprehensively process-map the current state to detail all inputs and outputs and identify gaps, pain points, and opportunities.

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Once this was complete, the team applied best practices to the development of optimized processes, process maps, and planning tools. The MPG team also helped the company to effectively implement the changes, not only developing the documentation and training seminars on the new processes and how to use the tools, but also working closely with the client team throughout the engagement, making sure they were building in-house capabilities for successful deployment and sustainability.

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With the planning system fully deployed, the client has achieved a 40% reduction in inventory across the supply chain.