Supply Chain Management Professional Designation

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- Localization at store level – If we change the distribution strategy from push to pull, it can greatly help by tapping into the local knowledge that resided with store managers, allowing them to better tailor product quantities to preferences in their communities. Under localization, product assortment decisions, which had been previously made at the category manager’s level at Winnipeg headquarters, would become the responsibility of North West’s 147 store managers.

Category Managers will analyze the sales /trends with Store Manager to determine products to stock and markdown options. This option would be trail ran in one store first and once the “Bugs” have been worked out expanded to all stores in all categories. It also requires $10M investment in an Advanced ordering system.

- Localization at Regional level: North West Company should appoint retail managers for different regions. They will analyze sales / trends with category managers in order to determine the quantities/ products to be offered to different stores. Regional Managers will also develop product menu selections for store managers to choose items and quantities from.

Localization seemed like a great way to enable Regional managers to take advantage of their knowledge of the community in which they lived. Regional Retail managers would become the local market experts, determining which stock-keeping units (SKUs) to carry and in what quantities.

- Buy from local market: If Company would buy from local suppliers, it will help us to reduce lead time and proper forecasting. In case of shortages at DCs, we can order for more quantities on spot. If we buy all products from local market instead of china, it will reduce lead time from 8 to 3 months only. So it’s another option to consider for management.

5. Recommendations

I recommend implementing Localization strategy along with advanced information system in order to cater all the issues faced by North West Company. Store managers should be given proper training on new system in order to get most out of it. They can take every decision in respect to their store inventory by using their knowledge and past experience in their area. However the procurement at DCs will be handled by category managers but they will improve forecasting by using new information sharing system along with regular interaction with store managers/ Suppliers.

1) Apply localization at the store level – This option requires a $10M investment in an Advanced ordering system. This system does introduce tracking and places the responsibility on the store manager to manage their inventory but we will have 147 store managers making decisions on the quantity of product shipped to store. Store managers, even if they are given the same set of information, might make different decisions, based on his or her preferences, biases or personal experiences. So there is an undetermined risk and high cost involved in this option.

2) Apply localization at the corporate level. This option would introduce more of the required regional knowledge into head office, while still empowering the store managers to effect change. Regional manager will regularly interact with store managers and category managers to determine the appropriate order quantities. This option requires lesser investment and lower risk too.

3) Keep the current Push system. This option requires least amount of change but also offers the least amount of reward. It will continue to increase inventory carrying cost and hence causing lower profitability.

- Hence my recommendation is to apply localization/pull strategy at the Regional level but not at store level. Category Managers to analyze the sales and work with Regional Retail Managers who will then determine what products will be offered to which stores. Regional Retail Managers would then develop product menu selections for store managers to choose items and quantities from. Store managers will also play a crucial role as they can place order with regional manager during their regular meetings / interactions.

- Regional managers will work closely with category managers to prepare an optimized delivery schedule in order to receive new products in July instead of June.

- Regional managers will work with store managers decide on early / delayed markdowns depending on the demand of product in that region.

6. Implementation

- Category Managers to be refocused strictly on purchasing/sourcing/logistics.

- Regional Retail Managers, the new specialized team, responsible for developing product menu selections for store managers to choose items and quantities from.

- Regional Retail Managers must have in depth knowledge of their regions and products.

- Once positioned, Regional Retail Managers to spend first 3 months travelling their regions to gain understanding of the people, roads, individual requirements.

- Regional Retail Managers would test this new approach on a well-established medium sized, well managed store first.

7. Monitor and Control

Turns – Will increase, but may take some time to gain a large enough sample to analyze

Sales – Will increase due to capitalizing on current lost sales due to stock outs

Shipping charges – Will decrease due to less product being returned/repositioned.

Monitoring these 3 areas will tell you if the project is on track or if any minor adjusting is required.

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