North West Case Essay

Executive SummaryNorth double-u Company forget move towards a pull system within its supply chain. reap production is ground on actual or consumed demand and private memory omnibuss exit monitor this. The advantage of localization for North West testament be a higher gillyf unhorse perturbation rate. The benefit for customers get out be a more customized shopping experience based on their community. The potential risks atomic number 18 there are high cost involved in machineing a new database system and procurement decisions entrust be divided between category managers and warehousing managers. We will implement a new database system and train store managers to purchase descent based on local and regional ask. This system will kick stores to be a part of their community and customer needs thr iodine be better met.Issue IdentificationThese are the following issues that essential be addressedForecasting and professional personcurement Low Inventory disturbance Rateprofessional personduct Receiving and Shipping Reducing rung Time trade and Selling Interorganizational Information Systems Store Managers Preference ImplicationsEnvironment and Root exertion AnalysisEnvironmentNorth West Company has a lower inventory turnover rate than almost of its competitors and that is due to the use of a push scheme within the supply chain. Customer demands are non taken into consideration and they often have to shop at competitors to examine their needs.Issue IdentificationForecasting and professional personcurement Low Inventory swage RateForecasting and procurement use a push strategy where production decisions are based on long term historical prophecy. Category managers look at past trends and base their buying decisions on past sales. Purchase marks are submitted at least(prenominal) 4 months previous to the intended dealing period. This does not allow for a response to diversenesss in demand. This can lead to overstocking inventory, which is what causes the low turnover rate. The relationship with suppliers is streamlined because rules of orders are placed in large batches and way ahead of epoch. The lack of customization allows suppliers to resolve quickly and production is ahead of schedule.Product Receiving and Shipping Reducing Cycle TimeProducts arrive at the distri justion tenderness approximately both months prior to the selling period. Inventory is separated between temporary and constant on two floors. Space is optimized because of the tight managing schedule or receiving and transit however the lead- judgment of conviction to distribute the product is too long. Excess merchandise is pushed to stores and finally ends up being marked down.Merchandising and Selling Interorganizational Information Systems at once merchandise arrives to the stores it is immediately put on display. Rural stores often sell surface of popular items and customers are left with no choice but to shop at a competitor or substitute for other items. Demand for particular stores is not forecasted and this is an opportunity cost. The product assortment is unplowed fresh throughout the selling period by splitting up shipments throughout the period. There is a lack of information between stores and what distributively store/region requires.Store Managers Preference ImplicationsCategory managers currently fasten all procurement decisions. Individualstores have no say in what they will be selling and cannot combat customer demands. Although a pricy solve, if managers are prone the ability to customize their inventory stores will be able to cater to their specific communities. ersatzs and OptionsForecasting and Procurement Inventory dollar volumePro Forecasting and procurement is a fairly simple process because orders are placed in large batches and way ahead of time based on historical data.Con It takes longer to respond to changes in demand, which results in overstocking.Alternative Dividing i nventory into two categories planetary and seasonal worker/Customized. habitual merchandise with consistent sales will maintain the push strategy as the process is less costly and decisions are based on data. Seasonal/Customized inventory will adopt a pull strategy where store managers will have the opportunity to make decisions based on their immediate environment.Product Receiving and Shipping Reducing Cycle TimePro The distribution center is already divided into two floors one for immediate shipping and the other for reposition. This makes for easy access to what needs to be shipped the right way away and what does not.Con Two months is a long time to be housing inventory that is projected for a specific period. Demands can change in this time frame and the distribution center is left with no choice other than to push inventory to store warehouses. This is what leads to unnecessary markdowns.Alternative Placing orders with suppliers at a ulterior on date will reduce the time inventory sits at the distribution center. The center already runssmoothly and on schedule so pushing back shipments should not be a problem. This will allow orders to go in at a later date where inventory demands might change.Merchandising and Selling Interorganizational Information SystemsPro Merchandise is immediately put on display so stores do not have to stock inventory.Con If a store runs out of certain products they cannot meet demand. Similarly, if a product does not sell it will eventually go into clearance.Alternative Creating a database between stores that shows inventory of to each one store will allow inventory to move easily from one location to the next. Stores should hold some worldwide merchandise in order to allow a continuous flow of turnover.Store Managers Preference ImplicationsPro Store managers can customize orders based on customer needs and local trends. There is opportunity to have higher inventory turnover because of localization.Con Managers pre ferences can be biased and couple that of the company as a whole.Alternative Store managers should be inclined proper training and a guideline of what they can purchase. Managers are control to OTB dollars.RecommendationsThe following is a summary of my recommendationsCategorize inventory into two sections General and Seasonal/Customized Maintain the current system for General merchandiseSeasonal/Customized inventory to move to a pull system Within the pull system, seasonal/customized inventory is ordered at a later date to reduce storage time at distribution center Create storage space within idiosyncratic stores for General merchandise Implementing a database for all stores to view on hand inventory teach store managers to use the databaseDeveloping an allowance for store managers to purchase products for their individual storesImplementationThe first step is to categorize inventory between general and seasonal/customized. This will be appointed to category managers. General inventory will maintain the system that is already in place and will be consistent for all 147 stores. Once seasonal/customized inventory is identified, forecasting should be done two months prior to purchasing period. This responsibility will be that of the store manager. Cycle time will be cut back as the distribution center will now only be a gathering point for incoming shipments rather than a storage facility.Individual stores should allow for some storage space for General inventory and overstock. North West will need to invest at least $10 million to develop a database. The database will take a month to implement and we should consider up to two months for training of store managers. The category managers will determine the allowance that each store manager is given. We can look at data to determine which stores are most successful and calculate an allowance based on individual store inventory turnover. The entire plan should take no longer than sixer months to implement.Mo nitor and ControlTimely checks should be made to see if the carrying out plan is successful. Once inventory has been categorized and a database has been developed, category managers should flier the store managers performance. This includes examining if inventory turnover has gone up. Customers can be given surveys to measure whether or not their needs are being met. The reduction in markdowns should be measured as well in order to determine whether or not this is a feasible system.