North West Case Essay

Executive SummaryNorth air jacket ac party pull up stakes move towards a pull strategy within its supply chain. Pull production is establish on actual or consumed demand and individual store double-deckers testament monitor this. The benefit of mess for North West provide be a high breed overturn rate. The benefit for customers leave behind be a more customized shopping experience chemical groupd on their community. The potential risks be at that place are high costs involved in implementing a new database clay and procurement decisions ordain be divided between category managers and store managers. We allow implement a new database system and train store managers to purchase inventory establish on local and regional needs. This system will allow stores to be a part of their community and customer needs rump be ruin met.Issue IdentificationThese are the following issues that must be addressedForecasting and professional personcurement misfortunate roll Turnover RateProduct Receiving and Shipping Reducing hertz TimeMerc arrive atising and merchandising Interorganizational Information Systems Store Managers Preference ImplicationsEnvironment and Root Cause AnalysisEnvironmentNorth West Company has a lower inventory turnover rate than most of its opponents and that is due to the use of a vim strategy within the supply chain. Customer demands are not taken into consideration and they a great deal have to shop at competitors to meet their needs.Issue IdentificationForecasting and Procurement Low Inventory Turnover RateForecasting and procurement use a push strategy where production decisions are based on long term historical forecasting. Category managers look at past trends and base their buying decisions on past gross revenue. Purchase orders are submitted at least 4 months prior to the mean selling period. This does not allow for a response to transports in demand. This dismiss lead to overstocking inventory, which is what causes the low turnover rate. The relationship with suppliers is streamlined because orders are placed in man-sized batches and way ahead of time. The lack of customization allows suppliers to reply quickly and production is ahead of schedule.Product Receiving and Shipping Reducing Cycle TimeProducts arrive at the distribution center approximately deuce months prior to the selling period. Inventory is separated between makeshift and regular on two floors. Space is optimized because of the tight managing schedule or receiving and transfer however the lead-time to dust the merchandise is too long. Excess merchandise is pushed to stores and eventually ends up being marked down.Merchandising and marketing Interorganizational Information Systems one time merchandise arrives to the stores it is immediately put on display. Rural stores often sell come out of popular items and customers are left with no choice but to shop at a competitor or substitute for other items. Demand for particul ar stores is not forecasted and this is an opportunity cost. The product assortment is unploughed fresh throughout the selling period by splitting up shipments throughout the period. There is a lack of information between stores and what each store/region requires.Store Managers Preference ImplicationsCategory managers shortly make all procurement decisions. Individualstores have no say in what they will be selling and cannot combat customer demands. Although a costly process, if managers are given the ability to customize their inventory stores will be able to cater to their specific communities.Alternatives and OptionsForecasting and Procurement Inventory TurnoverPro Forecasting and procurement is a fairly simple process because orders are placed in large batches and way ahead of time based on historical data. chisel It takes long-dated to respond to changes in demand, which results in overstocking.Alternative Dividing inventory into two categories cosmopolitan and Seasonal/ Customized. General 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 terminus. This makes for easy access to what needs to be shipped right 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 later date will precipitate the time inventory sits at the distribution center. The center already runssmoot hly 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 switch 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 each store will allow inventory to move easily from one location to the next. Stores should hold some general 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 preferences can be biased and oppose that of the company as a whole.Alternative Store managers should be given proper training and a rule of thumb of what they can purchase. Managers are limited 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 quadriceps femoris within individual stores for General merchandise Implementing a database for all stores to view on hand inventory Training store managers to use the databaseDeveloping an fitting for store managers to purchase products for their individual stores performanceThe first step is to categorize inventory between general and seasonal/customized. This will be decreed to category managers. General inventory will maintain the system that is already in place and will be consistent f or 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 reduced as the distribution center will now only be a group 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 six months to implement.Monitor and ControlTimely checks should be made to see if the implementation plan is successfu l. Once inventory has been categorized and a database has been developed, category managers should measure 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. Thereduction in markdowns should be measured as well in order to determine whether or not this is a feasible system.