North West Case
Executive Summary
North West Company will move towards a “pull strategy” within its supply chain. Pull production is based on actual or consumed demand and individual store managers will monitor this. The benefit of localization for North West will be a higher inventory turnover rate. The benefit for customers will be a more customized shopping experience based on their community. The potential risks are there are high costs involved in implementing a new database system and procurement decisions will be divided between category managers and store managers. We will implement a new database system and train store managers to purchase inventory based on local and regional needs. This system will allow stores to be a part of their community and customer needs can be better met.
Issue Identification
These are the following issues that must be addressed:
Forecasting and Procurement – Low Inventory Turnover Rate
Product Receiving and Shipping – Reducing Cycle Time
Merchandising and Selling – Interorganizational Information Systems
Store Managers – Preference Implications
Environment and Root Cause Analysis
Environment
North West Company has a lower inventory turnover rate than most of its competitors and that is due to the use of a “push strategy” within the supply chain. Customer demands are not taken into consideration and they often have to shop at competitors to meet their needs.
Issue Identification
Forecasting and Procurement – Low Inventory Turnover Rate Forecasting 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 sales. Purchase orders are submitted at least 4 months prior to the intended selling period. This does not allow for a response to changes in demand. This can lead to overstocking inventory, which is what causes the low turnover rate. The relationship with suppliers is
North West Company will move towards a “pull strategy” within its supply chain. Pull production is based on actual or consumed demand and individual store managers will monitor this. The benefit of localization for North West will be a higher inventory turnover rate. The benefit for customers will be a more customized shopping experience based on their community. The potential risks are there are high costs involved in implementing a new database system and procurement decisions will be divided between category managers and store managers. We will implement a new database system and train store managers to purchase inventory based on local and regional needs. This system will allow stores to be a part of their community and customer needs can be better met.
Issue Identification
These are the following issues that must be addressed:
Forecasting and Procurement – Low Inventory Turnover Rate
Product Receiving and Shipping – Reducing Cycle Time
Merchandising and Selling – Interorganizational Information Systems
Store Managers – Preference Implications
Environment and Root Cause Analysis
Environment
North West Company has a lower inventory turnover rate than most of its competitors and that is due to the use of a “push strategy” within the supply chain. Customer demands are not taken into consideration and they often have to shop at competitors to meet their needs.
Issue Identification
Forecasting and Procurement – Low Inventory Turnover Rate Forecasting 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 sales. Purchase orders are submitted at least 4 months prior to the intended selling period. This does not allow for a response to changes in demand. This can lead to overstocking inventory, which is what causes the low turnover rate. The relationship with suppliers is