North West Company Case Analysis
North West Company Case Analysis
Barry McLeod, Director of Procurement & Marketing
Ken Claudel, VP of Logistics & Supply Chain
Issue Identification
Barry McLeod is currently faced with the decision to recommend a supply chain strategy to Ken Claudel as to whether or not implement localization at North West. This is a pull stategy approach as opposed to their current push model.
North West is facing low inventory turns which is affecting their inventory costs and warehousing costs. They lack accuracy in forecasting and have long lead times for most of their products and especially in their more remote store locations.
Barry needs to decide to implement localization or not, and if not, then have a plan B in mind for how to address the issues listed above.
Environmental & Root Analysis:
Category Management * Winnipeg Category Managers analyze trends, place orders and allocate products to stores. They are disconnected from customers and what their preferences are. * POs submitted at least 4 months in advance of popular selling periods * Category managers worked with store managers to review the previous year’s lineup, order and actual sales * Historical averages and next year’s forecasted growth, estimate demand at company level. Not done at the store level, there are large differences between consumer preferences in Alberta and Yellowknife. * General merchandise category: non-food, home furnishing, apparel, footwear, luggage… Too wide of a category. How can a manager really know in depth each of these? They are not even related items. Impossible to forecast company wide needs on these, without breaking it down to store level, especially when North West stores are so spread thin across the country, including very remote locations.
Transportation
* Products arrived at warehouse 2 months prior to selling period. Inventory cost averaged $21.5 million. Space was optimized since it followed a tightly managed schedule.
Barry McLeod, Director of Procurement & Marketing
Ken Claudel, VP of Logistics & Supply Chain
Issue Identification
Barry McLeod is currently faced with the decision to recommend a supply chain strategy to Ken Claudel as to whether or not implement localization at North West. This is a pull stategy approach as opposed to their current push model.
North West is facing low inventory turns which is affecting their inventory costs and warehousing costs. They lack accuracy in forecasting and have long lead times for most of their products and especially in their more remote store locations.
Barry needs to decide to implement localization or not, and if not, then have a plan B in mind for how to address the issues listed above.
Environmental & Root Analysis:
Category Management * Winnipeg Category Managers analyze trends, place orders and allocate products to stores. They are disconnected from customers and what their preferences are. * POs submitted at least 4 months in advance of popular selling periods * Category managers worked with store managers to review the previous year’s lineup, order and actual sales * Historical averages and next year’s forecasted growth, estimate demand at company level. Not done at the store level, there are large differences between consumer preferences in Alberta and Yellowknife. * General merchandise category: non-food, home furnishing, apparel, footwear, luggage… Too wide of a category. How can a manager really know in depth each of these? They are not even related items. Impossible to forecast company wide needs on these, without breaking it down to store level, especially when North West stores are so spread thin across the country, including very remote locations.
Transportation
* Products arrived at warehouse 2 months prior to selling period. Inventory cost averaged $21.5 million. Space was optimized since it followed a tightly managed schedule.