Off-Price Specialty Retailer CASE STUDY
Our client, a leading off-price retailer of apparel, home and specialty merchandise in the United States, selected Johnson Stephens Consulting to re-examine its Supply Chain Network. Extensive store growth, growth of e-commerce, and growth of the core business required evaluation of current network capacity vs. five year business requirements. The network included two existing, large DCs (New Jersey - owned & Inland Empire SoCal - leased), additional leased DCs (New Jersey) and 3PL operated sites comprising an extensive (27 pool points) outbound pool point delivery network for the U. S.
The network optimization resulted in significant annual seven figure operating expense savings with minimal capital investment required. A reduction in the number of pool point facilities were realized while maintaining DC to store service levels; relocation of pool points to take advantage of transportation lane savings. New MW & SE DCs options were not justified but need to be re-examined in the next five year plan. This settled an ongoing discussion among senior management. JSC also, identified several large stores for direct shipping to stores, bypassing pool points, improving service levels. The client is now committed to updating the supply chain network optimization effort every two years, in light of changing growth, merchandise mix changes, and E-Commerce growth.
Options considered included expansion of existing distribution centers (Base Line model), additional regional DCs in Midwest and Southeastern U. S., conversion of larger stores to direct shipping from DCs (bypassing pool points), and assessment of the number of pool points and their locations. JSC utilized leading edge network optimization tool, Llamasoft’s Supply Chain Guru®, to model transportation and operating costs. Extensive space (JSC Space Plannersm) and operating expense modeling occurred for the five year strategic plan. 15+ corporate interviews were conducted with senior management to align business strategic objectives. Net Present Value analysis was conducted, along with qualitative factors, to produce a network scoring matrix for decision making and recommendations. Constructed model to provide easy input and "what-if" analysis to use as business conditions change, which is frequent in the off-price retail vertical.