North West Company Case Analysis
Barry McLeod, Director of Procurement & Marketing
Ken Claudel, VP of Logistics & Supply Chain
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 …show more content…
By taking this option, North West is able to take advtange of the local managers knowledge of the consumers preferences and needs, have a say in their stores and he/she is more motivated to work harder and have a more accurate forecast since their say actually matters and their bonus is based on the store’s operating margin. Morevoer, they will work harder to forecast better, and sell their inventory as reducing old inventory frees up dollars for their OTB dollars.
North West should choose to implement localization in order to take advantage of the local managers’ knowledge and acquaintance with the consumers. As well have suppliers ship straight to the stores in order to decrease lead time and shipping costs, as opposed to have the warehouse re-assembled and hold its own inventory as well. Moreover, products should follow a shorter markdown schedule in order to have them go to the clearance outlet in Winnipeg sooner than week 19 or 21 depending on the size of the store.
Stage 1) Proof of Concept (6 months)
Management buy in from supply chain & logistics as well as marketing, procurement, IT/IS and finance. In order to get approval to implement localization company wide it needs to be a proven method. North West will start with its least profitable store and focus on a few SKUs or sub-categories which they are most able to impact.