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Nordstrom Audit

Productions and Operations Management
by

Jada Souffrant

on 15 March 2012

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Transcript of Nordstrom Audit

Nordstrom Operations Audit In This Presentation W
I
L
L 1 Give you a brief background of Nordstrom 2 Give a description of its Operations Management 3 Assess its Operation Managment 4 Present our recommendations In 1
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1 Nordstrom started as a small shoestore in Seattle With The Motto,
"Offering quality, value money merchandise and better customer service even though there is still competition" Company Background Nordstroms is one of the oldest and largest speciality retailers in the US It's stores offer customers a variety of merchandise from shoes to apparel to accessories Such as designer bags, belts, and jewelery. They also sell beauty items. Description of Operations Founded by John W. Nordstrom There are currently 159 stores located in 28 states Nordstrom's customer strategy: Hire The Smile "We hire nice people and teach them to sell." Bruce Nordstrom likes to say, "But we can't hire salespeople and teach them to be nice." Forecasting: history in expansion, 26 new stores opening in 2011 In 2011, Earnings are estimated to increase from $2.95 to $3.10 per share. Inventory:
Perpetual Inventory system
Inventory in stock monitored after each transaction
Decisions to reorder based on total of on-hand plus on-order stock (stock position)

Q System
Stock reaches predetermined order point
Fixed quantity placed on order by Nordstrom
management
Allows Nordstrom to better service their customers
Detailed and updated inventory information
Prevents stock shortages
Determines items with
low sales
W
e Vendors & Suppliers:
Partner with vendors who share Nordstrom's commitment to producing quality products
Use ethical business practices
Follow Nordstrom's "Standards &Business Practice Guidelines" Guidelines + Vendors/Suppliers:
Employ quality control personnel
Have permission to visit vendor's factories/warehouses Perform either in-line or finished product audits prior to Nordstrom granting shipping approval.
Hold Vendors/suppliers accountable for following ethical business practices.
Promotes goodwill image of Nordstrom Quality Control:
Everyone responsible for quality: Vendors, suppliers, management, sales employees etc.
Use TQM (total quality management)
Committed to continuous improvement
Respond to unreasonable customer requests
doing more than the customer expects
Quality +Vendors:
Vendors responsible for shipping quality merchandise
An integrated total quality program monitors vendors by:
Incoming materials inspection and testing
Statistical in-process auditing
Final 100% inspection
Final statistical auditing of each production lot after packaging Quality + Nordstrom Stores:
Inspect stores for:
Attractive, organized, well lit, and fully stocked displays
Clean, uncluttered stockrooms
Professional salesclerks: neat in appearance, courteous, knowledgeable, provide speedy transactions and accuracy

Store layouts:
Departments not categorized by merchandise
Created fashion departments to fit individuals’ lifestyles

TQM:
Results in:
Customer satisfaction
Customer Loyalty
Customer Retention
Customers receiving excellent service six times more likely than a satisfied customer to buy from store again
Reputation for quality merchandise and services
Profits
The type of product flow Nordstrom uses is batch flow. Some of the factors that influence the decision of process selection are market conditions and competition. For instance, there are many other similar companies that compete for upscale merchandise and superior customer service offering very similar products at competitive prices such as Macy’s, Neiman Marcus and Saks Fifth Avenue. Nordstrom also uses batch label printing compatible with distributor and suppliers to receive merchandise. Nordstrom’s business was built on the principles of quality, value, selection and service. Primarily Nordstrom is well known for their quality of design by assesses customer needs. They offer numerous styles of clothing and other apparel. They built a reputation as a credible high quality clothing store which vary in price but will fit any life style each representing a different design concept.

Each product Nordstrom sells falls under quality of conformance and goes through a vigorous process making sure that each product meets their expectations. Their products are made according to certain specifications. Nordstrom sells nothing but high quality apparel which is welling fitting and stylish. Additionally, Nordstrom's department stores inspect their display areas to make sure they are attractive, have good lighting, are well organized and stocked. The stockrooms are inspected to make sure they are clean and uncluttered, and that the goods are rotated. For contact services the discretionary service behavior (DSB) model is used which takes a contract management approach. For example, quality is articulated through customer service, therefore salesclerks must be neat in appearance, courteous, and very knowledgeable with accuracy and speed in credit checking and sales entry. Recommendations: Although Nordstrom has strict guidelines for its vendors/suppliers, they could still improve by implementing lean operations, when working with vendors to cut wastes and save money. Nordstrom is having trouble keeping up with inventory in all their departments. To help with that we suggest the store invest in inventory scanner technology that would allow employees to check and see if merchandise is in stock by using a handheld scanner before walking to the stockroom to get the item for the consumer. One of the most challenging aspects of supply-chain risk management is ensuring the proper implementation and continued application of an effective risk-control framework – procedures, training, monitoring and reporting.
PwC, PriceWaterhouseCoopers, helps clients to implement effective risk-mitigating activities and controls by providing training and monitoring services.
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