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Copy of West Marine Case Study
Transcript of Copy of West Marine Case Study
Centers CPFR solution: Managing customer demand through shared timelines allows for increased order fulfillment and more accurate forecasting Too Many Suppliers Jack
Torres (cc) photo by theaucitron on Flickr s u p p e i l r End
Consumer CPFR Solution: a database that measures stock levels and balancing demand increases with shared responsibility across supply chain Accurately Measuring Customer Demand CPFR Solution: links ‘best practices’ for sales and marketing – this keeps the strategy teams communicating with the key processes of the supply chain. Their involvement will prevent any stock-outs or logistics backups. Silos Accross Departments Published 1998 – collaborative planning, forecasting, and replenishment (CPFR)
Single, shared forecast that supports the joint plans of trading partners through combined knowledge of customer demand planning and order fulfillment
Clear performance measures were defined to ‘document operational performance expectations.’
Monetized risk – holding partners to clearly communicated financial consequences What is CPFR? CPFR Solution: Digitizing the inventory flow allows for the warehouses to better plan for increased shipments and staff accordingly so there won’t be bottlenecks at the warehouse Logistics & Transportation Costs (conventional order management)
Retailer pushes the order planning, forecasting and order generation
Retailer forecasts but the manufacturer controls order planning and buying
Retailer plans the orders and develops the forecasts; the manufacturer generates the orders
The manufacturer is in control of all three aspects; order generation, forecasting, and order planning Four Models for CPFR A B C D Buy – In
In order to use CPFR effectively you have to have buy-in from your suppliers. Without their cooperation it simply will not work.
Implementing a system like CPFR can be costly; you need to make sure you have the capital invested to launch the system correctly with sufficient support. What is needed for CPFR Implementation? People in charge
Wiped out top management
New team charged with setting own goals
Metrics were brought up to date
New systems and processes introduced
Emphasis on driving down costs and streamlining processes Behavioral Turnaround Category Management approach to inventory
24 product clusters:
Category Manager, Assistant Manager, Merchandise Planner, Replenishment Analyst
Distribution Center changes
Floor plan efficiency
Regular communication with corporate office Operational Turnaround Technology/communication improvements:
JDA’s Merchandise Management System
JDA’s Warehouse Management System
Electronic Data Interchange
Collaborative planning, forecasting and replenishment (CPFR) IT Turnaround Catalogue Web
Store Regular Retail Problem:
Failure to forecast demand Problem:
No communication with suppliers Not keeping staff also jeopardizes Boat U.S. brand equity (typically big dollars).
Lack of overlap in SKUs (20 %) and suppliers (13 %) given that rationalization of both will be necessary to operate efficiently and profitably
Sub-optimized logistics and warehousing facilities
Incompatible software at the Boat U.S. Hagerstown DC
Only 30 % of its suppliers set up for EDI
Most of its store replenishment activities are manual also pose major risks to a smooth merger Merger Risks CIO Shenk “it might take four to six months to get the systems fully integrated.” CEO Edmondson “wrong answer.” Effectively ignoring a probably optimistic four to six month estimate for integration
Shenk – CEO said if the acquisition was “too expensive or too complex they were not going to do it”
And yet, West Marine wanted to:
Begin operatings as one business in 60 days
Insure min disruption to peak season sales
Make the acquisition profitable in the first year
While refusing to retain Boat U.S. headquarters
staff to facilitate merger West Marine Reality Refine their supply chain by increasing vendor compliance to meet the company’s stated expectations.
Focus on a sustainable level of autonomous growth rather than dicey “you bet the company” acquisitions.
Yard management system with receiving appointment scheduling –eliminate manual coordination for high volume shipments such as winterizing anti-freeze.
Leverage Internet and catalog operations to handle ”long tail” SKU’s
Benchmark on inventory turns as well as in stock position. Dialing the expected service level back in JDA will free significant cash given their top line sales number.
Re-evaluate competitive position as specialty retailer .
West Marine’s effective execution of these strategies could improve profitability and grow sales organically gaining market share from Boat U.S. ending need for acquisition. Alternatives Express Retail Mega
Stores Commercial Customer Problem:
DC change leads to distribution failure and HR problems