Dynamic growth, local retail und efficient supply chain
A jewellery brand based in Central Europe expanded its worldwide sales network by 600 own stores within a few years – with convincing overall results. To execute growth plans at a swift pace, sales organizations in EEA, NA, APAC, EEMEA & LATAM set up their own retail structures, created their own organizations and processes as well as their own merchandise management systems. The sales performance is convincing, with own retail approaching ¼ of total turnover, yet the company’s overall cost and balance sheet structures have suffered under the 8-year store investment program.
As a number of operational warning signals appear, the fundamental strategic question of whether “all retail is local” is still the right approach is raised. Due to lack of uniform planning and supply chain management, the stores’ sales floor performance begins dropping at a rate of 10% p.a. Overstocking, stock-outs and lead times increase, while the capacity to react swiftly to market changes decreases.
Had the fast expansion come at the cost of supply chain efficiency?
Within less than six man-weeks, TRE and a team of client managers assess the key supply chain processes, organizational structures and selected KPIs and put the existing retail model to the test.
In a two-day executive workshop, case studies and examples of best practices of comparable retail brands are reviewed. Managers and staff form an initial vision of the potential of a restructured retail supply chain. In a further workshop, TRE presents control instruments for efficient supply chain management and helps conceptualize management programs for supply chain excellence.
Over the course of the weeks, we developed:
• A Retail Readiness Assessment
• SWOT documentation and a list of measures for supply chain processes
• A glossary of the main retail KPIs for globally uniform retail control tools
• Detailed descriptions of five supply chain management implementation programs
TRE conservatively estimates the top line sales potential with realization of the proposed programs at € 100m. But possibly more important: TRE votes against a centralized retail management, convinced that the regional/local control of retail supply chains can achieve excellence, provided the regions start to learn from one other and adopt best practices from in-house and other brand retailers.