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A regional home improvement company was having difficulty properly supporting their stores with core product from their distribution centers.  The challenge was accurately understand the demand for the products and then coordinating the vendor orders and deliveries with need.  The company decided to implement IBM’s INFOREM (now i2).  As the primary head of the business team implementing and then running INFOREM we were able to complete the implementation and begin realizing results in less than a year.  With the first year of operations we were able to permanently raise the distribution center fill rates over 20 percentage points while decreasing the overall distribution center ownership.  In addition to the technical implementation this project included a reassignment of purchasing responsibilities for all the core product, design and development of the information delivery requirements, and full daily administration of the INFOREM package.

 

A home furnishings and décor company that imported the bulk of its product was having difficulty efficiently processing product through their distribution center and properly servicing their stores.  At the time I joined it, this company had contracted for a second distribution center, there was a perpetual inventory of ocean containers waiting to be unloaded some of which were parked in an adjacent field because of the lack of space and which occasionally had to be extracted with a crane after sinking in the mud.  The 200,000 square feet was racked 5 high and essentially filled.

 

By implementing detailed merchandise plans and then revamping the ordering and delivery process to more closely coincide with sales I was able to reduce the flow of product arriving to only the necessities.  Simultaneously, we changed the process for receiving waiting containers in order to move the product through the distribution center and avoid the time and effort of put away and retrieval.  Within months the backlog of containers was eliminated and within 18 months the top two levels of the distribution center racking was empty.  Store stock rooms became less crowded with the majority of merchandise being able to fit onto the sales floor and product getting replenished on a regular basis.  As the new warehouse was getting ready to come online, it was clear that it was unneeded and was eventually leased to another tenant and we never took control of the facility.

 

Resources and expenses were reduced at the distribution center because of the improved flow, the investment in trade inventory was reduced which reduced the carrying costs, and store resources were either reduced or redirected toward the selling floor as the receiving areas and stock rooms became more manageable.

 

Throughout this process we also implemented the Island Pacific Merchandising System to which we fully converted from our legacy merchandising system in less than 4 months.

 

A northeast regional men’s company was prompted to hire me after taking a physical inventory and discovering that the fields on the summary inventory reports were not wide enough to report the results.  That just highlighted problems that already existed in the form of excessive aged inventory, high markdowns, and the lack of space in the distribution center and store stock rooms.

 

I implemented strict restrictions on the purchasing of trade inventory to just necessary items and quantities, and developed promotions to aggressively liquidate the aged inventory without generating a flood of red ink.  Within two years I was able to bring the aged inventory levels to an acceptable range, reduce the amount of inventory in the store stockroom, and virtually change the warehouse to a distribution center.

 

The reduction of storage requirements in the distribution center was so dramatic that two other creative executives and I established and grew a third party distribution services company as an operating entity with the menswear company.  Priority Distribution Services as it was known eventually processed merchandise for up to 16 different retailers at one time and help establish a stable year-around trained workforce in the DC and offset a majority of the distribution expenses for the menswear company.

 

A northeast regional menswear company was having difficulty moving comparative store sales in a positive direction.  Input as to the merchandising assortment and investment in inventory was bombarding the merchants.  Input took the form of granular reports, anecdotal experiences, and selective review of customer files.  Careful review of the inputs allowed us to discard the anecdotal input and incomplete analysis.  Exception reports were developed off the factual data and as the merchandise investment became focused, the comparative store decline was stopped and the company began to experience comparative store gains.

 

By protecting and streamlining the core businesses the company was able to reallocate resources to the seasonal and fashion portions of the business that required more attention.  In this case, by developing a course of action from facts that encompassed the entire business, a growth pattern for comparative store sales was established.

 

A chain of woman’s apparel stores experienced several years of comparative store growth.  Throughout that time stores were required to capture as much customer information as possible.  I developed a CRM application internally using Access to begin to leverage the customer information the stores were capturing.  At first, I began to monitor the stores’ customer capture rates and amount of new customers weekly.

 

As the house list reached a marketable size I began to mail postcards offers and immediately realized a significant increase in sales over large previous year increases. The promotions were very specific and I always kept a control group to estimate the true sales increase.  Our promotions generally ran for two weeks and we came to realize that although the redemption rate on the postcards was acceptable a full one third of the people we sent postcards to, came into the stores and bought something even if not to redeem the offer.

© 2006-2010 Mike Mahoney
mike@mike-mahoney.com