North West Case Study Essay

1671 Words Dec 6th, 2012 7 Pages
Executive Summary
The North West Company is a leading retailer of food and everyday needs to rural and urban neighborhoods across Canada. They are currently using a “push” strategy, which the category manager at North West headquarters in Winnipeg analyzed trends, placed orders and allocated products to stores. Inspired by Giant Tiger’s example of a “pull” system in action, North West management was considering giving store managers more control over their inventory ordering by moving to a “pull” merchandise replenishment strategy — also known as localization. Using this “pull” system North West will need to invest $10 million in order to support the Open To Buy (OTB) for the retail stores managers. The issues North West are currently
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Cons: This approach will be high in cost, as North West will need to invest on the new hardware and software in order to support Order To Buy (OTB) process for retail manager. There will be also cost associated with training managers extensively and providing coaching. This alternative has the highest inherent risk as the changes will impact the whole North West supply chain.

Alternative 2: Localize certain selection of product categories in the hand of store managers. Retail managers given a product menu to choose based on top 10 of popular items and top 10 of less popular items.

Pro: Inventory at the store level will be decreased. Store manager can better understand on which items sell more based on their current customers and communities and focus on those items. Flexibility and able to modify orders from head office will give managers better inventory quantity control. The change in current supply chain is not as drastic and lower risk.

Cons: Managers ideas might be bias; transport cost might be high, as manager will make frequent orders for the more popular selling products. Product selection might not suit each retail stores as the input came from all 147 retail stores.

Recommendation and Implementation North West had identified that using their current push system has created high-unsold inventory, which lead to the escalating markdown system and lower profit margins for the company. North West has

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