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Our client, a multi-billion-dollar investment holding company had acquired several large Australian retailers with a network of more than 300 stores across the country, and was in the process of defining their future integration plans and capability requirements. With stability of product range, store expansion and e-commerce being key drivers for the business, the company engaged GRA to develop a strategy to deliver cost reduction, improved service levels and greater utilisation of company-owned assets. Key to this engagement was a strong emphasis placed by the client on ensuring supply chain expertise was incorporated into the development of the strategy to ensure a sustainable outcome was delivered. The resulting business case developed by GRA provided opportunities to reduce costs, improve margins and drive greater utilisation of company owned assets. It also delivered a strategy to establish a common infrastructure and enable future acquisitions to be integrated into a common supply chain.
A multi-billion dollar investment holdings company had acquired several large Australian retailers with a network of more than 300 stores across the country. GRA was engaged to review the discrete supply chains of each brand and design a Group-wide supply chain strategy to minimise costs and enable growth through to 2020. Our client sought assistance to create a business case for the board to optimise the supply chain footprint, network and import methods. They also wanted to commit to a scalable, shared supply chain strategy moving forward.
GRA developed a strategy providing opportunities to reduce costs, improve service levels to stores and drive greater utilisation of company-owned assets. We also delivered a strategy to establish common infrastructure and enable future acquisitions to be integrated into a common supply chain. GRA identified around $14m in cost reduction in the first 5 years at a net present value of $6m after taking into consideration the required investment.
Our client had inconsistent demand, inventory & replenishment processes across all categories. As a result, the quality of outcomes varied based upon individual approaches and experience. GRA was tasked with reviewing existing processes and to develop, train and coach new standardised processes.as well as providing analytical support to ensure a smooth and managed Christmas stock build. GRA developed and deployed standardised processes across the business that led to an optimised inventory position in the lead up to the peak Christmas sales period with a 9% increase in sales and a 0.8% decrease in inventory.
Our client, required analysis of its inventory position and a review of its inventory and performance management processes in order to achieve immediate and sustainable service level improvements. Challenges included limited accountability for supply chain performance of which the Client had very limited control (pull v push processes) and needing to work within a heavily bureaucratic system. Our efforts returned a 70% reduction in understocked inventory and an 85% increase in balanced inventory as well as improved DIFOT performance from 90% to 96% with a 340% increase in transaction volume and a 28% reduction in the annual operating budget.
The client tasked GRA to assist in developing a business case to the cost effectiveness to continue with its direct to store deliveries from suppliers or use its own distribution network. As this was occurring in an environment where the business was undergoing significant, sustained growth it needed a quick, concise assessment of its distribution network to understand medium term options. We identified operational cost savings of $1.6 million pa in store receipting activity and offset increases in DC operational and transport costs of $3.6 million pa through recovery in via reduced cost of goods.
"After undertaking a broad diagnostic, GRA identified some great opportunities for our business. The GRA team worked effectively with management to prioritise the key areas of focus in terms of inventory reduction, freight cost optimisation, distribution network structure and broader organisational processes such as S&OP."
– Andrew Coventry, Catalyst Investment Managers Pty Ltd
- 20-40% inventory investment reduction
- increased service levels ranging up to 99.9%
- 10%-15% reduction in supply chain operating costs
- 5%-20% spend management savings
- the ability to fund business initiatives from operating cash flow (OCF) improvements
- improved return on capital employed (ROCE)
- a minimum 3:1 ROI (10:1 to 30:1 typical)