West Marine: Driving Growth through Shipshape

Supply Chain ManagementCase Study Solution

Presented By:Arun Kabra 11BM60046

Chandra Veer S Dulawat 11BM60030Partha Pratim 11BM60041

Sumit Pal Singh 11BM60048

About West MarineStarted in 1975 in Palo Alto, California by

Randy Repass

252 stores accounting for 82 % of total business

18 % sales through Internet and catalog orders, which had 50,000 SKUs

Market share of 7.3 % with 440 million in sales in the boating industry

West Marine Acquisition of E & B Consequences:

◦ Sales fell by almost 8 %◦ Peak-season out-of-stock levels rose more

than 12%

Major Challenge:◦ Infrastructure of West Marine was not

strong enough to support an organisation almost doubled its size

West Marine Acquisition of E & B ContinuedFocus Points for Change:

◦ Leadership – The Captain selects his Crew Key players changed by veterans in the

industry in case business in failing More experienced people in the management

team

◦ Strategy – New Navigation Rules Each executive was given the general

mandate to turn around his respective function outlined a series of specific financial goals

(company wide performance indicators)

West Marine Acquisition of E & B Continued

◦People and Culture – All Aboard Cultural change drive on the idea of

providing “better than expected customer service”.

Significant effort was put in redefining roles, the silos mentality was totally abandoned and new transparent communication was established.

◦Systems and Processes – Regain an Even Keel New management team started attacking

every process by reviewing every process and reinventing all of the systems.

About CPFRCollaborative Planning Forecasting and

Replenishment

Development of a single, shared forecast supporting joint plans of trading partners in supply chain and driving their replenishment activities.

Included systematic identification of exceptions, clear performance measures and monetizing of risks.

CPFR at West MarineThe key drivers to customer sales forecasts

were

Base annual forecasts Seasonal selling curves or “profiles” Ranking or service levels for items Promotional changes Assortment changes

In their business model, sales from non-stocking locations were also a significant driver.

Store-DC link West Marine elected to develop a custom

integration solution to link its store and DC level replenishment platforms. West Marine implemented a successful, robust linkage between the point-of-sale and DC systems that maximized automation and mass-maintenance procedures, thereby creating new user interfaces that enhanced the user’s view of how products performed across the network.

West Marine implemented JDA’s Intellectual seasonal profiling package to address the challenge of accomplishing accurate profiling.

West Marine – Trading Partners

Electronic data interchange (EDI) standardized electronic transfer of structured information between trading partners to increase productivity, reduce human error, and drive down costs.

West Marine worked with NMMA to establish this as the EDI standard in the marine industry with the hope of more rapidly stimulating its adoption.

West Marine also launched a significant data clean-up effort, by evaluating one SKU at a time.

With these improvements, West Marine created accurate 52-week forecasts of supplier orders of all of its products with a minimum of manual intervention. Historical sales data was used to generate the baseline forecast, which was made richer by taking into account:

Seasonal (geographic based) profiles,

Product rank (based on anticipated sales volume and gross margin), and

Scheduled promotions (fliers, special displays in the stores, and other promotional activities).

These forecasts were updates every 24-hours.

Internal ImprovementsTo support this new forecasting and

replenishment approach, West Marine agreed to implement a category management approach that would drive employees in the merchandising and planning and replenishment departments to perform as an integrated unit.

They divided West Marine’s products into 24 distinct product clusters, and assigned a category manager and an assistant category manager from the merchandising group to each one.

A merchandise planner and a replenishment analyst were assigned from the planning and replenishment department.

These four individuals were collocated in a team “pod” and were charged with working together.

ROLES Category Manager and Assistant:

responsible for choosing the items that the company would stock, assigning a channel(s) to each product, negotiating vendor agreements, determining price, margin, and volume goals, developing promotion strategies, and managing the on-going vendor relationships.

Merchandise Planner: acted as “supply chain captain”, cutting purchase orders, monitoring shipments and fill rates, resolving problems, and coordinating all aspects of supply chain from the vendor to the DC.

Replenishment Analyst: worked closely with the merchandise planner, but focused on those aspects of the supply chain related to getting the product form the DC to the stores. S/he entered and monitored the forecasts, interfaced with the stores to ensure that they got what products they needed and managed special requests from the stores.

The new category teams also worked closely with assortment planning, visual merchandising and marketing. The assortment planning group helped ensure that each unique store had the right mix of products to maximize sales and profitability in the market.

CPFR: Pilot at West MarineCollaboration with 150 vendors including 350 EDI partners.

In-stock rates at stores: 96%Forecast Accuracy: 85%On-time shipping: 30%

Improved Forecast for shipping and receiving activities at DC resulting in marriage of replenishment and physical logistics at DC.

Recommendations for Takeover of BoatU.S.

Branding and Integration Strategy:

A vendor and SKU Rationalization Effort would be needed, when the company is going for merging the two into a single brand West Marine.

But if it wants to go with Dual-Branding Strategy and decides to maintain the BoatU.S. brand, the company has to develop a more diverse product base and more unique assortments than ever before.

It also needs to take care of the integration of the replenishment activities because these are mostly manual processes in case of BoatU.S.

Recommendations for Takeover of BoatU.S. Continued

Overall complexity involved in the supply chain integration of both companies is high since both offered 50,000 SKUs via stores, internet and catalogs.

This is one of the most critical factor as West Marine cannot afford to have a repeat of the Supply Chain breakdown, as happened in the case of previous acquisition of E&B Marine.

Thus, the experience gained from the CPFR needs to be used and applied for the successful integration of two companies.

THANK YOU