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 …show more content…
Given the objective of increasing inventory turnover as well as controlling costs associated with implementing a new information system and strategic changes to the current supply chain model, alternative 2 is recommended. Alternative 2 recommends to localize certain selection of product categories in the hand of store managers. This alternative will change the current supply chain model at North West with less rest risk than giving the whole decision in the hand of local store managers. Going with this alternative managers would participate and indicate which product categories are selling more in their stores and have an option if they do not want to have less favorable product in their stores and more on others. Another benefit going with this alternative is that it gives managers more control than what they currently have by providing them the flexibility to change product order quantities and select which promotional items will be displayed in their stores. This alternative makes use of the local managers experience and knowledge in their markets. Every store will have certain product selling more than others given the area the store is located, population and community background. At this point North West customers and suppliers are not ready for making a drastic supply chain changes and investing on a new system. Considering current cash flow is tied up with aging inventory of $130