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North West Case - North West management was considering giving store managers more control over their inventory ordering by moving to a pull merchandise replenishment strategy

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Introduction

North West Company B Introduction The North West Company is a leading retailer of food and everyday needs to rural and urban neighborhoods across Canada, Alaska, the South Pacific islands and the Caribbean. In early 2003, North West had negotiated a master franchiser agreement with Giant Tiger Stores Limited (Giant Tiger) with the objective of opening stores west of Winnipeg. In contrast with North West's ""push"" system of product replenishment, Giant Tiger had developed a successful ""pull"" system that gave individual store managers tremendous leeway in ordering decisions. 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. ...read more.

Middle

The shift towards localization promised to tap into the local knowledge that resided with store managers, allowing them to better tailor product quantities to preferences in their communities. Under localization, product assortment decisions, which had been previously made at the category manager?s level at Winnipeg headquarters, would become the responsibility of North West?s 147 store managers. Costs and Benefits Localization seemed like a great way to enable store managers to take advantage of their knowledge of the community in which they lived. Store managers would become the local market experts, determining which stock-keeping units (SKUs) to carry and in what quantities, and incentive plans would be changed to reflect these new responsibilities. ...read more.

Conclusion

to support the ?open-to-buy? (OTB) process. The OTB process would spur store managers to clear out aging inventory in order to free up dollars to purchase new inventory. The upside potential of localization may include higher sales and reduced inventory levels as merchandise is tailored for each community. Currently, the North West Company has not been able to increase their inventory turns over 2.2 times. They expect that with localization, they could achieve inventory turns in the 3.0 or 3.5 range. Risks However, there are risks involved. Current supply chain processes will have to change. North West will have to invest in information systems and technology. There will be 147 different store managers making decisions on the quantity of product shipped to store. ...read more.

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