North West Co. Case Study

Case Analysis Report of North West Co.

Final Exam, Module (1) - Supply Chain Management

Prepared by : Mr. Abbas Elradi

Date: Aug 09 ,2015

EXECUTIVE SUMMARY:

Mr. Barry McLeod, the Director of procurement and Marketing in the North West Company, has challenge to support his proposal of adopting the pull strategic model (Localization), instead of their current push strategic model, Mr. McLeod has a meeting with Ken Claudel - vice president of logistics and supply chain, to review the benefits and costs of localization, plus the potential risk if the pull strategic approach has been adopted, and how they can implement it in accurate way.

ISSUE IDENTIFICATION :

Mr. McLeod has to support his proposal of a pull supply chain strategy to Ken Claudel as to whether or not implement localization at North West Company. North West is facing low inventory turns which is affecting their inventory costs and warehousing costs. They lack accuracy in forecasting and have long lead times for most of their products and especially in their more remote store locations. The North West Company is experiencing inventory management problems with unsold inventory piling up as well as experiencing stock outs resulting in lost sales. They have not been able to increase their yearly inventory turns from 2.2 to 3.00, well short of industry averages.

Popular items often sell out the day they arrive in stores, while excess stock items can be marked down up to 75%. Items not sold at the 75% markdown are then shipped back to Winnipeg and sold through a clearance Centre.

This current push model is increasing both sales and inventory/warehousing costs. The lack of accuracy in forecasting is magnified by the long lead times coupled with the transit times to their remote store locations.

Mr. Barry needs to support his plan and decide to implement localization or not, and if not, then how and where they can make improvement under their current supply chain push model of...