A multi-billion dollar investment holdings company had acquired several large Australian retailers with a networkof more than 300 stores across the country. They engaged GRA to review the discrete supply chains of eachbrand and design a Group-wide supply chain strategy to minimise costs and enable growth through to 2020.

The investment holdings company sought assistance in putting together a business case for the board tooptimise the supply chain footprint, network and import methods as well as committing to a scalable, sharedsupply chain strategy moving forward.

The fundamental principles of the shared supply chain strategy had to support the following (cost-effectively):

● Growth in online fulfilment channels● Geographic growth aspirations in WA and QLD● Growth via acquisition – scalability required in strategy● Leveraging of assets and owned supply chain infrastructure● Optimisation of import channels

In addition to this, it was important to acknowledge in the shared strategy the uniqueness of the individualbusiness units and the needs of their customers. GRA thereby dedicated considerable effort and time intounderstanding:

● Broader business strategies and customer value propositions● Retailers strategies, store network, product sourcing and e-commerce strategies● Product distribution/transport, stocking strategies (flow-through vs. put-away)● Operational assets, DCs number, location, ownership structure● Off shore consolidation, store ready builds etc. including leverage of unit volumes● E-Commerce Fulfilment operations

RETAIL: APPAREL, HOMEWARES & MANCHESTER

Supply Chain StrategyEnd to End Design(network, imports & online)

CASE STUDY

challenge

background

www.gra.net.au

GRA worked closely with the senior leadership team to leverage commercial & supply chain expertise as wellas to ensure appropriateness, buy-in and accountability in the ‘to be’ strategy.

A 3-phased approach (as-is review, design & test) was adopted by GRA to:

1. Conduct a detailed ‘As-is’ review of the key business supply chains that would ultimately shape the overallstrategy.

2. Design work-streams to test a series of proposed hypothesise. Work Streams in this instance included:

● Physical Network Model – to determine the optimal physical footprint for the retail conglomerate,balancing freight, fixed and variable costs to achieve a desired service offer.

● Upstream/Downstream Model – to determine the appropriate import flow mix. That is, to design whichactivities to perform at off-shore consolidation points vs. locally (packing, labelling, store-ready, etc.)

● Integration Model – to analyse the capital costs, efforts and requirements of the proposed scenariosto determine the return of investment.

● Online-fulfilment Model – to test the trade-off between store fulfilment vs. dedicated fulfilment foronline channels. This would analyse the cost to serve of each model and highlight labour pickingcosts, inventory obsolescence risk, freight and responsiveness.

● Hanging Goods Model – a specific strategic question for this supply chain group was to determinethe cost benefit of moving towards hanging infrastructure vs. cartonised infrastructure.

● International study tour to gather and test strategies used by similar international businesses in Europeand Asia.

3. Each of the above work streams were modelled and the findings were tested and validated by bothoperational and senior staff for the relevant businesses.

The strategy developed provided opportunities for the business to reduce costs, improve service levels tostores and drive greater utilisation of company owned assets. It also delivered a strategy to establish commoninfrastructure and enable future acquisitions to be integrated into a common supply chain.

Financially, the strategy enabled around $14m in cost reduction in the first 5 years at a net present value of$6m after taking into consideration the required investment. A detailed implementation plan as well as keyprioritised recommendations and accountability timelines were also provide to help ensure target areachieved.

A study tour to London and China was undertaken to both involve and educate the executive team insupply chain best practice whilst highlighting constraints specific to the Australian market.

110 Jolimont RoadEast Melbourne VIC 3002

Tel: (03) 9421 4611Email: info@gra.net.au

Suite 7, 340 Darling StreetBalmain NSW 2041

Tel: (02) 9810 0229Email: info@gra.net.auwww.gra.net.au

CASE STUDY

approach

outcome

#03