2. 2% 4% 6% 12% 14% 16%8% 10%
Integrate our logistics functions
Train and up-skill staff
Redefine our supply chain
Improve flexibility & agility of the supply chain
Improve information visibility
Improve collaboration in the supply chain
On-time deliveries
Ensure on-time outbound deliveries
Ensure on-time inbound deliveries
Decrease lead times
Improve asset utilisation
Improve service offered to customers
Reduce out-of-stocks / increase shelf avail.
Reduce investment in inventory
Lower outbound transportation costs
Lower warehousing and distribution costs
Lower inbound transportation costs
Lower sourcing and procurement costs
Other
0%
Supply chain objectives for the next year
1%
4%
8%
1%
3%
14%
2%
7%
3%
6%
6%
8%
5%
10%
3%
6%
1%
4%
6%
Retail:
CEOs, MDs and GMs
The response is at last strategic
3. 2% 4% 6% 8% 10% 12%
Aligning our skills to meet the sc strategy
Skills and capabilities of our supply chain staff
Integration of our IT systems
Information integrity and access
Capabilities of our existing IT systems
Redefining our supply chain
Creating sc collaboration opportunities
Achieving a common supply chain vision
Our planning and forecasting capabilities
Benchmarking & auditing our sc performance
Integration of our logistics functions
Finding suitable outsource partners
Our warehouse management capabilities
The diverse needs of our customers
The increased complexity of our supply chain
The increased volume in our supply chain
Our distribution network
Our sourcing and procurement practices
Other
0%
Challenges to meeting the supply chain objectives
8%
2%
3%
3%
1%
7%
11%
11%
3%
5%
8%
2%
6%
5%
3%
10%
6%
3%
4%
Retail:
CEOs, MDs and GMs
The response is at last strategic
4. 2% 4% 6% 12% 14% 16%8% 10%
Supply chain objectives for the next yearRetail:
SCLMs
Integrate our logistics functions
Train and up-skill staff
Redefine our supply chain
Improve flexibility & agility of the supply chain
Improve information visibility
Improve collaboration in the supply chain
On-time deliveries
Ensure on-time outbound deliveries
Ensure on-time inbound deliveries
Decrease lead times
Improve asset utilisation
Improve cash flow
Improve service offered to customers
Reduce out-of-stocks / increase shelf avail.
Reduce investment in inventory
Lower the costs of selling
Lower the costs of manufacturing
Lower the costs of direct purchases
Lower the costs of forwarding & clearing
Lower outbound transportation costs
Lower warehousing and distribution costs
Lower inbound transportation costs
Lower sourcing and procurement costs
Other
0%
4%
3%
8%
8%
4%
10%
4%
1%
2%
5%
3%
2%
12%
10%
5%
0%
2%
1%
0%
3%
6%
0%
4%
2%
The response is at last strategic
5. Availability of skills development programmes
Aligning our skills to meet the sc strategy
Skills and capabilities of our supply chain staff
Integration of our IT systems
Information integrity and access
Capabilities of our existing IT systems
Redefining our supply chain
Creating sc collaboration opportunities
Achieving a common supply chain vision
Our planning and forecasting capabilities
Benchmarking & auditing our sc performance
Integration of our logistics functions
Finding suitable outsource partners
Our warehouse management capabilities
The diverse needs of our customers
The increased complexity of our supply chain
The increased volume in our supply chain
Our distribution network
Our sourcing and procurement practices
2% 4% 6% 12% 14% 16%8% 10%
Retail:
SCLMs
0%
Challenges to meeting the supply chain objectives
4%
3%
2%
8%
4%
7%
13%
12%
1%
5%
1%
7%
11%
3%
1%
4%
2%
5%
5%
The response is at last strategic
6. Retail:
SCLMs
0% 5% 10% 15% 20% 25% 30% 35% 40%
How aligned is the supply chain strategy to the business strategy?
13%
27%
40%
3%
17%
There is no formal
supply chain strategy
Not aligned to the
business strategy
Partly aligned to the
business strategy
Mostly aligned to the
business strategy
Fully aligned to the
business strategy
Don’t know 0%
The response is at last strategic
7. The story begins …
The first Hi-Fi Corporation store opened its doors in
Wynberg, Sandton some 10 years ago and the entire stock
holding was sold out within a week.
The Hi-Fi Corporation success story had begun.
9. Background
• The importance of being Hi-Fi Corp
One of 11 chains in the group
Represented 29.3% of JD Group sale of merchandise
• Growth that Hi-Fi Corp experienced
216% growth in 1 year
• Network
South Africa – 15 stores
Namibia – 1 store
Botswana -1 store
• Prevailing retail culture
Can do
Work with what you have
11. Start where it matters
• The Customer
• Customer experience
Cluttered, unorganised, congested look and feel
Daunted by the queues (adds to congestion)
• To get in
• To get served in each department
• To pay
• To collect purchases
• To exit
• To hand in faulty product
• To fetch faulty product
The price is good though
Overall customer service experience not good – people don’t
want to come back
12. Why was this?
• Poor customer experience due to the following supply chain inefficiencies:
Poor space utilisation
• Congested, cluttered business unit (inventory up to ceiling) – the business unit is used
as a warehouse
• Inefficient picking at business unit storage area due to congestion (customer waits long)
• Frequency of replenishment & size of replenishment order
• Total push system vs. selective new product introduction
Lack of speed
• Ineffective network
• Ineffective inbound logistics (local)
• Inefficient information management/ lack of IT systems
• Frequency of replenishment
• Inefficient transportation management
Stock out
• Inefficient inventory management/deployment
• Poor supply chain visibility
13. The Supply Chain was stretched to
its limit and was going to fall over …
The plane was going to crash …
20. Scoping
& Visioning
Develop
Concept
ual
Design1.5 months 1.5 months
Gain buy-
in from
shareholders
Detail
design &
Implementati
on1 month detailed design
“As-is”
Analysis
Phase 1 Phase 2 Phase 3 Phase 4 Phase 5
1.5 weeks
Continuous
improvement
Phase 6
1st big
milestone
2nd big
milestone,
phased
approach
ongoing
Project management
Change management
7Mar‘05
EndSep‘05
20Jun‘05
The process followed
21. What did the team do?
• A detailed “as-is” assessment was conducted,
focusing on the following elements:
Company strategy
Supply chain strategy
Buying
Inbound transport
Warehousing
People (Supply chain)
SCOR best practices
Ishikawa diagrams
Detailed “as-is” process maps
Outbound transport
Stores
Returns
Technology
Inventory optimisation
Network mapping
• Detailed process maps, clearly indicating
gaps were drawn up to create the foundation
for conceptual new solutions.
• Information were gathered through site visits
& interviews
Time & motion studies
detailed“as-is”
S T O R E M A K E S T O R E S E L LM O V EM O V EB U Y
tools & methodologies
Strategy alignment
Cause-and-Effect Relationships between Strategic Initiatives of Hi-Fi Corporation
CustomerBusinessProcessLearning&GrowthFinancial
Sustainable revenue
growth
Customer value
proposition
Effective capital
management
Stable growth in
profits
Cost effective
electronic product
retail company
Maximise long-term
shareholders value
Efficient procurement
processes
Efficient warehousing
& distribution
Excellent business
unit execution
Effective category
management
Lowest price
Widest product range
Provide quality
products
Aggressive market
communication
Market research &
intelligence
Competitive products
Empowered &
competent staff
Employ and retain
competent people
Training in areas of
strategic importance
Best practice
performance
management
Dominant market
share
Great customer
buying experience
Product knowledge of
sales staff
Product research &
intelligence
Sales staff
competence
Buying strategies
Tracking currency
exchange rates
Knowledge of world
suppliers
Negotiating skills
Effective
merchandising &
display
Category specialist
Identify the quality
branded products
“Develop” house
branded products
Category
specialist strategic
stock management
Positioning of
products
Peace of mind
guarantees
Optimum product/
revenue mix vs space
Good supplier
relationships
Effective
communication lines
Establish Hi-Fi Corp
culture
Strategic store
positioning & location
Great customer
service repair
experience
Efficient service repair
infrastructure
Effective information
processes & systems
Efficient inventory
management
Buying power
(volumes?)
Responsiveness to
the market
Up-selling strategy
Store has warehouse
look and feel
Import capability
Efficient
replenishment
High brand image
Effective buying
structure
Expand international
supplier base
Service staff
competence
Efficient, low cost
administration
Cost effective,
demand driven
distribution system
Aligned organisational
structure
Efficient buying
business processes
Efficient inbound
logistics
Efficient
transportation
management
Effective S&OP
Efficient order
management
Effective financial
management
Build IT & S capability
& awareness
Information capturing
sharing & usage
E-commerce channel
Effective & Efficient
Supply Chain Strategy
Revenue Growth Strategy
Guarantee
Succession planning
Business Unit
Service
Receiving
Sales
Congestion
Queuing
First Impression
Amount of stock on floor
Movement of stock on trolleys
Current skill set
Sales persons personality
“Clubbing seals”
No focus on add-on sales
Queuing for purchases
in alternative departments
Excessively long queues
TV licenses
Assistant has to locate goods
Lack of staff
during peak periods
Position of Service desk
Lack of communication
Time consuming
Customer returns
to POSLocal suppliers collection frequency
Retail space to store repairs
Double handling
of unprotected stock
Duplication of administration
Space Constraints
Customers abandon items
Stores do not define requirements
No demand forecasting
Push distributed
Bulk received
Lack of delivery visibility
Non logistics people involved
in logistics activities
Salesmen offload and barcode
No shelving
No logical allocation of product to areas
Daily Stock Takes
Salesman conducting
logistics function
Product layout
hampers counting
People
Process
Inventory
Management
People
Layout
Process
Inventory
Management
People
Inventory
Control
Visibility
Inventory
Management
People
Ineffective
NetworkInventory
Management
Complex
scheduling tools,
warehouse
management,
customer service
performance
measures
Scheduling tools,
performance
management
Workflow
management, Fixed
vehicle scheduling
Basic route
scheduling
carrier
management
Limited /
Reactive
Delivery
Projected workflow
planning, work
standard setting
Solid core of flexible
staff with OT/Casuals
Multi-skilling with
house keeping to
balance time
Limited work
standards with
task allocation
FewOrder Picking /
Preparation
Comprehensive
warehouse
management
Warehouse
competence and
multi-location
environment
management
Location
management and
workflow Planning
Basic procedural
skills,
warehouse
management at
base level
FewReceive and
Store Products
at DC
Comprehensive
supply chain
engineering
expertise
Modeling, what if
skills, business
impact knowledge
Understanding of re-
order point, fixed
cycle and pareto and
inventory profiling
Cycle stock /
safety stock
basic statistics
LimitedMaintain /
Manage DC
Inventory
Strategic planning /
implementation
skills
Comprehensive
workflow analysis /
Prediction
Workflow analysis /
performance
measurement
Pareto analysis
– Basic
warehouse
planning
Basic
Warehouse
/ MHE
Warehousing
Management
ExcellenceCompetenceUnderstandingAwarenessInnocenceSkills Matrix
Complex
scheduling tools,
warehouse
management,
customer service
performance
measures
Scheduling tools,
performance
management
Workflow
management, Fixed
vehicle scheduling
Basic route
scheduling
carrier
management
Limited /
Reactive
Delivery
Projected workflow
planning, work
standard setting
Solid core of flexible
staff with OT/Casuals
Multi-skilling with
house keeping to
balance time
Limited work
standards with
task allocation
FewOrder Picking /
Preparation
Comprehensive
warehouse
management
Warehouse
competence and
multi-location
environment
management
Location
management and
workflow Planning
Basic procedural
skills,
warehouse
management at
base level
FewReceive and
Store Products
at DC
Comprehensive
supply chain
engineering
expertise
Modeling, what if
skills, business
impact knowledge
Understanding of re-
order point, fixed
cycle and pareto and
inventory profiling
Cycle stock /
safety stock
basic statistics
LimitedMaintain /
Manage DC
Inventory
Strategic planning /
implementation
skills
Comprehensive
workflow analysis /
Prediction
Workflow analysis /
performance
measurement
Pareto analysis
– Basic
warehouse
planning
Basic
Warehouse
/ MHE
Warehousing
Management
ExcellenceCompetenceUnderstandingAwarenessInnocenceSkills Matrix
Skills capability
assessment
13. Business Unit Sales Process
BusinessUnitMarketing
No
Yes
13.11
Delivery?
13.9
Customer
Interaction
13.14
Closing the Sale
13.4
Sales
Presentation
13.8
Queuing
13.17
Goods moved to
the customers
vehicle if
required
13.15
Customer
Receipt of
Goods
Purchased
13.17
Security check
13.16
Product moved
to conveyor belt
or to the exit
13.5
Add-on Sales
13.3
Greeting
Process
13.10
Processing of
Sale
13.7
Customer
moves to Pay
point
13.2
Walk In
Customer
13.6
Sale Closure
13.13
Delivery of
Customer
Goods
13.12
Delivery
documentation
sent to despatch
for delivery
13.1
Marketing
Ref Process Process description
Responsible
(designation)
Department System Issues
13.1 Marketing
Advertising through various
forms of media, including
Television and literature
Executive Marketing -
13.2 Walk In Customer
Through security and into
store departments
- Business Unit -
13.2.a First Impression - staff & security
greeting
13.2.b Amount of stock on floor
13.2.c Movement of floor stock on trolleys
13.3 Greeting Process
Salesman acknowledges the
customer and offers
assistance
Salesman Business Unit -
13.3.a Lack of customer acknowledgement.
13.3.b Lack of sales personnel.
13.4 Sales Presentation
Asking the right questions,
establishing the needs of the
customer and up-selling
Salesman Business Unit -
13.4.a Customer needs aren't clearly identified.
13.4.b This may be related to current skill set
and personality of sales persons.
13.4.c “Clubbing seals”
13.5 Add-on Sales Including guarantees Salesman Business Unit - 13.5.a Attention is not focused on this activity.
13.6 Sale Closure Includes writing the sales slip Salesman Business Unit Retailman
13.6.a Queuing for purchases in alternative
departments
13.7
Customer moves to pay
point
With or without additional
purchases
Customer Business Unit -
13.8 Queuing process Customer queues to pay - Business Unit -
13.8.a Excessively long waits when business
unit is busy
13.9 Customer Interaction Greeting POS Clerk Business Unit -
13.9.a Satisfactory greeting’s are neglected
when business unit is busy
13.10
Processing of Sale
Completion of the required
documentation, clearing
payments and processing
payments.
POS Clerk Business Unit Retailman
13.10.a Required to create copies of
documentation leads to time delays
13.10.b TV licenses delay the entire customer
queue
13.11 Option to deliver goods Decision by customer POS Clerk Business Unit Retailman 13.11.a Delivery is not utilized to full extent
13.12
Delivery documentation
sent to despatch for
delivery
POS Clerk Business Unit Manual
13.12.a Potential bottleneck if delivery
requirement increases
22. The Solution that was implemented
[ Provide details of the solution selected and detail requirements to address the problems or challenges to achieve the goal or
strategic objectives]
• Implementing the Barloworld Logistics
inventory optimisation methodology, using
the Just Enough software (JD group license)
• Reduction in inventory
• Changing the buyers’ behavior
• Visibility of stock
• Improve availability of stock in stores
• Performance indicators
• Optimised replenishment cycles
• Improved store layout & customer buying
experience
• Time & motion studies were conducted to
highlight the bottleneck areas, and built a
simulation model to measure flow of store
and simulate different experiences
• Applying warehousing principles in the store
• Solutions retained the “warehousing” look &
feel
• Through optimised inventory, no more
unnecessary stock at stores
inventory optimisation improving the customer experience
optimal CDC operation
• Detailed design & process flows of new facility
• Racking & material handling equipment
• Systems (WMS, scanning)
• Bin locations
• Safety & security
• Loading / off-loading area
• People
• Performance indicators
• Product classification (fast vs slow moving)
systems
• Inventory optimisation (Just Enough)
• ERP (Dolfin) – customer preferred option
• WMS & scanning technology (Range Gate)
Biggest challenge was the availability of key leadership to ensure buy-in as we develop the solution &
implement. Strong project management & leadership from JD Group assisted hugely in managing this
risk.
supply chain strategy
• Concise conceptual design (“to-be” vision) at the
end of the “as-is” analysis
• A journey map reflecting implementation
sequence
29. Results
• Inventory optimisation
In the initial period, distribution levels halved while excess
inventories within the stores were being consumed
Improvements
• Reduction in stock on hand by 12%
• Reduction in shortfall by 35%
• Reduction in potential stockouts by 41%
• Increase in availability by 3.7%
• The new logistical solution
Growth of the business is 3 years ahead of plan
The solution still holds firmly
Enables Hi-Fi Corp to rapidly open new stores
Provides Hi-Fi Corp with an competitive advantage
31. Key Learnings
• JD Group strategic insight and commitment from leadership to conduct a
comprehensive assessment of the “as-is”, and jointly develop a “to-be” solution that
will address the business need. It pays off to invest in detailed analysis and
design!
• Client’s commitment to implement solutions and reap the benefits before the next
peak trading period
• Strong project management disciplines. Apart from having a comprehensive
integrated project plan, project risks were closely monitored on a weekly basis and
resolved as a priority
• Contracting the Barloworld Logistics expertise to develop a supply chain that is
flexible, agile & create the foundation for growth
Provided focus throughout
New concepts and challenge old habits
• Success in the combination of Barloworld Logistics supply chain expertise and Hi Fi
Corporation operational reality
• Successful application of appropriate technology as an enabler vs a driver
• Entrenchment of the inventory solution through ongoing Barloworld Logistics support
through an extended period
• Thorough investment in setting up KPI’s ensured correct behavior and sustainability
of solution
• Win-win engagement from start to end
