Typical projects that I have conducted or managed:

  1.     Process for Special Purchase "Deals"
  2.     Forging B2B E-Commerce "Electronic Linkages" To Customers
  3.     Creation of a "Customer Satisfaction Center"
  4.     Development and Implementation Of A "Stocking Strategy"
  5.     Development and Implementation of a Route Accounting System
  6.     Turnaround of a Purchasing Function 
  7.     Development Of Optimal Sourcing And Distribution Strategy 

1.   Process for Special Purchase "Deals"

Problem/Opportunity:
We had been asked by several different clients to help them develop a process for handling special purchase "deals." These situations occur when you have a special opportunity to buy at a great price, but you must commit to buying large quantities. Such deals normally arise at the end-of-the quarter or year when the seller is anxious to "make their numbers." Another common instance is when the seller is trying to "stuff the channel" prior to the introduction of competing products by major competitors (e.g., IBM offered discounts up to 50% off the price of OS/2 in an attempt to get maximum shelf space just prior to Windows 95 being introduced by Microsoft). Prior to implementing our process, We frequently found that clients had up to 30-40% of their inventory composed of these special deals. This was often a real strain on both warehouse space and cash.
Solution:
   
Interviewed key purchasing, finance, and sales personnel, plus selected suppliers .
Developed a financial model (of the economic tradeoff between the added profit from buying at the special price and the cost of carrying the additional inventory) that generated an optimal buy quantity recommendation
Developed a process that assured the finance people were involved to see that these special buys met their cash constraints (if any) as well as their ROI targets.
Trained the buyers on the use of the model and the new process
Trained the buyers on negotiation tactics, as well as, how to use the model and the process as a negotiating tool to get the suppliers to "sweeten" their deals even further to satisfy the model’s targets
Results:
All clients reduced their purchases and the inventory associated with these special deals -- while increasing the total money from special discounts. For example, one client decreased their quarterly special deal purchases (and inventory level) from $90 to $15 million -- while increasing their gross profit from special deal discounts by $1.5 million. All clients achieved greater control and consistency through the new process. In addition, all were assured that all special deals met the target ROI and the overall cash constraints
 
2.   Forging B2B E-Commerce "Electronic Linkages" To Customers

Problem/Opportunity:

A $3 billion drug and sundries wholesaler found itself with rising costs and declining margins. One of the areas that had been singled out for potential cost reduction was order entry. The current order entry process was extremely inefficient for both the wholesaler and for its customers (primarily drugstores). Because it was completely manual, the process was both lengthy and cumbersome. In addition, no information was captured electronically which could have been used to either the wholesalers’ or the retailers’ advantage. These inefficiencies spilled over to other aspects of the wholesalers’ business, e.g., because the SKU number was not captured as a part of order entry, the order pickers in the warehouses were forced to look for "Bayer Aspirin" rather than "Bayer Aspirin located on Aisle 21, Shelf 4, Position 17."
Solution:

Established an overarching philosophy that the new system would be a new customer service
Conducted extensive interviews and focus groups with customers about their business needs
Designed the computerized order entry system to give the drugstores greater flexibility, ease-of-operation and useful information
Developed a number of custom reports that enabled the retailers to control:
  • Product assortment
  • Pricing
  • Shelf-space allocation and inventory
  • Optimized the warehouse layouts based on SKU velocity (using system’s location codes) 
Results:

The system, ECONOMOST, is credited with "changing the rules of the game" for the entire industry. Specific results achieved by the wholesaler during the first ten years after the system was introduced included:
   
  • Sales volume grew four-fold while market share went from 20% to 28%
  • Sales force decreased from over 600 to approximately 250; while 142 Sales Order Entry positions were eliminated altogether
  • Warehouse picking efficiency (as measured by picks-per-man-hour increased four-fold
  • Retail pricing and assortment management improved dramatically because of the quality of the information provided to the retailer from ECONOMOST
  • Customers became "locked-in" to the wholesaler
ECONOMOST was singled out by Tom Peters (among others) as one of the best examples of using computer systems to gain a sustainable competitive advantage and to forge "electronic linkages" to customers 
 
3.   Creation of a "Customer Satisfaction Center”

Problem/Opportunity:
A $10 billion healthcare distributor asked us to look into the cause of a rising number of customer complaints and to make recommendations for improvement.
Actions taken:
Interviewed everyone internally who “touched the customer” and conducted focus groups and individual interviews with customers
Summarized and presented findings:  
Primary customers complaints were about: “No way to get timely and accurate information about product availability”
  1. No one “owned the customer”
  2. Sales people focused on selling “deals” and had no authority to get information and/or see that action was taken on behalf of the customer
  3. Customer well-being was 5% of everyone’s job, and 100% of no one’s 
 
Made recommendation for a “Customer Satisfaction Center” with the following charter:
  1. Centralized point of contact for problems or information
  2. “Owned” the customer call/problem/satisfaction
  3. Empowered to create/cause action throughout the organization
  4. Charged with taking preventive action as well as corrective action
  5. Tasked with developing the tools and processes to provide better information and better support to customers
We guided the evaluation of the Customer Satisfaction Center as follows:  
  1. Dedicated Customer Satisfaction reps were assigned to each customer.  Special customers were given their own 800-number.
  2. Created and published weekly-expected arrival dates for the top 50 “Not Available” SKU’s.  These reports were distributed to each customer each week and eliminated about 90% of the prior complaints.
  3. Developed process to move product between warehouses in anticipation of out-of-stocks
  4. Expedited emergency deliveries to customers whenever possible
  5. Developed special information and reporting processes
 
Results:
The Customer Satisfaction Center was been a tremendous success.  Complaints plummeted, while customer satisfaction soared.
 
4.   Development and Implementation Of A "Stocking Strategy"

Problem/Opportunity:
A $5 billion software distributor had eight warehouses spread across the country but never seemed to have the right item, in the right place, at the right time. All eight warehouses had been attempting to carry all 15,000 SKU’s (Stock Keeping Units) -- resulting in too much inventory in some warehouses and too little in other warehouses. Furthermore, fast moving items always seemed to be in stock in the wrong place -- resulting in poor customer service and excessive expenses for expedited freight.
Solution:

Worked with the VP of Operations and built a model that allowed us to look at the trade-offs among:
  1. Warehouse capacities
  2. SKU’s stocked
  3. Inventory investment -- both safety and cycle stocks
  4. "Splits" (occurs when an order for a SKU is not filled from the nearest warehouse)
  5. Freight expenses (including premium freight for "splits") 
Once the model was developed and benchmarked against actual demand history, we used it to evaluate difference scenarios for stocking different types of SKU’s in various warehouses. We paid particular attention to individual warehouse capacities since this was already a problem at several warehouses.
Out of the evaluation of these scenarios came our stocking strategy:
  1. Slow movers, customer specific items, troublesome consumer products and very expensive SKU’s are now carried in only one warehouse in the middle of the country
  2. Fast movers and/or big dollar generators are carried in all eight warehouses
  3. All other SKU’s are carried in two "Master" warehouses located on both coasts 
Results:

When the stocking strategy was fully implemented, significant improvements were made. Premium or emergency freight was cut by over two-thirds. Fill-rates (both before and after "splits) have increased by about 10%.
 
5.   Development and Implementation of a Route Accounting System

Problem/Opportunity:

A team that I was managing was asked by the largest bottlier and distributor of bottled water (to homes and commercial sites) to help them develop and implement a computerized Route Accounting system. Before we started this project, the company only had a manual process which was done by their route salesman (actually their delivery truck drivers).  This process had a number of problems: 
  • Salesmen do their paperwork at the end of a hard day of lifting 5 gallon bottles and they were tired. The last thing they wanted to do was paperwork.
  • Bills were late to customers leading to poor cash-flow
  • Bills often had mistakes causing poor customer service and frequent complaints
  • Salesmen got exasperated with all of the paperwork leading to high employee turnover
  • Routes frequently changed as new customers were added and it was difficult to keep route/customer information in-synch between the salesmen and the accounting department
Actions taken:
  • Interviewed key Sales and Accounting personnel and determined that new system needed to have minimal input from the salesmen, but still needed to be timely and accurate enough to satisfy the accountants and the customers
  • Reviewed various data input technologies from OCR to 2-way EDI terminals
  • Selected a 2-way EDI terminal that allowed for up-loaded transmission of what was delivered to each customers at the end of each day and down-loaded the route/customers information for the following day
  • Developed and implemented a system that used this technology combined with creating a centralized billing process in the accounting department
Results achieved:
  • Bills were much more timely and accurate.  Cash-flow improved.
  • Salesmen could focus on their job, i.e., making deliveries and selling new customers -- not paperwork
  • Salesmen turnover improved dramatically because the worst part of the job was eliminated
6.   Turnaround of a Purchasing Function
 
Problem/Opportunity:

A $500 million Computer Hardware Distributor found itself in a state of confusion due to having made seven acquisition in the prior year and not having completed the integration of these seven new organizations.  One of the functional areas in debilitating disarray was Purchasing.  The Purchasing staff was scattered in three location with overlapping vendor responsibilities and total lack of clarity for: functional objectives, overall direction, reporting relationships and accountability.   As a result, the inventory was too high while stock-outs were all too frequent (resulting in poor fill-rates to customers.) 
We were asked to assume responsibility for the Purchasing function on an interim basis, reorganize the function (while cutting costs), develop new improved processes and procedures, and ultimately improve both inventory turnover and customer fill-rates.
Actual actions taken included:
  • Consolidated all buying into one location with improved clarity about roles, responsibilities and reporting  relationships
  • Rationalized buying responsibility so that no more than one buyer bought a supplier’s line
  • Re-organized by product categories -- for example, only one buyer would handle all printers
  • Developed and implemented better tools and processes to make buying decisions for both replenishment purchases and  “deal or opportunity” buys
  • Pruned the least important suppliers in each product category
  • Eliminated “brokerage” purchases and sales (and their related losses, write-offs and “dead” inventory) 
Some results achieved:
  • Overall Purchasing staff was consolidation into one location and headcount was reduced by 20%
  • Inventory turnover increased from 10 to 13
  • Fill-rates improved dramatically (as measured by lost sales %) 
 
7.   Development Of Optimal Sourcing And Distribution Strategy

Problem/Opportunity:

A $3 billion retail drugstore chain had always allowed their individual store manager to decide what to stock and how to acquire it. While autonomy did enable store managers to match their individual stores’ product assortment to local markets, it had created significant disadvantages for the chain:
  • Economies of scale in purchasing were almost impossible to achieve
  • Direct-Store-Delivery (the primary distribution method) was being cut back by suppliers (because of rising costs) – causing fewer options for the stores
  • Delivery minimums were being increased dramatically – requiring the store to order and carry more inventory
  • Rack-jobbers had raised their mark-ups on merchandise to the point that this option had become uneconomic for many product categories
  • Other drugstore chains were increasing their use of captive warehousing and distribution alternatives resulting in lower "landed-on-the-shelf" costs 
One of my CGR partners and I were asked by the Client to identify the optimal sourcing and distribution strategy for each of their non-pharmaceutical product categories. Specific alternatives to be considered included various wholesalers and rack-jobbers, direct-store-delivery (DSD) and various forms of chain-controlled self-warehousing and distribution including various third-party logistics providers (3PLs).
Solution:   
  • Conducted extensive interviews with store managers and suppliers
  • Documented current volumes for each key product category (e.g., dollars, cube, pounds, shipments, minimums, etc.)
  • Documented current prices, mark-ups, volume discounts, etc., for each product category and for each sourcing alternative
  • Documented key attributes (e.g., frequency of delivery, minimum shipment, inventory implications, etc.), capabilities and costs for each distribution alternative (wholesaler, self warehousing, 3PLs, etc.)
  • Built a financial model that enabled "what-if" analysis of various alternative combinations of product category, sourcing and distribution alternatives
  • Validated model and performed extensive analysis
  • Made recommendations by product category and supplier 

Results:   

  • The chain contracted with a 3PL for warehousing and delivery
  • Developed centralized purchasing for some product categories
  • Continued with some wholesalers/rack-jobbers/DSD for selected categories after renegotiating prices
  • Recommendations identified reductions in "landed-on-the-shelf" costs of 0.6% to 2.1% depending upon the product category.