Traditionally consulting firms are not leaping to their feet to gain retail supply chain business. History dictates that the retail sector is the last to implement processes and technologies that other industries must have to continually improve and be competitive. Retail is about marketing & advertising the merchandising choices. This leaves little capital for supply chain infrastructure and technological improvements.
Technologies:
Historically retailers have invested first in POS (point of sales systems) as this is critical to the stores operations and thus profit margins. Additionally, no other business sector is as dependant upon fourth quarter sales as retailers.
When other industries began to adopt WMS technologies and RF, the retailers took a wait a see attitude. Hence most WMS (warehouse management systems) vendors were geared toward CPG (consumer packaged goods) and manufacturing.
Seeking new clientele, WMS software vendors actively pursued the retail sector. Even so many retailers are just now understanding the benefits and installing packaged systems to replace legacy ones.
Replacement of legacy systems does not hold true regarding ERP or forecasting systems.
What to expect:
When entering a consulting engagement in retail, specifically if previous retail experience is not abundant on the part of the consulting team, it is important to note what to expect.
Expect tight pocketbooks, bargain basement consulting fees to be paid, with high ROI in return. In other words retailers want the Rolls Royce for the Ford Focus price.
Knowing a bit about how retailing operates becomes imperative.
Financial measures:
Income Statement Purpose The income statement shows the profit (also called earnings or income) or loss produced by a company over a specific period of time.
Contents An income statement shows sales, expenses and profit or loss for a given time period (usually one year). Line items on this statement include:Net Sales Cost of Goods Sold (COGS) Gross Margin Operating Profit Selling, Goods and Administrative (SG&A)
Balance Sheet
Purpose The balance sheet shows current assets owned, and how creditors and owners of the company chose to finance those assets. Balance Sheets also provide information about the ability of a business to meet current financial obligations, financial growth and expansion.
Contents A balance sheet shows a company’s financial condition at a specific point in time. Its main areas of concentration are: Assets Liabilities Equity
Cash Flow Statement Purpose A cash flow statement shows the activities that led to the current business situation, and summarizes all the cash flow activities that have taken place in a business during a given time period.
Statement of Shareholder’s Equity Purpose A statement of shareholder’s equity analyzes the changes from year to year in each shareholder’s equity account. It shows whether the company has issued stock or bought stock back. Both public and non-public companies publish these statements. Every company needs a recorded history of investments.
Contents A statement of shareholder’s equity shows: Number of common stock shares Value of common stock shares Retained earnings Net earnings
Shareholder Value Analysis (SVA) SVA’s basic premise is that a company must make more than the cost of the capital it uses to generate the profit. In essence, a company’s goal is to generate the highest possible profit while spending as little as possible to generate it.
Metrics:
Percent Increase/Decrease vs. Last Year Percent increase/decrease versus last year expresses the percent difference, plus or minus to last year’s actual results. It can also consider plan.
Initial Markup Dollars Initial markup dollars are the difference in dollars between the initial retail selling price of received merchandise and its costs expressed in dollars.
Cumulative Markup Percent Cumulative markup percent is the difference between the cumulative YTD retail and cost values of merchandise on-hand at a point in time during the year, expressed as a percent.
Markdown Percent Markdown percent is the relationship of markdown dollars to sales dollars expressed as a percent.
Gross Margin Dollars Gross margin is the difference between sales and the total cost of goods sold (COGS) expressed in dollars. It is generally calculated and maintained as a cumulative (season-to-date or year-to-date) number.
GMROI GMROI is a statistic indicating the amount of gross margin dollars returned for every dollar invested in merchandise inventory.
Supply chain consulting in the retail sector will be challenging, but the rewards extremely meaningful.
Jim Smaltz is a motivated and a seasoned veteran with extensive experience in the field of Supply Chain management. He possesses strong project leadership, process and solution development, client relations, training and senior management skills that are balanced with equally strong communication skills to achieve and exceed desired management results. He provides a full spectrum of expertise from a process and implementation perspective in the areas of warehouse management, ERP and WMS systems, and process improvements. His expertise has been essential to several successful ERP & WMS implementations while focusing on end state solutions.
His experience runs the gamut of such prestigious companies as Industri-Matematik America (IMI), Phillips, and others. Jim has domestic and international experience to his credit. He brings particular expertise in order management, business solutions design and testing, project management, training, metrics and procedures.
Jim began working with Navesink in 2003 with Bacou-Daloz during their WMS install and warehouse design phase, by lending his project management skills.
With 25 + years of experience, we are proud to present Jim as our featured consultant. He is a valuable asset to Navesink and an integral part of our virtual network model.
Navesink Logistics, Inc. (NLI) has established a proven methodology of holistic implementation across the supply chain which has become our specialty. By viewing the entire supply chain, including people, processes and technology, the integration process and the impending changes become streamlined and palatable.
Methodologies and consultants are linked and monitored via “Share-IT”, Navesink’s proprietary knowledge capital database. Proven methodologies obtaining positive results are just another reason Navesink Logistics is the right partner for your business.
Navesink has been focusing on Supply Chain Implementations and methodologies since 1994.
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