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Nordstrom Inventory Management

Date post:15-Nov-2014
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Its my presentation for the Operations management paper in 2nd sem of my MBA.. chek it out..

About Nordstrom.. 1901- started as a small shoe store in Seattle With a Motto- offering quality, value for money merchandise and better customer service even though there is stiff competition From shoes to apparel to specialty stores

About the case Shareholders return and net profits start declining Board Meeting Chaos Scaling Down growth plans The problem??? Reluctance in adopting a proper inventory management system More problems

What is Inventory management??? Inventaire- a detailed list of goods The single largest asset in many retail and wholesale operations When the customer spends, you have got to be ready with the goods. Inventory Control and Management

Perpetual Inventory Management Continuous real-time tracking of quantities of a product Exact inventory status!! At any given time!! Integral aspect of the Q system of Inventory management Perpetual V/s Physical Count Perpetual Inventory Modules

Back to Nordstrom - sliding down1990s- Nordstroms superior the 2000s Reluctance to invest in Inventory Management Lacked the tools to support inventory management and pipeline management Operations personnel unaware of customer service got outdated in

And the slide continuesOver confidence on Nordstrom image Decentralized- Key decisions to lowrung employees To avoid customer disappointmenthuge inventory Huge holding cost, inventory carrying cost

Realizing the mistakes Withdrew the wrong marketing initiative called " Reinvent Yourself Made large scale changes in the top management Importance of INVENTORY MANAGEGMENT Shift to Perpetual inventory-react to changes in fashion Focus shifts to 3 core activities Drive top line growth

Corrective Measures.. Productivity to be increased by Inventory Management Inventory Allocation In-stock Position System Leverage Expenses Leverage Training on the New Inventory System- Mandatory MONTHLY RECORDS OF Sales and Gross Margins Inventory Quality and Efficiency SCM Labour Savings

The Nordstrom revivalInitial glitchesvDeclining profits vFall in share prices vCustomer service!!!! vSevere Competition

BUT!! The new inventory system was showing its resultsvImproved MERCHANDISE tracking v


More time for Merchandise Buyers to plan. Planning Markdown. Reduction in time required to attend the Customers. Information about availability of goods regarding Discounts and

AFTER EFFECTS Increase in 2nd Quarter Profit from $36.3 Million in 2002 to $65.9 Million in 2003. Sales per square foot increased from $319 in 2002 to $325 in 2003. Net Income: $242.8 Million in 2003 Revenue: $6.4 Billion Ranked No.1 by Fortune in 2005 in General Merchandise Category.

Thank You.

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