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The North West Company Push vs Pull

In: Business and Management

Submitted By Coast7819
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The North West Company

Executive Summary:

The North West Company is a leading retailer of food and everyday needs in rural Canada. They are currently using a “push” strategy with the category managers at headquarters analyzing trends, placing orders and allocating products to stores.

Inspired by Giant Tiger’s pull system, North West management was considering giving store managers more control over their inventory ordering by moving to a “pull” replenishment strategy. Barry McLeod, Director of Procurement and Marketing, has been assigned with determining if this “Pull” strategy would be a better fit.

In order to reduce the risk and capitalize on the benefits, North West should localize in the hands of Regional Retail Managers. This strategic change will be beneficial for North West as they would gain the required regional/store level knowledge while avoiding giving all the responsibility to local store managers and investing a large amount of dollars to support the pull system.

Table of contents:

Contents Issue(s) Identification 1 Environmental & Root Analysis: 2 Alternatives and/or Options: 3 Recommendation: 4 Implementation: 5 Monitor: 6

Issue(s) Identification

The North West Company is experiencing inventory management problems with unsold inventory piling up as well as experiencing stock outs resulting in lost sales. They have not been able to increase their yearly inventory turns from 2.2, well short of industry averages.

Popular items often sell out the day they arrive in stores, while excess stock items can be marked down up to 75%. Items not sold at the 75% markdown are then shipped back to Winnipeg and sold through a clearance Centre.

This current push model is increasing both sales and inventory/warehousing costs. The lack of accuracy in forecasting is magnified by the long lead times coupled with…...

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