Best of Breed
Don't tell Bombay Company about the 2001 retail meltdown. It enjoyed modest sales gains of nearly four percent in the off-year. Perhaps more importantly, Bombay's capital outlay for inventories was reduced by over 50 percent in the fourth quarter as the company aggressively went after its supply chain efficiency, customer service, online outlets and multiple selling channels.
Among the many advances the company made as it plowed through the tough retail recession were improvements in technology for inventory management. In a top-down attack on the problem, a half dozen Bombay executives charged into the problem and launched a multi-pronged campaign to make Bombay stronger in merchandising.
"When I came on board in the fall of 1999 I was shown a tremendous amount of opportunity in collaborative planning and allocation within the company," says Roger Tyler, VP of merchandising, planning and allocation at the 400-plus store company. Bombay already had begun upgrading its JDA-based retail systems, launched new Web sites, and improved overseas operations through a variety of technology and business measures. But the company knew it needed to add something to the basic arsenal and Tyler looked to supply chain execution and demand chain optimization as two areas of promise.
Best of Breed
"We looked at it as a search for a best of breed enhancement to JDA," he says. And the parade of vendors was on the march. One after another they appeared at Bombay headquarters with plans that ranged widely in price, service and other offerings. But the one that caught his eye came from NonStop Solutions.
Tyler, whose 14 years in the business include stints in merchandising, systems and finance, considered NonStop's set of predictive algorithms as the best in the business. It was best in breed that caused Bombay to also stick with the JDA platform and at the same time use STS applications for various elements of its merchandising.
"Our IT department gave NonStop good grades, especially considering issues like integration with our other systems," Tyler says. "We picked NonStop in March and by September we stepped back and thought 'this is too good to be true.'"
"This was our first foray into overseas lead times versus continental real times," says Lisa Campbell, who was marketing manager at NonStop at the time. "We saw it as an opportunity to test our science on a new market." NonStop had been in the pharmaceutical business for the most part and was eager to embrace a new client with the requirements of an upscale mall store.
New client, new vendor, new ideas about inventory efficiency -- all the issues baked together quickly and Bombay enlisted the help of Dallas-based Born Associates to make sure the project took off flawlessly. "They facilitated all the time and action charts and kept up weekly meetings," Tyler says. "Project management is a key to the success of any change in technology and business practices."
With the new approach to the supply chain, Bombay had lessons to learn, and Tyler says NonStop helped them ramp up quickly. "In the beginning we were getting squirrelly numbers," Tyler says. "I called NonStop right away and they steered us toward recalibrating the parameters. Those were the parameters that would give us the service levels for specific SKUs. It really worked very well."
"We were able to improve some of the science we have in the product," says Campbell (see About NonStop). "We came to understand how they do new product introductions, and that helped us take another look at demand planning from the Bombay point of view." Not that it was about Bombay's business practices. Campbell says the Bombay approach is so good that changes made for them will show up in NonStop DemandNetwork 7.0 to be released later this summer.
Introducing demand chain planning is a cultural shift for any company. "We had some people who were skeptical about this making a big difference," Tyler recalls. "People thought a technology based in pharmaceuticals would not be adaptable to our needs." But the Bombay leadership knew better.
"Last year, when the retail economy got tough we were able to use NonStop and STS together to forecast sales losses," Tyler tells RIS News. "This allowed us to bring inventory down $13 million and that put us in a very good position." The system allowed Bombay to stay in-stock almost 98 percent of the time for its top 200 SKUs.
"We will achieve 2.4 turns in 2002 and profitability will rise about 25 percent as a result," Tyler adds. "When I give senior management and our shareholders a 25 percent increased return on their dollar, it's a happy day."
Tyler, who calls the NonStop system "user friendly," says the company has sent experts out to the Bombay headquarters quarterly since installing the system. "We place a very high value on vendor-presence in the process," he adds.