Logistics can be the least cost-effective link within your supply chain. Often, the need to meet demanding customer delivery schedules contradicts the drive for cost effectiveness. Facility layout, inventory, and supplier management also play crucial roles in the success of on-time services. Tefen's logistics programs employ some of the leading experts in supply chain consulting. By treating the logistics function as a crucial element to streamlining the supply chain, Tefen unleashes our clients' business potential while improving profitability.
Managing efficient cost structures will always be critical to the success of retail organizations; especially in the post-recession environment in which consumers are constantly seeking more value for their spending. Procurement optimization projects present an easy and swift opportunity to reduce cost. These cost reductions have a direct impact on EBITDA with projects delivering a 10-12% decrease in the annual spend on goods and services. In comparison to process re-engineering and headcount reduction efforts, procurement optimization projects are popular with retailers for their quick implementations.
Tefen recognizes two main opportunities to optimize procurement efforts in retail organizations. The first one relates to the existing network of store locations and headquarters, where we review the total list of expenditures from COGS and supplies, to third party service providers. The outcome is lean, centralized and transparent purchasing that reduces overhead spending, as well as COGS. Both the retailer and the final consumer receive more value for every dollar spent. The second improvement opportunity relates to growth strategy. For retailers expanding their reach/market, the procurement of new store materials and services is an area often neglected by management, but presents a significant opportunity for cost reduction. For rapidly growing retailers, 3 – 4 months of intense procurement support could mean significant savings on materials and services.
Tefen employs a two-phase approach to optimizing retailers' procurement efforts. In Phase I, consultants focus on identifying and realizing ‘quick wins’ in order to bring immediate cost savings to the bottom line. Phase II seeks to sustain these ‘quick wins’ by addressing the underlying causes of these inflated costs. Tefen analyzes and re-designs procurement processes and procedures and works with internal project management teams to implement optimized procurement standard operating procedures.
Main Activities and Deliverables:
Typical procurement optimization projects yield annual savings of 10-12% and, in some cases, up to 20-25%. Implementing the optimized strategy will align every-day operating practices with the newly optimized processes resulting in a more lean and agile organization. Internal teams will be empowered with the tools to continually seek, recognize and act upon improvement opportunities.
The most important asset of any retail organization is its customers. Those who interact most closely with the customer base are the store employees, therefore these employees must provide the best customer experience possible. Management must also support this endeavor by implementing procedures that give employees the best chance to provide a positive customer experience.
Tefen’s goal in optimizing store operations is to make the labor force more efficient (aligning staffing levels with demand and applying lean practices to standard operating procedures). In doing so, store employees find themselves with more time to interact with customers and provide a memorable shopping experience. Management will realize these benefits by seeing increased store revenue and potentially reduced labor costs.
Tefen’s strategy for improving store operations begins with a detailed analysis of a single store, or selection of stores, and is followed by company wide data analytics, benchmarking and focused interviews with key staff members. Following these activities, improvement opportunities and new standard operating procedures are consolidated into a runbook to be utilized during rollout and implementation.
• Rollout store optimization blueprint
Each store operation improvement project is unique and the approach described above is often tailored to meet the specific needs of the client. Based on our past experiences, retailers can expect performance improvements between 8-10% on the agreed KPIs. The rollout team responsible for implementing the improved store operations plan will be equipped with tools and documents that all stores and store employees will find valuable. In addition, knowledge gained from the Tefen consultants will allow them to continually seek improvement opportunities and roll these opportunities out to the expanding network of stores.
Supply Chain and Logistics improvement projects are at the core of Tefen's culture and track record. With years of experience and knowledge, Tefen prides itself on the success it achieves for clients in these areas. Across a variety of industries, and in particular, the retail sector, Supply Chain and Logistics engagements yield such benefits as increased visibility, reduced costs, and improved sales & service. Of course, each organization has different goals and consultants are mindful to approach each project with a broad set of tools and methodologies.
Deliverables and Methodologies
Deliverable 1: Current State Logistics Model – Model of the current supply chain state and benchmark of current costs
Deliverable 2: Identify Potential Solutions – including potential new supply chain models, shipping strategies, partners, constraints, and ways to reduce lost sale opportunities
Deliverable 3: Mixed Model Logistics Optimization and Implementation Plan – customized future state supply chain model with an implementation plan
Determine optimal mix-model logistics solution
Calculate ROI based on actual costs and expected benefits
Technology implementations are becoming even more common in the retail industry, and even more troublesome for retailers to successfully complete. The biggest challenge for retailers is assigning the necessary resources to the project and being able to communicate business needs to a technology provider. Tefen has the resources and experience to understand the needs of the client, in particular retail clients, and translate those needs into detailed instructions for technology providers to execute. Whether at the onset of a technology venture, or in the midst of struggling with the implementation of a project, Tefen consultants can quickly come in and act as an intermediary between the technology provider and the business, ensuring both parties’ needs are met.
Often overlooked by clients are the necessary plans and changes that must accompany implementation in order to achieve success. With the deep understanding of current and future business processes, Tefen can identify organizational gaps that must be addressed in order to achieve success. These gaps might be filled with such plans and changes as: process and procedure re-design, updated role and responsibility definition, change management programs, user support resources, communication plans, consumer education plans, etc… Tefen helps design and deploy these programs, ensuring that the client's day-to-day business requirements are met without disruption and the implementation effort will achieve the desired ROI.