CASE ANALYSIS

GROUP 12
HOLT RENFREW BACKGROUND
 Holt Renfrew was the Canada’s elite high-end retailer with ten stores in seven cities
 They sell top quality, private label and branded designer fashion and cosmetics
 Holt Renfrew was owned by Wittington group that was headed by Canadian business leader
Galen Weston
 Their peak sales periods were March/April, July/August and November/December but their
publicity campaign run throughout the year
 The company issued approximately 21,500 order a year at the flagship store on Bloor street,
Toronto
 Out of total 3000 suppliers, approximately 1000 suppliers were used in a year
 The company had approximately 500000 SKUs but only 50% were active
 Changing of fashion trends led to the introduction of new merchandise that would have accounted
for 40% to 50% of SKUs ordered.
HOLT RENFREW’S LOGISTIC FUNCTION
 Holt Renfrew had 2 DCs, - Primary DC and Secondary warehouse

 Primary Distribution Channel is a 80000 sq. ft. DC located in Mississauga, Ontario that has

average of 40$ million of inventory every month where all merchandise were shipped that was
ordered by the buyers and around 3.3 million units of merchandise were shipped from DC to store
every year.

 Primary DC was designed as flow through warehouse where all merchandise coming should be

processed and send to stores immediately

 Secondary warehouse had an area of around 60000 sq. ft. located in Mississauga and held

inventory that are not sold in stores and kept there until disposed
PROBLEMS

 Poor and time-consuming order confirming process as the staff mostly spent time on the phone confirming and adjusting their orders

with suppliers.

 The store managers would also constantly call to check on the delivery status of merchandise, as a result of which the staff had to follow

up the orders with suppliers and transportation service providers.

 Both the warehouses were loaded to capacity and not well arranged – this makes finding inventory difficult, leads to loss of inventory

and also cause safety hazards.

 Cost of holding inventory will be large.

AS TONY KELLY, WHAT RECOMMENDATIONS WOULD YOU MAKE? AND WHAT STEPS DO YOU PROPOSE TO TAKE? SUGGEST SOME IMPROVEMENTS.

 By generating common strategic business plans, a collaborative arrangement must be developed to

leverage strategic positioning and align individual business operations.

 Tony Kelly should follow the practice of CPFR that stands for collaborative planning, forecasting and

replenishment so that trading partners could efficiently manage planning and logistic activities.

 A Management Information System (MIS) must be implemented across the supply chain so that

information about each and every order can be processed, shared, and tracked at every level of the supply
chain via effective tracking technologies such as RFID or bar coding.

 Tony Kelly should officially propose the plan in the meeting with board of directors to expand the DC to

include mezzanine floor.

WHAT DO YOU BELIEVE SHOULD BE DONE ABOUT THE SUPPLIERS?

 Effective communication between the supplier and the company to avoid stock out

 Company should introduce some policy so that the supplier will send prior notification before

sending merchandise

 Should revise their inventory policies so that they can handle both demand and supply efficiently

 Meeting with the suppliers so that issue can be discussed

 Company should shift to capable and reliable suppliers.

WHAT IS YOUR VIEW ABOUT THE MEZZANINE PLAN?

 Tony Kelly thought of expanding the DC to include a mezzanine floor as soon as possible so that the

warehouse has additional space.

 They are facing a warehouse space deficit, which could result in further stock outs if there isn't enough

capacity to continue operations.

 Mezzanine floor would provide them more space in the DC to conduct their key sales procedures while

they worked out improved inventory management systems that would allow them to change storage
facilities in the future.
 THE SECONDARY WAREHOUSE IS STAFFED BY TWO SUPERVISORS AND TEN HOURLY EMPLOYEES
WHO WORKED FOR 8 HOURS DAILY IN 2 SHIFTS IN 365 DAYS, WHERE THEY GET A WAGE OF $14?

Secondary Warehouse Cost = Lease Cost + Taxes, Maintenance, Insurance + Variable

Cost + Labor Cost
= (60,000*5) + (60,000*2.50) + (60,000*1.50) + (12*8*2*365*14)
= (3,00,000) + (1,50,000) + (90,000) + (9,81,120)
= $15,21,120 per year.
One time investment for adding a Mezzanine floor in DC: $10,00,000.
ADVANTAGES

 Eliminate rent and other recurring expenses

 Better operational efficiency
 Reduced shipment time and shipment costs
ERP SOLUTION FOR HOLT RENFREW

 Holt Renfrew should implement ERP solution to manage their inventory.

 The features which needs to be present for the same are as given below:
 Order Placing
 Track Inventory Level and Auto replenishment of inventory
 Track Current Orders
 Inwarding of inventory
 Outwarding of inventory
 Inventory forecasting using historical data and studying trends.
 Barcode and tag generation for the SKUs
 THANK YOU
GROUP 12

Aakanksha Ranjan
Akarsh Makheeja
Gyanesh Chauhan
Saurav Sharma Guided By
Sreehari Krishnan Prof. Navin C Rao