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Multi-channel distribution project in the Textile Retail sector

Client situation & approach

The client was a worldwide custom-made fashion and home furnishing company offering home delivery. It operated in a promotion-driven market. Although successful there was:

  • A highly volatile demand pattern which created service level problems and lead to compensation payments and huge negative publicity
  • Unquantified costs of quality which were clearly high
  • No real quantification of true profitability

Therefore, the challenge was to improve customer satisfaction, dramatically improve service levels, reduce costs of quality and optimise pricing and promotions.

EFESO supported by:

  • Analysing costs of supply by product category / supplier
  • Identifying hidden supply costs and true cost of quality
  • Analysing service constraints by supplier
  • Reviewing cost reduction options
  • Developing action plans by supplier
  • Designing a weekly performance report to track the KPIs

Results

  • Agreed a blueprint for growth and cost reduction
  • Achieved c. £8m p.a. benefit for pilot categories (14% reduction)
  • Improved service performance to support sales growth (worth £3.5m p.a.)
  • Changed pricing and promotions which generated a 20% increase in sales and margins
  • Optimised promotions and tightened retail disciplines to reduce “unofficial discounting”
  • Gained strong commitment to change from suppliers