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
