Lifted EBIT via category and supply chain redesign
Case study:
Lifted EBIT via category and supply chain redesign
- Situation
- A retailer with a large private label assortment saw profitability decline as inventory ballooned, markdown pressure increased and sales momentum weakened
- Growing assortment complexity combined with a uniform supply chain setup drove high operating costs and trapped working capital in slow-moving stock
- The business required a category and supply chain redesign to regain control over complexity, inventory efficiency and profitability
- Actions
- Segmented the product range into roles such as core, seasonal and capsule and set category policies for breadth, depth, renewal, pricing and promotions
- Reduced assortment breadth through SKU phase-outs and set policies for seasonal planning and new product intake
- Designed differentiated supply chain models per segment and aligned sourcing, supplier setup, inventory targets and replenishment logic accordingly
- Allocated products to the appropriate supply chain model to improve forecasting accuracy, reduce inventory exposure and support margin objectives
- Quantified the impact across category economics, buying and supply chain and drove implementation into the next season cycle
- Results
- Category strategy and supply chain models aligned by segment to meet different demand patterns and economics
- Assortment complexity and inventory exposure materially reduced through SKU phase-outs and tighter seasonal planning
- EBIT increased by 20% through improved assortment economics, lower markdowns and reduced working capital