Posted on 20th September, 2009 | No Comment
Bradbury Anderson, CEO of consumer electronics retailer Best Buy, understands the complexity of- and potential payoff from- a synchronized supply chain. Two years ago, Best Buy began a major effort to overhaul how the company does business. Although sales were growing, Anderson and his senior managers knew that future growth would depend on superior customer service as way of differentiating the company from its competitors. Making that happen, says Anderson, would mean giving store managers and frontline employees the power to tailor the product mix and marketing to suit the needs o local customers. In the past, Best Buy had made those decisions from corporate headquarters.
To execute this new strategy, Best Buy’s supply chain processes had to be improved. For example, before this initiative, if a particular television model wasn’t selling, there was no efficient way to get that information to the Chinese factory making it. Now, a $130 million investment in technology- including the upgrade of its inventory tracking systems- will streamline the supply chain, says Anderson, and help Best Buy better match customer’s tastes with what vendors are manufacturing. This cuts down on unsold inventory and helps save money.
Despite the greater complexity of this new business and supply model, Anderson says the idea is to keep store-level operations simple, with the corporate supply chain absorbing the complexity, so employees can spend their time servicing customers, and not worrying about logistics issues.
At the same time, Best Buy is revamping its relationships with its vendors by sharing its own research about customer likes and dislikes. Unlike the past, hen conversations were limited to price negotiations, Best Buy executives now work with vendors on improving delivery times and keeping out-of-stock items to a minimum.